Millennium Pharmaceuticals, Inc. (MLNM) Message Board

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Biotech / Medical : Millennium Pharmaceuticals, Inc. (MLNM)

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From: Icebrg	12/22/2007 2:08:48 AM
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MORGAN STANLEY DOWNS MLNM..AS OVERVALUED! 21-Dec-07 09:17 am Stock Overestimates Fundamentals; VISTA Not Likely to Drive Large Growth Investment Conclusion: We continue to see MLNM as overvalued as we do not share the Street’s view that the potential of Velcade has changed dramatically since the VISTA data presentation. Current valuation implies that US Velcade could grow to $750MM+ in sales. Even after raising our estimates, we struggle to get beyond peak sales of $450-500MM. We believe there is near term risk to our thesis as Velcade will likely have a sales uptick the next couple of quarters. However, our longer term bet is that the growth is not going to be sufficient to significantly change the potential of the drug. VISTA Data Good but Unlikely to Change Growth Trajectory, as we believe: 1) Velcade continues to be an injectable with major tolerability issues which we expect will limit it to patients who are Imid ineligible or intolerable (Velcade already has significant market share in this population), 2) due to toxicity, it is unlikely patients will use significantly more Velcade cycles in front line vs. other lines, minimizing the impact of a move to front line (as was seen after strong APEX data and move to second line), and 3) the cost structure limits profitability. In 2007, SG&A is nearly 60% of US Velcade sales (unlikely to change in the competitive landscape). Risk to Strategic Alliance Revenues: The alliance revenues have been a driver of profitability and are very unlikely to continue at recent levels (most of the realizable milestones from JNJ should be achieved by next year and we see no proven pipeline candidate to partner). We believe the lowering of strategic alliance revenues could make sustainable growth a hard target. Lack of pipeline: Velcade has limited promise in additional indications (the NHL trial is questionable) and the company has faced setbacks with 2 of its more advanced pipeline candidates in the past 6 months. Catalysts: 2008 guidance and quarterly sales. Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. Customers of Morgan Stanley in the U.S. can receive independent, third-party research on companies covered in Morgan Stanley Research, at no cost to them, where such research is available. Customers can access this independent research at www.morganstanley.com/equityresearch or can call 1-800-624-2063 to request a copy of this research.

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