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Biotech / Medical : GelTex Pharmaceuticals (GELX)
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To: James Silverman who wrote (30)10/17/1997 12:22:00 PM
From: NY0001   of 127
 
James:

Yes, Cholestagel is an improved version (at least appears to be) of
an existing class of drugs. However, this is not necessarily negative.

First of all the cholestoral-lowering market is huge and growing and
there is lots of room for multiple drugs in this market.

Secondly, different treatements will be used for different people. I believe that one of the reasons
that GELX stock has increased in valuation is that there tests in conjunction
with statin class of drug was so successful. Doctors are looking for ways
to improve results of their patients without experimenting too much.
By getting improved results without discontinuing a treatment (statin)
that they already know works they will be inclined to experiment more
with a new drug like Cholestagel. This is a good marketing strategy
and should improve the capability of GELX to secure a favorable
strategic partnership, maybe even with one of the statin manufacturers.

IF YOU WANT TO WORRY ABOUT SOMETHING, worry about cholesterol-lowering
food additive products and new classes of treatment and preventative
products that are entering the pipeline. I follow two foreign stocks,
The Raisio Group (Reuters:RAIS.HE), a finnish company that recently signed
a US licensing agreement with a division of Johnson & Johnson for their
cholesterol-lowering margarine product, AND Forbes Medi-Tech Inc.
(VSE:FMI), a small Canadian bio-tech company which is in negotiations
with a major international food company (Schroders' European research
dept. speculates that the food company is one of Unilever, Kraft, CPC or
Hershey. FMI is restricted from disclosing at this stage of negotiations)
for a similar cholesterol-lowering food additive (Phytrol).

Raisio has a market cap of $1.3 billion based on the food additive product
and FMI has a market cap of only Cdn$30 million but analysts are forecasting
Raiso to move to $2.5 billion and FMI to $100 million over the next
year.

GELX is going to do well. The whole cholesterol market is huge and
growing. Valuations are difficult and the trading patterns can
cause heart attacks but if you are patient I think you will make a
good return on all the stocks in this market.
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