The following are some of my thoughts about AGPH and my principle reasons (other than my belief that Viracept will continue to be a blockbuster drug) for remaining committed to AGPH and actually substantially increasing my holdings at this level.
1. From what Peter Johnson has said (and will likely say on Monday), AGPH has 13 or so different research programs currently at work. Some compounds are in the pre-clinical stage (RhV Protease, AICART, Neuropeptide Y) and others at the reasearch stage (at least 8 I count from AGPH's last annual report). As most of us are aware, anti-cancer compounds (AG 3340 and AG 2034) are also currently in clinical trials. AGPH expects these two compounds to come to market by 2001.
2. AGPH is very clearly thinking in terms of the future. The team that brought forth Viracept, plus the Alanex team, are firmly in place -- with no brain drain. That's literally hundreds of reasearchers. This is the great unknown for AGPH inverstors. It's clear the street has a difficult time understanding the value of design-based reasearch companies. But here's what I do know. AGPH is the leader in protein structure based drug design. With Alanex' combinational chemistry expertise AGPH is perfectly suited to succeed in several major areas of design-based drug discovery. That means coming up with new compounds and using its library screening capabilities as a source of further income. How much income this will generate is, of course, unknown. But, I feel it will be substantial. Indeed, it was one of the reasons AGPH felt the need to acquire Aanex in the first place. And, IMO (and as H and Q analysts have suggested in reasearch regarding other combinational chemistry companies) biotech and pharm companies without such expertise (or access to companies with such expertise) will be at a major future competitive disadvantage.
3. AGPH clearly wants to continue to move into the pharm. business. Another unknown. That means, as others have suggested, that in the short term AGPH will need to aggressively search and succeed in locating other products to market. If they can succeed, the future return for shareholders could be huge. This, of course, is a big IF. In fact, as in all investing, there's a tremendous amount of risk involved in plunking down money on AGPH shares. Such an investment should not be done without much homework. But, FWIW, I believe AGPH has the model in place to succeed.
All this said, sometimes biotechs (like LIPO) get shot and never recover. David S. has analyzed LIPO's deficiencies (on the LIPO thread) and, personally, I think he's right (at least for now). But as I hope I have just suggested, AGPH has alot more going for it than companies such as LIPO. It is NOT just a one drug company. Viracept is NOT a flash in the pan. And, I feel AGPH's research capabilities are NOT bunk. (At least, that's my reading of the short's major arguments against AGPH -- shorts, correct me if I'm wrong). Don't let the tremendous volatilty in its share price scare you off. Lots of people with far more capital than any of us will use this company (and other companies) and the fear of its shareholders to increase their fortunes. But IMHO AGPH is a great long term buy. Time will tell if I'm right or wrong. Finally, I apologize for my long-windedness. |
