Here's the interview:
07/24/96 -- Jim McCamant,
Editor of the "Medical
Technology Stock Letter"
BOOM OR BUST FOR
BIOTECHS?
Jim McCamant, one of the leading authorities on biotech stocks, joined
Worth OnLine's CONFERENCE CALL chat show on July 24 for the
discussion "Boom or Bust for Biotechs?" McCamant's newsletter,
"Medical Technology Stock Letter," which has been in publication since
December of 1983, is a leading source of information about the biotech
industry.
McCamant will return to Worth OnLine's CONFERENCE CALL on
October 23, 1996 at 8 pm EDT.
What follows is a transcript of the evening's event, edited for clarity. The
opinions expressed within are those of Jim McCamant and do not necessarily
present the views of Worth or Worth OnLine.
OnlineHost : Welcome to "Conference Call," Worth OnLine's new live chat
show series. Every week we give readers the opportunity to chat with the
leaders in money and markets. Check our site (Keyword: Worth) for a
calendar of upcoming events. Our guest tonight is Jim McCamant, editor of
"Medical Technology Stock Letter." Mr. McCamant is going to talk about
trends and current events in the biotech industry.
Question : What do you think about Amgen and its future prospects?
MTSL : Amgen is a good company and the leader in the industry, but the
product pipeline is not great. We think the stock will lead the advance, but the
long term risk is more competition for their two approved drugs.
Question : Novartis released a statement on July 17th that the new company
planned to use its influence as a shareholder of Chiron to support the
granting of non-exclusive licenses under certain gene therapy patents of Viagene.
Is this perceived to be a conflict?
MTSL : No, not a conflict; Chiron is the leader in gene therapy. They will
work well with Novartis which owns 49 percent.
Question : What is your opinion of Somatogen and its blood substitute
product Optro?
MTSL : We are very optimistic about Somatogen. We think Optro has the
potential to be a billion dollar product. We are recommending purchase of
SMTG.
Question : Why do you not like Amgen's pipeline which has a drug for
hep C coming out next year as well as leptin in the future?
MTSL : Amgen's hep C product will compete in an already established
market -- small potential.
Question : Who do you see as the "winners," if any, in the development of
synthetic blood?
MTSL : Leptin is a long shot as no evidence that overweight people are
short on leptin. We expect SMTG to be the big winner, but Baxter is likely to be
on the market first. Baxter has a problem in limited supply as they use
outdated human blood.
Question : Is Cortex in negotiations with a pharmaceutical partner? If so, at
what stage?
MTSL : Yes, we believe they are, but do not know stage. These deals can
take a long time.
Question : How would you recommend a casual investor benefit from the
potential that several biotech companies may make blockbuster returns? It
seems like panning for gold.
MTSL : The easiest investments are those with a number of products in the
pipeline and broad technology. In this group we like Agouron, Isis
Pharmaceuticals, Ligand and Icos.
Question : What is the current status of Systemix, in your opinion. Is it holding
its own or are there too many competitors with similar products?
MTSL : Yes, there are many competitors and it is too early to pick
the winner.
Question : What is your outlook for the market in the next three to four weeks,
in light of the recent fall in the Dow?
MTSL : They are in the process of being bought by Sandoz. We think the
biotech stocks are forming a bottom in this area and expect a rally soon. The
stocks are down an average of 25 percent with no bad news and many
down 50 percent.
Question : What is the market potential for Prostacint, Cytogen's new prostate
cancer imaging agent?
MTSL : Prostacint is the most promising product from Cytogen, but
we hesitate to predict sales since they fell well below estimates on earlier
product.
Question : Do you know anything about a pharmaceutical firm whose ticker is
SCIO?
MTSL : Have followed Scios for many years formerly called California
Biotech. The company has moved very slowly but they do have two interesting
products in the clinic.
Question : What forum do we have to follow your buy/sell recommendations
as you discover winners moving to the front of the pack?
MTSL : The MTSL letter is available to subscribers at $320 a year. We are
happy to send samples and they are available online at streetnet.com
Question : Do you have recommendations for biotech
companies in the agricultural sector?
MTSL : Yes. We also follow ag/bio in second newsletter. Our top
recommendation is Calgene. We also like Mycogen and Biosys at current
prices.
Question : Biotech stocks seem to go through three to four year cycles.
Where are we currently in the cycle?
MTSL : Our best guess is that in prices we are about halfway but further in
time.
Question : Jim, what resources do you use to keep your predictions ahead of
the public in predicting what will happen in the biotech industry?
MTSL : The best source is from companies talking about their
competitors. We also attend a lot of meetings. This is in addition to a lot of
reading. Often investors ignore information that is available.
Question : Do you like UBS (US Bioscience)? How do you feel about
their recent split (2 for 1)?
MTSL : We are neutral on UBS, not clear view of revenues. The reverse split
makes it easier for institutions to buy the stock. Management from Genentech
and funded by Glaxo. They claim to have cure for common flu. Symbol
BHTA.
Question : Which Biotech stock do you feel is selling at the greatest discount?
MTSL : There are a number of stocks that have gotten very cheap. Certainly
one of the biggest bargains is Somatogen, with its big potential and
great partner in Lilly.
Question : Do you see the Carticel product from Genzyme tissue repair
being an economically viable product in the new managed care environment?
MTSL : Yes, but cost will reduce demand, acceptance is likely to be slow
but some will pay.
Question : Gilead Science, long and short term targets. Also, opinion of
Emisphere tech, with oral heparin delivery system?
MTSL : Gilead is one company we have reservations about. Big cash hoard
insures survival, but not excited.
Question : Do you have a long term outlook for Immune Response?
MTSL : Oral delivery will eventually make some company money, but
Emispheres is only one of many. We would avoid drug delivery companies
for now except Alza. Immune Response has some interesting
technology, but we are negative on the HIV vaccine and would avoid the
stock.
Question : I've currently invested about 85 percent of my portfolio in Chiron,
Celtrix and Somatogen based upon your newsletter. Should I sleep well
tonight?
MTSL : If you are a long term investor, no reason to worry.
Question : About Scios, their price has been steadily falling to $5 -- $6. When
do you recommend building a position? What time frame do you give it? What
is a good sell price to target?
MTSL : We have not recommended Scios, because of earlier
disappointments, but stock is cheap here.
Question : What is your opinion of ISIP at this time?
MTSL : ISIP is one of our favorites. Great management and a clear leader in
antisense. We think it will be big long term winner.
Question : I would like to know if you have heard of a Canadian company
called Micrologix Biotech, involved in development of various peptides for
restoring the effectiveness of antibiotics. Thank you.
MTSL : Micrologix seems interesting but not enough information yet to have
an opinion as investment.
Question : How do you rank the companies in the liposome industry?
MTSL : We have not recommended any but think Nexstar is the most
attractive stock. They seem to have best amphoceterin B product and more
in pipeline.
Question : What is your time frame for the next major event to happen within
Celtrix and Somatogen?
MTSL : Next event from Celtrix is likely to be partnership, but also a candidate
for buy out. Something likely in next few months. Somatogen will be results
from current clinical trial and starting other. Likely to get news in the fourth
quarter. Also a partner for other indications of optro about then.
Question : What is your feeling on Biogen?
MTSL : We are modestly negative about Biogen. One of the least
productive research efforts in the industry.
Question : Concerning Prostascint and Cytogen...Why would stock drop so
precipitously on such GOOD news of approval?
MTSL : The drop in Cytogen mainly reflects the bad market. Investors are
selling on news. This reflects the fear which has resulted from the drop in
stock prices.
Question : When do you think the market will increase the value of
companies like Agouron based on their recent HIV progress?
MTSL : AGPH stock has been held back by stock offering. We expect it to
bounce when it is done. The big excitement will come late this year or in
first quarter when they file for marketing approval.
Question : What is your outlook for Ecogen Inc. (EECN)? Long and
short-term?
MTSL : Ecogen should work out long-term but sales have grown more
slowly than they expected. Ecogen may require some patience.
Question : What is your opinion of Imclone Systems, big recent correction,
have you heard any news?
MTSL : Imclone's stock got ahead of itself. An interesting company but we
have not recommended.
Question : New issue Millenium has been forming many alliances do you see
a bright future for them?
MTSL : Yes, but much of that is already in stock price. The genome
companies are too popular.
Question : When Chiron's CEO purchased 100,000 shares of his
company on the open market, what, in your opinion was he preparing for?
MTSL : He believes strongly in future for Chiron and had money available as
a result of Ciba's purchase last year.We share his enthusiasm and it is our
clear favorite among large biotech stocks.
Question : Do you know anything at all about current realities vis-a-vis 'forest
biotechnology stocks'?
MTSL : We know of no companies doing much in that small sector.
Question : I'm interested in Macrochem, a company with a topical delivery
system called SEPA. Ibuprofen and Prostaglandin are now in Phase I/II
tests for topical application. Do you have an opinion about the company and
do you think it's a good investment? Thank you.
MTSL : Macrochem is interesting, but not convinced they can make it all
work. No opinion for now.
Question : I own the Fidelity bio tech fund. Is this the way to play this
market?
MTSL : We are not fans of Fidelity biotech fund, but not a lot of mutual
fund choices.
Question : Good evening, I would appreciate you opinion on Enzo
Biochem?
MTSL : We think Enzo writes great press release, but not impressed with
the technology or the management.
Comment : What is up with Biosys? The stock price has really declined in
the past few months.
MTSL : The biggest problem is no sponsorship. We think they will make
their consolidation strategy work. The stock price will eventually follow if they
keep running the business well.
Question : It seems that over the past year Ligand stock has been heavily
shorted. Why?
MTSL : Most of shorts are hedger who own ALRTZ and have warrants on
Ligand, but some active shorts more recently as the stock ran up. Good
company, but complicated for investors to understand.
Question : Will FDA permit a filing by Immunogen based on their Phase II
results?
MTSL : No final answer yet, but our guess is that they will. Likely to be for
lymphoma associated with AIDS. A filing next year either way.
Question : If you could pick one biotech stock that has the best bet of
being an absolute out-of-the-park home run over the next decade, what would it
be?
MTSL : Isis is our first choice, but there are a number of others that should
make you lots of money.
Question : Who else (other than US), is researching genetically engineered
PolyClonal Antibodies that can reproduce in the Human Blood Stream?
MTSL : We know of no one active doing this.
Question : Given that there are still many months left in 1996, how do you
see the Biotech sector doing by year end?
MTSL : We expect a good rally from these levels, but after that, much will
depend on the broad market. With the continuing progress and more good
news coming the sector should have a great year.
OnlineHost : That Concludes this edition of "Conference Call," Worth
OnLine's live weekly chat series. Thank you for joining Worth OnLine and Jim
McCamant for this evening's chat. The Worth staff extends its appreciation to
Jim McCamant for being our guest. Transcripts from all of Worth OnLine's
live chat shows are available in our Software Library. |
