SangStat Med. (SANG) - 10 of 10 analysts say Strong Buy Message Board

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Biotech / Medical : SangStat Med. (SANG) - 10 of 10 analysts say Strong Buy

SANG 5.045

-2.6%

Dec 22 3:59 PM EST

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To: F. Jay Abella, III who wrote (63)	1/23/1998 11:44:00 AM
From: James Silverman	Read Replies (1) of 184

Jay A couple of things. The "recent product delays" are a bit misworded by Rachel. The products have been on file at the FDA, so the delays are not from the company, its in her overly aggressive estimates in regards to timing of approval. I give generics two years to get approved once the ANDA is filed, seems most analysts had estimated 1 year. Short term looks like the stock is fine. Incidentally I added at the close yesterday so at least for now I feel good about that move. Lastly, I don't think its appropriate to model them as an R&D company. In other words based on the model you have, SANG will be grossly undervalued given the lessened risk and potential for high profitability within 1 or 2 years. SANG has a ton of earnings leverage and irrespective of the precise timings of approvals, sales and profitability is right around the corner. On that count, I'd guess her new earnings model calls for profitability to be reached in the 2H of this year, not a year away. So say a loss of $1.00 1H 1998, gain of $0.64 for 2H (complete guesses as I have not seen her precise revisions). If you want to take a stab at valuing them, use $80M in first full year sales which would lead to $56M in gross profits, but only $64M in market cap according to your valuation rules. So in my opinion this yields overly conservative numbers for a company with less risk. Jim

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