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Biotech / Medical : VD's Model Portfolio & Discussion Thread

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To: Peter Singleton who wrote (5283)	7/15/1998 3:27:00 PM
From: Andreas Helke	Read Replies (2) of 9719

My short list for potential 10X in 3 years price appreciation: ANIK CHAI ENMD GENZL LGND. Anika has already demonstrated that it has the potential for that kind of price increase by rising from $1.5 in 1995 to $19 yesterday. techstocks.com I don't really think that it will repeat that performance by rising to $190 in the next 3 years. But it still has a reasonable market cap of $180 million and a lot of room to grow. Its most important product Orthovisc for the treatment of osteoarthritis of the knee has a large potential market. Orhtovisc is a approved and marketed product in some countries. It is approved but not yet marketed in the European community. In the USA the NDA has been submitted in december. I did not know that company in 1995 and therefore do not know why it got as cheap as it was back then. The major asset of Life Medical Sciences CHAI is its low market cap of $11 million. CHAI does not need to become a big company to achieve a 10x return. After abandoning several product candidates it got pretty cheap. Now they have a chirurgical anti adhesion product in clinical trials that worked better than Genzymes Seprafilm in preclinical research. A major drawback is lack of sufficient cash. Combined with the low market cap that could lead to highly dilutive financing. Interested investors might want to wait until the next round of financing has been completed. This is of course a highly speculative and risky investment. EntreMed has shown promise by rising 7x over night. It has now given back most of this somewhat exaggerated gain. Now we have a biotech company that has a somewhat too high market cap for a early stage biotech company. But since endostatin is the most promising preclinical cancer drug candidate so far the current price is IMHO justified. EntreMed has a good chance to turn into a successful company. Thalidomide is in phase II trial for cancer and shows much promise. And the still preclinical cell permeation technology has much promise for improving blood transfusions and treating some hart diseases. Endostatin is the wild card that will lead to wild price swings of the shares and potentially to a major success. Genzyme tissue repair GENZL got just too cheap. Based on year 2000 earnings of $1 I have a one year price target of $20. If we take the highest earnings estimate we get a target price of $30. Include a higher PE and 2 more years of time and GENZL should not have any problems to rise to the $60 that are required to make the 10x in 3 years target. I don't think that Ligand is a 10x candidate right now. Its impressive pipeline needs a little too long to create equally impressive earnings. But if Ligand keeps in its current $10 - $20 trading range for the next 2 years it probably has to catch up with its earnings by going up 10x in the following 3 years. Andreas

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