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Biotech / Medical : Agouron Pharmaceuticals (AGPH)
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To: Peter Singleton who wrote (4973)7/23/1998 10:08:00 PM
From: schadenfreude  Read Replies (1) of 6136
 
>>I worry about whether Peter Johnson is focusing too much on the stock price, and the bear raid by the shorts. Unless they need to raise equity capital, the stock price over the next year is much less material to the success of the company than how it executes. <<

>>What they need to do with the first big product is to take the free cash flow from the rights they've retained and plow those into their pipeline. The pipeline will be their earnings engine. The way to get there is the cash flow they keep from Viracept.

That said, by inlicensing the three HIV products, and by continuing the development of their (mostly) early stage but extremely promising other programs, they're putting themselves in a position for tremendous earnings growth in the out years. And they don't need to go to the equity markets to get there. They don't need to sell off rights to corporate partners for cash to fund development ... they can strike deals when and if they make strategic sense. Its an enviable situation to be in.<<

Great post! I concur totally. While the oncology spin-off may gain support for AGPH on Wall Street, I don't see it adding to the long-term value of the company. I think Johnson made a hasty decision that he might come to regret.
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