IDPH--Positive preliminary results for pivotal trial of ID Message Board

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Biotech / Medical : IDPH--Positive preliminary results for pivotal trial of ID

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To: I. Luttichuys who wrote (193)	12/9/1996 7:17:00 PM
From: Brad C. Dunlap	of 1762

Hi Bennett, I share everyone's frustration with the lousy performance and the following are a few attempts to rationalize the situation. #1 In today's press release concerning the numbers on C2B8/chemo there was a wrong number used for % of CR. I believe they incorrectly used 3% which was obvious that it was not a valid number.# 2 I remember Agouron Pharm, Gilead Pharm, and Guilford Pharm behaved poorly after they had released their phase III studies. I guess the old saying " buy on the rumor and sell on the news" applies in this situation. If you think about Idec's situation, I suspect that most of the street had already assumed that this was going to be a strong announcement and I don't think it really surprised anyone.# 3 Idec is valued on a fully diluted basis of approx. $575 million. If you subtract out $78 mill of cash you arrive at approx $498 mill for the technology. Conservatively using $65 mill and $40 mill spent on R&D and subtracting this from the valuation give a figure of approx $393 mill. There are many individuals who believe that today's valuation fully reflects all fundamentals. I understand this arguement, however, I believe that a larger valuation should apply for the success of the R&D and the potential of C2B8 and CE9.1. I also feel that the demand for C2B8 is going to be extremely high from NHL patients. If you put yourself in the shoes of a NHL patient I believe you and your oncologist would be hard pressed not to require C2B8 as a front-line therapy. When you extrapolate the numbers on the assumption of penetrating a decent % of the mkt, gives you numbers that would support a stock far and above anything that I have seen in print. The 2 analysts that cover Idec are very credible and use conservative figures. I believe that the penetration will be much greater then anticipated but this part of the story will no unfold until FDA approval. It certainly is possible for the stock to underperform in the near future but it is something that could also overperform as well. As you can see I'm as confused as everyone. Next year we have 2 IND filings on 2 products that are currently in pre-clinicals. However, the studies in humans will probably be later in 97. I don't have a confirm on what biotech conferences Idec will be attending in January and Feb. If attending at H&Q or Montgomery Sec this could create some demand for the stock. Also any postive feedback fron YB28 would dramatically add to the valuation as this is not widely followed. Anyway, a short term call is very difficult for any stock let alone a biotech. The long term performance should be more then worth the wait if one can take the risk and the volitility. This probably doesn't help much but it is the best I can do.

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