Ariella,
Here's a transcript of tonight's NBR segment on buying Biotechs:
" Before Buying Bio-Techs, Do Some Research
SUSIE GHARIB: And what a week it was. Well, biotech stocks could be hot again. Analysts say it's
because of partnerships with big drug companies and also the approval process for new drugs is faster.
But as Diane Eastabrook reports, investors still need to do research before buying.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: This Seattle
laboratory may hold a key to preventing cancer. Corixa (NASDAQ:CRXA) is considered a leader in
the development of cancer vaccines. The three-year old biotech firm went public last year, raising more
than $40 million. But developing a successful vaccine will take millions more. That is why Corixa has
formed early partnerships with pharmaceutical companies like SmithKline Beecham (NYSE:SBH) and
Abbott Laboratories (NYSE:ABT). The partners fund research and would share the profits of
successfully patented drugs.
STEVEN GILLIS, PRESIDENT & CEO, CORIXA: Our approach has really been to diversify that
risk if you will and leverage it on the backs of partners who are far stronger, whose balance sheets are
far stronger than ours. And therefore mitigate if you will against the risk of not being able to raise that
equity capital.
EASTABROOK: But some biotech companies are becoming more hesitant to partner too early with
large pharmaceutical companies, fearing the potential loss of intellectual property could lead to a loss in
profits later on. Icos (NASDAQ:ICOS) is one such company that believes it's better to raise cash
through stock offerings rather than partner early or at all with a pharmaceutical firm. CEO George
Rathmann says alliances on drug development can potentially turn both investors and partners into
losers.
GEORGE RATHMANN, CHAIRMAN & CEO, ICOS: It doesn't do us a lot of good to spend a lot of
time with a partner on something that isn't going to work and so on the downside, if it isn't going to
work, let's find that out ourselves. On the upside if it is going to work, let's find that out so we can get
full value when we do a relationship.
EASTABROOK: Many analysts recommend investors look closely at partnerships before investing in
biotech companies.
PETER DRAKE, RESEARCH DIR., VECTOR SECURITIES INT'L: If they partner, are they
partnering in a big market where they receive a fat royalty or are they partnering in a niche market
where they're not going to receive a very big royalty?
EASTABROOK: Corixa says the only way it will receive a royalty is to develop a successful drug. The
company says partnerships allow it to spend time trying to do just that instead of spending time trying to
raise research money. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Seattle.
Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by
FDCH. Updates may be posted at a later date.
The views of our guests and commentators are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT.
Information presented on Nightly Business Report is not and should not be considered as investment
advice.
(c)1998 Community Television Foundation of South Florida, Inc."
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