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Biotech / Medical : Agouron Pharmaceuticals (AGPH)
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To: Tom DuBois who wrote (5191)8/19/1998 6:08:00 PM
From: biopicker  Read Replies (1) of 6136
 
Very definitely, the reason for the Agouron advance today was the upgrade to a Number 1 buy by David Molowa of Bear Stearns. The reason for the recommendation is based upon the value of Agouron to a potential corporate buyer. Four companies that he mentions in his report are DuPont, Bristol Meyers, Hoffmann La Roche, and Upjohn. He is certain Agouron wishes to remain independent, but also believes management would not shirk its responsibility to consider a reasonable bid. If they didn't, while rare he considers a hostile bid a possibility. In his opinion, the vast majority of Agouron's worth is in its protease inhibitor, Viracept, and the marketing infrastructure the company has established. He valued Viracept at 4 times estimated calendar 1999 sales of $480 million, which compares with average U.S. pharmaceuticals 5.8 multiple of sales. He really gives very little value to the remainder of the company. For example only $75 million for the MMP inhibitor. I believe he has the right idea but his estimate is too low. I have consistently believed that the value of Viracept alone far exceeds the entire market value of the company, and people are underestimating how smart Peter really is. Who knows what will come out of the 3 drugs in the antiviral area that we recently licensed. Molowa is right; there is a major disconnect between the value of the company and the market price. Good Luck to All; and HAPPY BIRTHDAY, JOHN!!!
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