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Biotech / Medical : Agouron Pharmaceuticals (AGPH)
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To: Bhag Karamchandani who wrote (5252)9/3/1998 10:03:00 PM
From: George T. Santamaria  Read Replies (1) of 6136
 
It would be very interesting if one were to be very tough-minded and compare the cumulative earnings of AGPH's profitable quarters to the last 11 years or so of cumulative losses. I do believe that one gets a deficit. Kind of like considering a curve of sunken cash vs time. I think that one could show that we still have yet to realize a net gain after all these years, never mind earning a reasonable rate of return on the sunken cash.

Actually, for the reported success of Viracept, the profit margins have turned out be a miserable 5% or so and they appear to be headed lower. Recent trends have been very unhealthy.

If one would project a sunken cash curve into the future with current AIDS projects, I do believe that you cannot see the day when we get ahead. The risk discount normally assigned to future Viracept earnings is sustantial. The current new AIDS drug projects and remune will contribute very little to future expacted earnings because the average chance of success is probably less than 25%. In another words there is a substantial risk that all three projects will spend over $100M and contribute zero to future earnings.

I am relating my opinion, which is based strictly on my intuition. Haven't gathered the facts yet.
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