Rick:
I just don't think any of there AD Stuff (AB and ACH)is very worthwhile...but I found this on Yahoo....you may be interested
As a sidenote, I remember Steve Gorlin talking up NPS on cnbc a few months back....and here BVF is giving them a "wake-up call"
Curran On The News: Biotech Chill- Federal Filings via Dow Jones Biotech Chill WASHINGTON (FFBN) --
Long-view investors who in today's uncertain markets can still manage to be enthralled with the lower-priced tier of
biotechnology companies working on the next generation of blockbuster medical treatments may have noticed that the
winds of market sentiment got a bit more chilly on Wednesday morning. That's when one of the er-known funds
investing in this sector fired shots across the bows of 17 firms in which it holds major positions, telling them to carefully
husband their liquidity for fear that rough seas lay ahead in raising additional capital to fund operations. Firing those
shots was Biotechnology Value Fund L.P., a partnership that should be no stranger to investors who pay attention to
ockholder ownership filings at the Securities and Exchange Commission. Over the past several years, it's difficult to
recall any other single entity that has shown up in SEC filings as a more active and remarkably patient buyer of small cap
biotech stocks. With investments spread out over a wide range of these drug development companies, the fund's
strategy seems clear: diversification among a lengthy list of the best names in the sector should yield a nice payoff in the
longer term, requiring only a small number of those firms to succeed in commercializing their inventions on a large scale.
Given that today's biotech stalwarts such as Amgen (AMGN), Genentech (GNE) Centocor (CNTO) Immunex
(IMNX), and Biogen (BGEN) were at one time all in the same boat as many of today's loss-making members of the
sector, the potential investment rewards from the sector are tempting. But for the small firms that haven't yet made the
leap, Biotechnology Value fund issued a fairly serious warning on Wednesday. ... the fund said that it may seek to work
with management to maximize shareholder value. Rather than the er-type overtones that such language from
shareholders typically might impart, Biotechnology Value Fund's urgings take a more down-to-earth form: conserve
cash and don't dilute existing holders by launching new stock offerings. Specifically, the fund advised the firms to protect
the value of partnering agreements that they have with larger drug firms. Typically, these arrangements involve the larger
firms financing several million dollars worth of drug-specific research and development activities by the smaller firms, in
exchange for the right to market new products and take big shares of the resulting revenue streams. Prudence on the
expense side, BV Fund argues, is required because the external environment for small biotech companies is "undergoing
change due a convergence of a depressed equity market, the possible slowing pace of corporate partnering activity and
escalating cash burn rates" at many smaller firms.
The result, the fund says, "could produce an industry shakeout in which financially conservative companies prosper and
financially weak companies falter." Absent development deals with larger companies, small biotech firms often have few
options for raising cash other than trying to sell more stock. In times of rising markets and high optimism, investment bankers
have a better chance of generating some sizzle for a promising biotech firm seeking to float more stock at a good price. But
as a fund spokesman told FFBN's Drug & Medical Device desk on Wednesday: "There's tremendous uncertainty in both the
broader market and the biotech industry." "Equity offerings in this market would be very difficult...we don't want to see more
dilution," the spokesman said. Even in the best of times, serious investors in the small cap biotech sector must maintain a high
degree of patience, and often are required to wait several years for small companies to develop and commercialize new
products. But that degree of patience comes more easily when robust performance in other market sectors is available to
offset these riskier plays. Making any new equity offerings all the more perilous for small biotech firms is the dismal stock
price performance over the last 18 months. Stock prices of small biotechs as a group are off 18% so far in 1998, following a
3.9% dip in 1997, according to indexes tracked by FFBN. In comparison, the large cap drug sector scored a 46% return
last year, and is still up 21.6% this year despite the market's recent performance. Those firms receiving the wake-up call
from Biotechnology Value Fund on Wednesday include: Recent Price 52-Week High
OSI Pharmaceuticals (OSIP) $3-3/8 $11-7/8
NPS Pharmaceuticals (NPSP) $6-3/8 $11
Trimeris Inc. (TRMS) $6 $17
Neurogen Corp. (NRGN) $12-3/4 $28-3/4
Sibia Neurosciences (SIBI) $3-3/8 $9-1/8
Autoimmune Inc. (AIMM) $2 $4
Cima Labs (CIMA) $3 $7-1/2
Guilford Pharm. (GLFD) $11-5/8 $32
Advanced Magnetics (AVM) $6-3/4 $15
QLT Phototherapeutics(QLTIF) $13-5/8 $20-3/8
Chrysalis International(CRLS)$1-1/4 $4-1/2
Arqule Inc. (ARQL) $5 $29
Repligen Corp. (RGEN) $1-3/8 $3-1/2
Protein Polymers (PPTI) $1 $3-1/4
Cortech Inc. (CRTQ) $1/2 $7/8
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