IMNR mention. Also another old favorite of mine-ADRX
Nov 06, 1998
Drug and Biotechnology Stock
Outlook with David Saks
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David Saks of Gruntal & Company, provides the following interview with
Mark Johnson, Editor of the Internet Financial Connection. Below is the
write up.
David Saks of Gruntal & Company, is no stranger to the drug and biotech
area. He feels that the drug industry is the single best sector to investment long
term or achieve superior and above average returns that an investor can make
in the stock market. "It is an industry that is virtually guaranteed to grow and
maintain much faster growth than the average american company because of
the needs of ever expanding aging population," says David. "As we age, we
get ill and frail, we need drugs more than any other single product... There is
no other industry on this planet that has such a bold, positive and sustainable
exciting future as the drug industry."
He sees the major drug companies pumping out a new array of products. In
1997, the big prescription drug to come to market was Lipitor by
Warner-Lamber. and co- marketed with Pfizer. In 1998, Pfizer brought
attention to a new category of sexual dysfunction and the aging process by
introducing the blockbuster Viagra. David thinks that Pfizer (PFE 106) may
offer the largest blockbuster drug in 1999, which is called Celebrex. This new
drug, he referred to as a "Super Aspirin" and will be used by people with
arthritis. "There is a huge multi-billion dollar market for this new drug," says
David. He thinks that the large drug companies are the best place to invest in.
Pfizer is his favorite stock in the drug area and has a reasonable target of
$125 within the next 12 months.
American Home Products has an extremely good drug pipeline
David notes that many other drug companies are coming out with a vast array
of drugs. Merck (MRK 138 3/8) is developing a new breakthrough drug
called Substance P. It will be used for the treatment of anxiety, schizophrenia
and depression. Schering-Plough (SGP 104 1/2) will be introducing a new
drug that will be used in the treatment of hepatitis C. They will also be
introducing new asthma drugs and may very well be leaders in the area of
respiratory illness.
American Home Products (AHP 51 1/2) has an extremely good drug
pipeline, even though their deal with Monsanto was a bust. Rapamune is a
new drug in their pipeline used for the prevention of organ transplant rejection.
David says, "Rapamune is a dramatic improvement over what is currently
available." Johnson & Johnson (JNJ 81 7/8) is getting ready to launch a
new drug for the use in the treatment of Multiple Sclerosis. Amgen (AMGN
81 1/4) is developing a new drug that regulates the appetite for weight loss
control called Leptin.
David notes that the biotechnology area is still a teenager
A smaller drug company that David likes is Watson Pharmaceuticals (WPI
56 7/8). "They are an extremely attractive company in generic, drug delivery
and specialty products." His 1 year target is $65.
In the small cap area, David's favorite stock is Andrx (ADRX 39 7/8). They
are a generic drug company and currently have about 25 drugs in their
pipeline. David mentions that they will be the first to market generic Prilosec,
currently the top selling prescription drug world wide at about $4 billion,
which is coming off patent in year 2001. They reported "breakout earnings" in
Q3 1998 and thinks their stock can hit $60 over the coming year.
David notes that the biotechnology area is still a teenager and has some
maturing to do. Many large drug companies are collaborating with smaller
biotech companies to help fund specific drugs and projects, rather than
acquiring companies. A few companies on the top of his list are Immune
Response (IMNR 13 3/8). They are working on a HIV vaccine and has a
target of $20 per share. LifeCell (LIFC 5) is a leader in tissue science and
skin wound repair. "Revenues are on the fast track and should be profitable
next year." His target for their stock is $12. Neurocrine (NBIX 5)
specializes in novel drugs that can treat diseases of the central nervous system
such as insomia , anxiety and depression. They have world class sponsors that
include Johnson & Johnson, Novartis, and Eli Lilly. He has a one year
target of $12. |
