Don't worry, Chuckj, I'm not going to flame you over spelling or geography, nor on your choice of Glaxo as an investment. GLX is a fine company, well positioned to sell its own triple combination for AIDS therapy in about 18 months (assuming that GLX' partner Vertex follows the same linear march to success that Agouron has had.)
You're right that Glaxo is a safer investment. However, it is much less likely to double or triple than Agouron over a given time frame. Glaxo has a market capitalization approaching $50 billion, which is 50 times as large as Agouron. One way of looking at this is that if Vertex' PI and AGPH's Viracept run a dead heat, Vertex will increase Glaxo's value by 2% as much as Viracept increases AGPH. In a nutshell, Glaxo has 130 times as many shares out.
As to insider trading, AGPH CEO Peter Johnson sold some shares about a year ago (in the 30's). At the time, the company said he was establishing a pattern of selling periodically to diversify. Therefore, I would expect further small sales and will not be concerned by them.
As to valuation, Merck is generating about $500mm in annualized revenues from Crixivan, according to a Wall Street Journal article. To get that revenue, they spent more than that amount on Crix development and built two production facilities. Because the AGPH molecule is simpler, the company is contracting for metric ton production quantities and will enjoy a better margin. The three PI's on the market reportedly develop cross-resistance; Viracept alone does not. If Agouron's PI is competitive with Merck's, 4X sales would be a conservative valuation, 10X more likely. These are very big per share numbers: 4X = $147, 10X = $369. It will be many many years before Glaxo grows this far from current levels.
|
