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Biotech / Medical : Biochem Pharma (BCHE) -- Ignore unavailable to you. Want to Upgrade?

To: Jim Oravetz who wrote (678)	10/30/1999 1:52:00 PM
From: Steven Yang	Read Replies (1) \| Respond to of 783

Jim and other BCHE investors, I think that BCHE has become a 'value biotech' stock, if such a notion exists at all. The driver for BCHE for the next two years will be the sale of its HB drug. Due to the lackluster sale of this drug in the first half of 1999, analysts have basically discounted the sale potential of this drug, which is the reason for the weakness in BCHE share price. In my view, this is exactly the opportunity. From the medical point of view, the drug works very well. According to a report from GLX about two months back, the cure rate is more than 60%, if the drug is taken for three years. This is almost unheard of for any chronic disease. Such an effectiveness, plus easy to take (once-daily, oral), fewer side effect, and lower cost mean that this drug will replace the current treatment and become a standard in chronic HB patient treatment. Over the past year or so, the competition landscape becomes better for BCHE as well. The drug candidate from BMY was taken off the trial for HB due to safety reason. The drug from GILD causes some kidney problem. As a result, I think that it could be approved for HIV treatment. But, it is not going to be a competition for the treatment of chronic HB patients. The drug (Famvir) from SBH is no longer targeting at HB any more, according to the info. from SBH's web side. Thus, there is no competition for BCHE's HB drug that is beyond Phase II trial. It means that GLX will have the field to itself for at least four to five year to establish the standard. What about the affordability issue since most of the HB patients live in developing countries like China? Taking China as an example, about 120M people carry the HB virus. Of that number, about 30M people have the virus which is active. In China, about 30-35% of the people live in cities and towns, and have better access to doctors and have better living standard. Considering the fact that a lower percentage of HB carriers will become active if their living standard is better, I estimate there are 5M patients in China who live in cities and towns who will be treated if cost is not an issue. According to BCHE/GLX, the drug will cost $500 (or 4000 Yuan)per year in China. In comparison, the medium gross income per family (couple and a child) is about 25000 Yuan per year, and the top 20% families has a mean income of 60000 Yuan per year. Thus, the affordability is not a very serious issue. I think that GLX should be able to get 300K patients before the reimbursement program kick it, and have up to 1M patients once the program starts in 12-18 month. The sale would be $150M for 300K patients, and $500M for 1M patients. Given the size and marketing power of GLX, there is a very good chance that the above figures can be reached. Given GLX's situation, I have to think that they will be working very hard to get the next blockbuster going. In addition to China, one has S. Korea, Taiwan, Japan, and Europe (particularly Italy and Spain). It is conceivable that this drug can bring in more than $800M per year. Steven ps: I am long on BCHE, for disclosure.