Kis, have you ever thought about buying Bio-techs?
>
The search is on! If there is one thing that never passes by investors'
noses, it's the smell of someone ELSE making money! And as the biotech
sector continues to garner headlines, and several individual stocks
continue to go through the roof, investors who weren't in biotech two
months ago want to get in, and they want to get in NOW.
BUT.
They want to get in on a winner. They want the "next" Celera, the "next"
Human Genome Sciences, the "next" Millennium [all in our portfolio!]. So
they are searching, scrounging, calling every contact they ever made,
trying to get that golden nugget of information that will help them pick a
winner.
Well, we hate to burst anyone's bubble, but unless you plan on doing
something illegal, you are much better off looking for a great company
that people have heard of than a hot tip on a mystery company. What do we
mean? Start looking for companies with a great reputation, for companies
that have successfully brought products to market in the past. Find out
what the drugs they are researching actually do.
Do your homework. It will pay dividends. This is true of for all
investments, but it goes double for biotechnology companies, especially
small caps. Funny thing about smaller biotech companies -- if their
patent efforts fail, if their drug does not get FDA approval, if the
research team hits a wall, well, that company can realistically cease to
exist. Should this frighten investors? A little. But more importantly,
it should compel investors to take their time, and invest wisely.
Case in point, Celera (CRA, $167, up 17.) Those who got in early are very
happy, but that doesn't mean that it is too late. Their research has been
validated to some degree. There is proven demand for genomic research.
Sure, they are not likely to go up another 500% in the next two months,
but that does not mean that they have ceased to be a quality long term
investment in biotechnology. They remain a quality investment because
they have something that no other firm has - a map of the human genome.
Now it is up to the firm to figure out a way to sell this information to
the giant drug companies. Pfizer has already bitten. Who, if any, will
be next? Risky? You bet.
With regards to a smaller company, we return to Biomira (BIOM, $12, unch),
as we so often do. They have, in recent weeks announced a further
acquirement of $100 million in funding and have presented positive news
regarding their clinical trials which are currently in progress. The
further investment tells us those who are privy to the day-to-day results
of the clinical trials are confident enough to invest significant
additional cash. That certainly shows confidence that their cancer
vaccines, including Theratope, have a great chance of going to market.
Does this make them a sure bet? No. But what does appear to be true is
that the risk inherent to investing in Biomira is dropping, while the
price is remaining reasonable. This to us is a sure sign to buy. We have
a solid portfolio of secure biotechnology companies, so we can confidently
invest in a more speculative company such as Biomira. This is where we
are shooting for the big winner, and so far, so good.
The moral of the story: Don't invest until you speculate, but don't
speculate so long you miss your opportunity to invest.
In the interest of getting you going, here are two companies that we are
currently looking into. Maybe you want to do a little speculating
yourself. The first is Matritech Inc (NMPS, $9, up 2). Worth less than
$200 million, it is smaller and riskier, but maybe you may see a bright
future for their research and products -- a blood-based protein for
detection of breast cancer and collaboration on a prostate cancer test
with Johns Hopkins University School of Medicine.
The second is Gene Logic (GLGC, $112, up 7). They are a larger company
($2.7 billion market cap) that have been around for a while, and are
beginning to really turn heads. They develop proprietary genomic
information products, software, and research services and markets them to
the global pharmaceutical and life science industries.
Take a look. You may find a winner. |
