Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Bill Harmond who wrote (320)	5/19/2000 3:39:00 AM
From: allen menglin chen	Respond to of 57684

FUND VIEW-Biotech valuations to triple over three years Thursday May 18, 6:32 am Eastern Time biz.yahoo.com By Nick Edwards HONG KONG, May 18 (Reuters) - Nasdaq-listed biotechnology shares could see valuations triple over the next three years as U.S. federal drug approvals and the coveted patents that go with them begin to be awarded, a senior fund manager said on Thursday. ``Within the next year to three years the sector's valuation is going to double, if not triple,'' Michael Weiser, research director at biotech hedge fund, Paramount Capital Asset Management, told Reuters. ``There are only 12 profitable biotech firms now,'' New York-based Weiser said on the sidelines of the Asia Pacific Global Hedge Funds Congress in Hong Kong. ``That 12 will become 24 over the next couple of years. You've got tremendous potential when these firms become profitable.'' Biotech stocks have been slammed since peaking in March and the benchmark Nasdaq biotech index (^IXB - news) that covers more than 200 U.S. and European firms, languish some 38 percent below its 1,619.98 high. Investors have cashed out of the market, driven in part by the general sell-off in technology stocks and fears that legislation will prevent biotech companies from patenting products devised using genetic research. Gene research is key to the drug development work done by pharmaceutical-based biotech firms and Weiser -- a surgeon whose firm is owned and run by seven medical doctors -- said over-regulation was still a risk. ``The biggest risk factor we face is legislative risk, but even that risk is small. Regulations are going to take years and the industry will see them coming a mile off. Also the industry is designed to save lives. I think regulators will be careful,'' he said. And that is positive news for the 23 biotech firms which have 44 drugs currently awaiting approval by the U.S. Food and Drug Administration (FDA). He said about 400 biotech drugs were in stage three clinical trials, the point immediately before being submitted for FDA approval. Weiser said applications were at record levels and about 85 percent of biotech drugs were approved on average by the FDA. The approval -- at its fastest a three-year process -- is crucial to biotechs as without it, their drugs cannot be sold. Weiser estimates an approval is worth about $250 million to $300 million a year in revenues during the lifetime of a drug's 17-year patent. ``The patents are the big difference between biotech and Internet firms. Biotech developments are protected, you can't say the same for Internet or other technologies because you can reverse engineer them to get around a patent,'' he said. BIOTECHS TO GAIN ON PHARMACEUTICALS Weiser said the sector was undervalued at its March peak and would gain on the mainstream pharmaceuticals companies which had been busy merging to create big distribution operations at the expense of cutting edge drug development. ``(Mainstream) pharmaceuticals companies have used their capital merge with each other. They've got big distribution networks and that's where they will devote money in the future. Drug development will come from the biotechs,'' he said. Weiser's six-year-old fund has $850 million under management, invested in about 80 long and 75 short positions. It has delivered a 54 percent annualised return since inception. It was up over 100 percent in the first three months of the year before the correction hit. The fund is now up about 22 percent on the year, outperforming the Nasdaq biotech index which is up 13.7 percent so far this year and recovering 24.3 percent from its April low. And Weiser said the sector's outlook was bright. ``People live longer, the world's population is growing, telemedicine is expanding the global reach of medical care, preventative medicine is more popular. These are all good reasons why drug sales are going to continue to rise,'' he said.