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To: Mark Fowler who wrote (116646)	1/31/2001 10:22:12 PM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Mark, with $1.6 billion in cash I'm not worrying about Imnx. >Companies like those, while well off last year's highs following the much-ballyhooed mapping of the human genome, still sport multibillion-dollar valuations. That's way too optimistic, Lehman said in a report that was co-authored by McKinsey, the consultant. Genomics companies and their big drug company partners won't be reaping "fruit" in the form of new drugs or late-stage prospects before 2005, they said. Ah, the Space "Despite the recent pullback in the shares of genomics technology companies, we believe the space may still be overcapitalized by 30%-50%," said Lehman analysts Rachel Leheny and Joe Dougherty. "We also worry that there is an underappreciation of the challenges these companies will face, notably rapid technology change and short product lifecycles." The brokerage took pains to point out that it wasn't downgrading the whole genomics sector to a sell, and that it still has some favorities. Companies like Human Genome Sciences (HGSI:Nasdaq - news), Genentech (DNA:NYSE - news), Curagen (CRGN:Nasdaq - news), Immunex (IMNX:Nasdaq - news), Tularik (TLRK:Nasdaq - news) and Corixa (CRXA:Nasdaq - news) have built up substantial capability in genetics that will likely form the basis for profitable new drugs in the future, the brokers said. The Lehman-McKinsey report drew skepticism from some investors who have watched genomics stock values evaporate in the last year. "This would have been a great call a year ago," says Carl Gordon, portfolio manager for OrbiMed Partners, which holds a selection of genomics and biotech stocks. "These stocks have been trashed since then."