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Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Mark Bong who wrote (8673)	3/17/2001 12:56:07 PM
From: Vector1	Respond to of 9719

Mark, they are both good value but MLNM is still getting a 3b plus technology valuation and INCY is almost at cash value. Things are getting ridiculous and the model is getting clobbered. I should have sold more in Jan but was busy and stubborn. What a mess. Some unbelievable values out there for the bold. V1

To: Mark Bong who wrote (8673)	3/17/2001 1:55:30 PM
From: rkrw	Respond to of 9719

As Vector pointed out, with its cash buffer, I agree incy has less downside exposure. These are two entirely different companies. mlnm develops drugs, incy derives low single digit royalties. I prefer mlnm. If I didn't already hold shares, I'd take the opening to start building a position in mlnm.

To: Mark Bong who wrote (8673)	3/17/2001 7:08:03 PM
From: software salesperson	Respond to of 9719

Mark, I first invested in mlnm at split adjusted 4(haven’t sold any yet) based on the premise that here was a company which consistently delivered ahead of time. I thought to myself, “self, I don’t recall ever dealing with ANY other company which ever delivered ANYTHING on time(and I’ve attempted to sell software to practically every large company in north america at one job or other). ” Certainly not a high tech company. That premise was enough for me.(I wouldn’t know the difference between a cytokine,vector or a biowa if I fell on it) As I began listening to the conference calls, with very minor exceptions, they are still delivering what they say. Mlnm is a company which has VISION, goals and realistic plans to get there. Their goal is to be a top 10 pharma company in , say, 7-10 years. At todays’ market caps , that would be about 70 billion. In 7-10 years, it would obviously be more. So, what’s the plan to get there? 1) Be profitable by 2003-4 (i) metabolic disease partnership - - accomplished with abt (ii) m&a for late stage products - - anticipated for last year; they need to do it this year to maintain credibility (iii) a groundbreaking type of deal which , I estimate , will close by 2002 , where they trade their platform expertise for real revenues from a pharma in trouble. Mlnm needs to do it by 2002 to become profitable by 2004. pharma will become more desperate depending upon how quickly each individual pharma loses their , on average, 25% of revenues to patent expirations. Pharma will become desperate long before mlnm will. When the guy from abt was on the last conference call, he mentioned that the deal covered all metabolic areas except for those products from which abt already had revenues. my suspicion is that mlnm had proposed a different deal which would have gotten them real revenues. 2) build a strong pipeline (estimates) 2000 6 2001 1-2 internal + 4-5 acquired 2002 2 abt, 1 bayer, 1 aventis, 1 internal 2003 2 abt, 2 aventis, ace2, 1 internal 2004 3 abt, 2 aventis, 1 pdli, 1 internal 2005 ditto 2006 ditto when I listen to the conference calls, the overwhelming sense I get is of master negotiators and deal-makers talking to everyone in the industry, most of which are lined up to give them money faster than the next person for fear of being left behind. In my judgment, if they are able to deals 1 (ii) and (iii) in 2001 and 2002 respectively, they will be well on the way toward attaining their 70 billion goal. But even if they are overly optimistic, and they only attain 35 billion, that’s still a long way from where we are today. If you believe this argument, does it really matter whether you get in at 23 , 27 or 32, the latter two points being my most recent entry points. Regarding incy, although I own it as well, you’re dealing with a company which is , to a large degree, passively waiting for royalty checks to reach their expected valuation(tho they are trying to become more proactive). I believe that the checks will come one day, but the timing is totally outside their control. Not to imply that the potential valuation increase is any less than for mlnm over the next 7 years. Both seem to be ridiculous bargains. My comfort zone would be to pay the premium for the industry leader who is continually transforming themselves and the industry with each transaction. Call me a control freak, but I prefer the active over the passive. sales