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

To: Vector1 who wrote (8765)	5/2/2001 12:46:27 PM
From: tuck	Read Replies (1) \| Respond to of 9719

Vector1, It's taken me some time to get over my biases. ABSC and me go a ways back in my short career as a wannabe biofreak. It was a 20 bagger for my Mom (my best best call ever, which is why I get sentimental about it), and I've profitably traded it many times. I had my Mom reenter in a couple of nibbles that probably leaves her about even now on her second try. So at first, I thought "huh?" and was disappointed, as I thought ABSC was somewhat oversold on its change in business plan. VRTX evidently agrees. But why was it buying a tool company? Other such shallow thoughts. Upon more reasoned reflection, I see that with this acquisition VRTX covers all bases in the "industrial versus biological approach to drug discovery" debate. I think that both are valid, but given the tough environment for big ticket tools, I worried that the UHTSS business was already mature (wait for the many low royalties a la INCY, but market saturated with actual machines), and that competition was gaining technologically there (Technology Partners (private UK outfit), DPII, others). VRTX gets the first UHTSS system that's up and running -- half a year now, I believe. I would imagine ABSC has scored some interesting hits that the world does not know about, but maybe VRTX does. ABSC was one of the first of the first top tier tool companies to start down the path of developing its own therapeutics, so their "Big Biology" effort is thus more developed. ABSC was a tad late trying to cash in on the bubble, and missed the window last year; we would likely have been looking at a much worse deal than the $70/share they turned down (one of their few mistakes). So I think this is their way out, and I think VRTX got a nice deal. This does indeed boost their discovery efforts and long term pipe. Shouldn't be a drag on VRTX earnings, or at least cash flow. I like VRTX and I was thinking of buying anyhow on any near term pullback into the 20s. I now agree that this helps VRTX take a giant step towards becoming a DNA or AMGN in a few more years. So I like the deal, and I plan on telling my Mom to hold her ABSC shares, while buying ABSC myself on weakness. If there is a discount related to the risk of the deal not getting done, I would take advantage of it. I see no antitrust concerns or other reasons for the deal not to be consummated. Thus it might be a good arbitrage opportunity, too, if that's your game. Usual disclaimers about forward looking statements, IMHO, etc., apply. Thanks for your thoughts on AFFX (but I'll take more specifics from you or anyone). The Trickle Portfolio is a bit overdue in putting it on its WatchList with a target, which is $25. FWIW. Cheers, Tuck