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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Icebrg who wrote (5628)	2/4/2002 12:29:44 PM
From: Hector	Respond to of 52153

ELN is a fine company and its valuation is very compelling at these level, but it's irrelevant. Fundamentals will matter very little over the next 6 months. The more important issue is how many shares the big momentum mutual funds own. Until they stop selling, the upside for this stock is in the low 20's. If you buy at these levels and hold for a few years, you'll get at least a double and probably more.

To: Icebrg who wrote (5628)	2/17/2002 4:17:49 AM
From: Icebrg	Respond to of 52153

The Future Beckons to Biotech's Faithful By KENNETH N. GILPIN BIOTECHNOLOGY companies are at work on the drugs of the future, but they are having difficulty in the here and now. The Nasdaq Biotechnology index is down about 15 percent, almost three times the decline in the Nasdaq composite index. Eric Ende, a medical doctor who is also a managing director at Banc of America Securities, took time last week to talk about how to invest in biotech stocks. Following are excerpts from the conversation. Q. Biotech stocks had a heady run in the late 1990's and in 2000. Why have investors soured on the group recently? A. They have soured on genomics companies and companies that make tools for genomics companies. But therapeutic companies, whose business model is focused on developing drugs, have actually done pretty well. For the 52 weeks ended Feb. 8, the Nasdaq Biotechnology index was down 24.3 percent. But an index of ours, which tracks genomics and tools companies, was down 51 percent during the same period. And our index of therapeutic companies was down 11 percent. Q. How many biotech companies are profitable? A. There are about 380 public biotechnology companies. Last year, about 32 companies were profitable, of which 10 to 15 are well known. We think 45 will be profitable this year. But consider this: In 1990, there were only about 100 drugs that were in clinical studies, only 10 drugs were on the market, and revenues were about $2.8 billion. By 2000, 370 drugs were in development, 92 were on the market and revenues were $18 billion. By 2005, we are looking for 800 products in human clinical trials, 197 on the market and revenues of close to $50 billion. That's top-line growth of close to 21 percent. Q. ImClone, Bristol- Myers Squibb and the Food and Drug Administration are battling over testing and marketing a cancer drug. Has this hurt the entire sector? A. I am not making any judgment about what happened at ImClone. The reality is we still don't know. I think this should be looked at as a stand-alone case. But it does wake people up to the fact that drug development is risky, and the F.D.A. is a black box. The average company spends between $500 million and $800 million to get their drug on the market. And for every five drugs that get into human clinical studies, only one ever makes it to market. Q. Has there been progress since the mapping of the human genome nine months ago? A. I didn't expect the mapping to affect anything in the near term. It is extremely important, but there is a lot more to do, with identifying targets and how they are associated with disease, for instance. I have always thought it would be 5 to 10 years before that could happen. Q. Is it fair to equate biotechnology companies with Internet stocks? A. There are no barriers to entry in dot- coms. In biotech, you need very smart scientists, a very good technology, a lot of money to develop drugs and patent protections on the drugs. And the technology cycle is very long. Drugs are on the market for 15 to 20 years. In the dot-com area, things can be outdated in six months. Q. What time horizon should investors have for biotech stocks? A. If you are buying a large-capitalization, earnings-driven company, the time horizon doesn't have to be as long as with others. You could see something positive happen over a year. But I would prefer to take a longer perspective of three years and buy at least three stocks. It's important to do that with smaller companies because they could blow up if one drug goes bad. Q. Which companies do you favor? A. The names I am recommending are Idec Pharmaceutical, Gilead Sciences (news/quote) and Cephalon (news/quote ), which is kind of a specialty pharmaceutical company but is still a great name. All of these companies have shown they can not only develop products but execute on a business strategy. Q. And for the longer perspective? A. The names I love are NPS Pharmaceutical, Cell Therapeutics and Intermune. They are all going after big market opportunities, there is enough data out there to give me comfort that what they are doing has a good probability of working, and valuations are more than reasonable. Q. You didn't mention Amgen (news/quote) or Biogen. What are their prospects? A. Amgen is in a very important part of its life. They are in the process of reaccelerating their growth rate, which has been relatively flat for a while. They are finally in the process of launching new drugs with enormous market potential. But the stock market has discounted a lot of that potential already. So I am in a wait-and-see mode. Biogen is having a rough time. nytimes.com