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To: mishedlo who wrote (149560)	2/7/2002 9:11:50 AM
From: reaper	Respond to of 436258

Mish <<You are a long term kind of guy. What do you think of this risk reward?>> You are honestly talking to the wrong guy if you're talking about long-dated spread option trades. I am a simple man, long and short only, no leverage, and the very rare option that I use is the inside month for an earnings release that I think might go badly/well. So instead I'll give some price and time targets and let you build an option strategy around that, if you wish. Erbitux, if it works (big if of course) could be a $1 billion-ish drug. Under the current deal (and the deal of course is potentially in flux now; see WSJ today) ImClone gets 1/2 the economics. IDEC Pharma has a cancer drug, Rituxan, that is getting close to $1 billion, gets 1/2 the economics from Genentech (DNA), and has an $8 billion market cap (for some reason investors pay more for cancer drugs; I don't really know why). Now people will object to this comparison as they will say that IDEC also has Zevalin, which also adds to their valuation, but my personal opinion is that hopes for Zevalin are not that high and most all of that market cap comes from Rituxan. Then there is Immunex, which has for all practical purposes only one drug, Enbrel. Immunex is being bought for $15-ish billion by Amgen. Enbrel is +/- $1 billion now, although people hope that it could be a $3 billion drug in time with new indications and label expansions. So anyway, that gives me a target valuation for ImClone, if it works out, of +/- $5 billion. That would be about 5x the current share price, or +/- $75. In terms of time frame I'm thinking 5-ish years; if they have to re-do the trial it'll be at least 2 years before they can even get approved. So in an '03 kind of time frame I wouldn't be expecting too much from the stock. Downside is obviously $0 (or sufficiently close to $0 to call it $0). I am getting comfortable with that risk-reward. If today's article in the WSJ drops the price sub $15 I will probably buy a full position and just put it in a desk drawer and forget about it. Cheers