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Biotech / Medical : Millennium Pharmaceuticals, Inc. (MLNM) -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (1668)	6/30/2003 11:11:41 PM
From: PCSS	Read Replies (2) \| Respond to of 3044

Goldman-Sachs' take tonite: Yesterday, Millennium entered into a development and commercialization collaboration on Velcade with Ortho Biotech, a subsidiary of Johnson & Johnson (JNJ). The timing of the agreement is in line with Millennium's stated goal of establishing an alliance on Velcade by the end of Q2/03. While the upfront payment of $15MM, might be considered low, we believe Millennium's key objective was to retain US rights and share development costs/risks. Having $1B in cash to support operations in the next few years, we had expected Millennium to structure the alliance for long term benefits rather than near term cash payments. We view the agreement as positive both financially and strategically: 1) MLNM retained all commercial rights for Velcade in the US (which represents 60-70% of the global potential). 40-45% of global development costs are paid by JNJ. The total development costs could reach $0.5B. 2) The reimbursement of development cost and milestone fees could reach $750MM, exclusive of royalties. Part of the cash flow and the option to copromote in Europe should allow MLNM to build an infrastructure in Europe, if it so desires, in preparation for the launch of other cancer products, such as anti-PSMA for prostate cancer, MLNM 578 for acute myeloid leukemia and MLN 579 for cancer. All three products are in Phase I trials 3) Sharing development cost of new indications with JNJ also reduces the risk and increases the likelihood of reaching MLNM's goal of profitability in 2006. 4) JNJ's development and commercial infrastructure should speed up the penetration of Velcade outside the US. Furthermore, JNJ's financial support and expertise may accelerate the development of Velcade for new indications, including non-Hodgkin's lymphoma (NHL) and solid tumors. We maint. our InLine rating based on the momentum from the Velcade launch, a broad pipeline and good cash position. Risks to our rating include slower sales of Integrilin, failure in clinical development and aversion to high-risk stocks. Our coverage view remains Neutral.