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Biotech / Medical : sgp(schering plough) -- Ignore unavailable to you. Want to Upgrade?

To: Home-Run who wrote (112)	12/11/2003 5:00:43 PM
From: Home-Run	Read Replies (1) \| Respond to of 117

Realistic SGP valuation II by: the_enemy_within_02 12/10/03 11:30 pm Msg: 23665 of 23689 Zetia has so far had no significant contribution to SGP's gross. Let's look the comments the UBS analyst makes: "'Zetia-zocor is a good drug and clearly has a role in the treatment of cholesterol. But we don't believe the profile is significantly better than current therapies and continue to believe the most optimistic of scenarios is factored into the stock,' Sylvester said. The analyst also argued that the profitability level for the Zetia-Zocor joint venture with Merck will be low and he expects the franchise will likely face a very difficult pricing environment with 35 percent of the statin market going generic in 2006." The comment 'believe the profile is significantly better than current therapies" is just reflective of someone who has no understanding of the LDL problem. In Oct. a supposed head to head study of Lipitor and other statins, mostly pravastatin, demonstrated in a rather unique way that LDL's have to be at 80 or less to totally inhibit plaque deposition (and, in my opinion there will be a future finding that LDL's below 80 will reverse plaquing.) No current statin reaches this reliably and effectively (Crestor may be the exception but will have to be evaluated over time). I predict that there will be two significant developments soon: 1) physician shift to this way of assessing effective lipid control; 2) Zetia is the only effective addition right now that, in combination with statins, achieves these goals with almost no side effects. Unlike Rebetrol whose primary users, in the aggregate, are not a reliable or informed population (with many notable exceptions), the cholesterol market is targeted at a more motivated population to manage its health, the middle class. With the big bulge in baby boomers reaching the age where CV diseases will begin to be the primary cause of morbidity and mortality, the market for statins, despite it transient "leveling off" in this past year, is about to resume its incredible franchise. In addition, unlike the stupidity of some other analyst who claims that the medicare bill will be bad for pharms, the medicare bill could not have come along at a better time for the burgeoning distribution of statin/Zetia combination. Besides being used with Zocor (the Merck/SGP combo), Zetia will be used in combination with almost every other statin with the possible exception of Crestor probably 80% of the time. This will translate into a $10 billion blockbuster that will change the financial picture for SGP significantly. If SGP is a 50% partner on Zetia alone (although I can not find in their info the exact split), this will mean at a minimum of $5 billion. Lets say SGP returns to $10 billion on the basis of their other markets alone and Zetia adds $5 billion. The numbers then will look something like the following: Sales of $15 billion, gross of $12, net after SGA and research of $4.5 billion; - $1.3 taxes = $3.2 billion/1.6 billion shares = $2 per share. At a current price of $16 we have a future PE of 8:1. If the split on Zetia with MRK is higher, the income will be higher. Lets compare this analysis with less than $1 target he says would be unachievble by 2006. The most uninformed comment this analyst made was related to the effect of the statin market "going generic". Great, with a generic statin market Zetia will be even more attractive as an add-on because the total cost will be less. What does that have to do with Zetia's prospects? Just the opposite of what he says. So, on that basis the stock tanks $.70. Does this analyst need another job? Probably not. By the time reality dawns on this analyst everyone will have forgotten his analysis and he will still be seen as a valuable source of information!!! From YAHOO message broad