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Biotech / Medical : A Biotech Bonanza! -- Ignore unavailable to you. Want to Upgrade?

To: Alys Hall who wrote (25)	10/28/1997 11:19:00 AM
From: Giuseppe Scalamogna	Respond to of 64

Are the blue-chip drug stocks now attractive? I think they are more fairly valued now. One issue here is how some of these smaller biotechs are evolving into mid-cap and in some cases large-cap stocks. I don't think this bodes too well for already entrenched companies like Merck, Lilly, and Bristol-Meyers. I personally think they will face increased competition not only from amongst themselves here on out. The big company's advantage in here is more of a simple cash issue. They can go in and take over some of these proprietary companies for the underlying technology they present. In the case of Supergen, the Extra technology provides a whole new area of opportunity as it doesn't focus on a single drug. What happens though when some of these smaller biotechs vastly improve their operating cash reserves. Small-caps in general have outperformed the market historically. Small-cap investing however is often misconstrued as some type of general phenomenon. It is more for knowledgable investors who can tilt the problems of assymetic information in their favors and score gains much higher than that of the generalized small-cap universe. Going forward, small-cap investing will rely on the ability of companies able to target niche markets which are sometimes untouched by other companies. Going up against larger companies and competing for their business is usually a death sentence. That is why I like biotech so much. Many niche markets are pristine and there for the grabbing. I am focusing most of my portfolio and overall attention to biotech/medtech companies. I think in the long-run this will pay off most. GS

To: Alys Hall who wrote (25)	10/28/1997 11:28:00 AM
From: Giuseppe Scalamogna	Read Replies (1) \| Respond to of 64

In response to the generic drug market and Supergen... The vibe I am getting here from SUPG is that they do not intend to focus so much on generic formulations of current anticancer products. The initial focus of this generic strategy I think was more of a marketing/ notierity issue which has been more better served by Nipent. In speaking with the company I found that they still outsource manufacturing for the products which tells me they don't plan on making generic formulations a main focus. Part of this is a cash-burn issue. They would need to expend alot of capital to tap into their proprietary fermentation process which supposedly is the most cost-effective system on the market. More focus I think is being placed on the EXTRA technology and movement of proprietary new anti-cancers to market such as RFS-200 a possible competitor for Taxol. The Supergeneric or EXTRA formulations put an interesting twist into the generic framework. The product is much more attractive for use and can consequently chalk up much bigger sales. Notice the focus isn't to find the mother of all cancer drugs to replace everything. That is a much riskier strategy. Supergen is leveraging and hedgins itself in here very well. More to come... GS