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Biotech / Medical : Zonagen (zona) - good buy? -- Ignore unavailable to you. Want to Upgrade?

To: Michael Young who wrote (858)	11/21/1997 9:34:00 PM
From: Anaxagoras	Respond to of 7041

<< But I didn't believe his response to the question of why SGP didn't take an equity stake in ZONA.> What do you mean, you didn't "believe" it? I think you're confused; what he said was that Zonagen, after their experience with Schering AGP and their fertility unit, didn't want to sell an equity position to SGP because they have too much influence over the stock price in the near term when the stock price doubles and then they dump. Listen to the call again (I have- twice). <<From the conference call,it appears that the rest of the money is contingent on approval AND broad labeling. Not much of a gamble for SGP.>> Sure, you can spin it that way; but you can spin anything negatively. If you consider the way these things are usually structured, you'll see that this deal is unusual in that the royalty stream is not based upon revenues- in other words, what stands out about this deal is that all ZONA has to do is get approval and broad labelling and they get the royalties, regardless of whether the thing sells. Not bad, IMO. And they already have heaps of cash bearing interest. Anaxagoras

To: Michael Young who wrote (858)	11/22/1997 3:47:00 AM
From: Paul M.	Read Replies (3) \| Respond to of 7041

Mike, I agree with you 100%. SGP has billions in cash. 10m is a drop in the bucket for SGP. SGP spends over 700m a year on research and still nets close to 2billion on 6 billion sales. If everyone is interested in equity stakes that SGP has take a look at seprecor. It is developing an antihistamine. This is more in line with SGP core product line and the founders are expatriots from SGP. Not to say SGP's top marketing expertise could not sell 200million+ of Zonas drug. Zona is risky but don't go on the word of Asensio. He is known to pick shorts but he also known to drive a stock down and dump it without telling his fellow shorters.