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Biotech / Medical : Agouron Pharmaceuticals (AGPH) -- Ignore unavailable to you. Want to Upgrade?

To: Oliver & Co who wrote (3094)	12/3/1997 10:47:00 AM
From: Bhag Karamchandani	Read Replies (2) \| Respond to of 6136

Typically shorts have a short term perspective, because they feel the stock is currently overpriced - technically or otherwise, but only in the very short term. However, AGPH has been charcterized by a very large number ( 5- 7 million shares out of approx. 15,000,000 shares outstanding) of very longterm ( over six months ) shorts. According to savy street experts, this suggests that these shorts were in the know about fundamental negatives not available to the individual small ( retail may be more appropriate) investor. In an earlier post, I pointed out that AGPH showed disproportionate accelerated price increases for several weeks prior to two crucial and positive press releases in 1997, followed by very sharp ( seemingly unjustifiable and unwarranted) drops upon formal release of the news. To a degree this is typical, but again, the volume and activity suggests, accumulation by people in the know ahead of others , often for several weeks in advance of the small investor, who came in purchased AGPH on actual news only to lose money each time, despite seemingly contrary fundamentals. In other words, profits were clearly at the expense of investors whose only access to information is AGPH Investor Relations and press releases. I think this maater is worth serious investigation by NASDAQ and the security monitoring watchdogs. IMHO. Good luck to all.

To: Oliver & Co who wrote (3094)	12/3/1997 12:06:00 PM
From: margie	Read Replies (4) \| Respond to of 6136

re: Remember my note on Nov 21st? Oliver, Yes, I remember your question too well. I really did think the price drop on November 20 and 21 was all options related and that the price would rebound. I certainly did not know about Roche's decision and I feel like a fool for telling people not to panic and sell on November 21- options expiration day and hope I did not mislead anyone.It was my opinion. I never thought the price would get this low and I am upset, as other longs must be. I have been buying on the way down, thinking it was the bottom. Wrong! I certainly hope this is it. The stock price was three times as high last year, when the company had no revenues. Now with 450 million for FY 98, and $550 million FY99, this price is a travesty. I was very disappointed to hear the news about the discontinuation of Thymitaq but at least the company behaved in an honest way and did not drag the clinical trials out when they "unblinded" the trials and saw that the results did not show any superiority to drugs already on the market. At least they did not burn money by dragging hopeless products through Phase III clintrials. AND THE STOCK HAS CERTAINLY PAID THE PRICE. PW had estimated that Thymitaq would generate only 17.5 million in revenues, representing less than 3% of total product revenues in FY 2000. Paine Webber has not changed revenue estimates for Viracept. How many companies, let alone biotech companies have revenues of 450 million (estimates FY 98), in their first year of profitability? Agouron has 29% market share of the protease inhibitor market in its first six months on the market and has executed a very successful drug launch against giants like Merck, Abbot, and Roche. And the total market for protease inhibitors is increasing, not decreasing. As far as claims that Agouron is overvalued: (imo, bs) 30.3 mm shares @ $29 = $878. market cap. They have $99 mm in cash. At $29/share and $550 in '99 sales, Agouron's price to sales ratio is 1.5 to 1. Amgen is 7, Chiron is 3.5. How can anyone think Agouron is overvalued at this price? The problem with AGPH is that it will be perceived as a one-drug company for some time. Centocor is very successful and has annualized sales under $250mm, for comparison. Sales of Viracept were $79 million just this last quarter. Estimates are FY 98 for Viracept US revenues are $450 million and $550 million for FY 1999. (Fiscal year ends June) Vertex will not be on the market until 1999, and there is no indication it is "better" than viracept, contrary to David Crossen's claims. Even if integrase inhibitors or other gene therapies gain approval, which would not be for at least 4 years, there are comments in the literature they will probably be used in quadruple therapy. It is necessary to have an arsenal of drugs available, for patients who do not respond to certain ones, and it is ridiculous to think (as some analysts have suggested) that patients who are responding successfully to their current regime may be switched to new therapies. And vaccines are 10 years off. The end of the collaboration with Roche will decrease contract revenues for 99 and 2000. In the near term Agouron is exploring licensing opportunities for later stage products for cancer and HIV infection to augment its pipeline. Who knows why Roche discontinued the cancer drug collaboration. PW believes that Roche's decision to end the collaboration has nothing to do with the product itself (AG 3340, the MMPI). According to PW, Roche is in the midst of a large acquisition of Boehringer Mannheim/Corange and has to prioritize its collaborations. Maybe there is a conflict of interest with products from other collaborations. Roche is also in the midst of an internal reorganization. In some respects this is not dissimilar to when Agouron reaquired rights to Viracept from Eli Lilly, which chose to discontinue its involvement in this program in 1993. Agouron certainly benefited from the end of that collaboration. Agouron intends to pursue development of the MMP inhibitory and other cancer products (e.g. Gart) aggressively and has the opportunity to potentially reap significant upside from these cancer products in the future. The marketing collaboration with Roche for Viracept in Europe and certain Asian countries remains intact with European approval of Viracept expected in early 1998. Agouron has the money to support it's cancer program. At least it won't have to share the profits. It is unkind to think this, and may be way off base, but maybe Roche felt that they didn't need Agouron anymore, now that they have acquired the rights to market Viracept in such large markets as Europe and parts of Asia, where they are already selling saquinivir, the weakest protease inhibitor (IMO). They need Viracept to help make their protease inhibitor successful, as studies underway have shown that Viracept significantly increases the bioavailibility of Saquinivir. I heard that viracept/saq is already being used as a dual protease inhibitor in parts of Europe. (according to Dr. Gallant , in the Body). European sales of Viracept will benefit Roche, and obviously Agouron. Agouron will receive royalties from Roche on European sales of Viracept or Saquinavir. The amount of royalties will be from whichever drug has higher sales, and the percentage of royalties will increase with increasing sales. LMoss from AOL corrected me on this. I had mis-stated the royalty arrangement previously. The basic point remains that Roche does not have a strong incentive to push Saquinavir over Viracept. Plus Agouron will receive an $11 million royalty payment from Roche upon European approval. BTW, I heard that George Soros was short, but is now long. (unconfirmed). He has taken positions in Biotech companies lately.