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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Amigo Mike who wrote (2836)	4/8/1998 8:47:00 PM
From: Sergio H	Read Replies (1) \| Respond to of 29382

Mike, take a look at this article and tell me if it doesn't whisper ANTX in your ear........... For an enhanced HTML version of the Money Daily, visit moneydaily.com. Thursday, April 9, 1998 A prescription for biotech investing Part two of Money.com's interview with tech stock guru Michael Murphy Pfizer (NYSE: PFE) just introduced a drug that's supposed to make sex better for millions of impotent men. And American Home Products (NYSE: AHP) is battling to get Redux -- its diet pill -- on the market. The business plan behind both is simple: tap into a drug millions will use, and you've got billion-dollar prospects. Invest in the company that makes one of those drugs, and the returns could be huge. Invest in one where the drug fails, and you could lose your shirt. It's called biotechnology. MONEY staff writer Duff McDonald recently sat down with Michael Murphy, the author of Every Investor's Guide to High Tech Stocks and Mutual Funds, and the editor of the California Technology Stock Letter, to get a prescription for biotech investing. MONEY.COM: What's the basic story investors need to know when investing in biotech stocks? MURPHY: The first thing you need to be aware of is that most biotech companies are still in the development stage. Venture capitalists have to bring these companies public early because it just takes so much money and so many years to develop a drug. MONEY.COM: So it's like investing in an Internet company that isn't making any money yet? MURPHY: Not quite. Take Netscape, for example. You have no idea what they're working on and whether or not their next product is any good. In biotech it's different. They all have scientific advisory boards and you can see the quality of those boards -- are they from Harvard and Stanford and the Mayo Clinic and that kind of place, or are they from places you've never heard of. They also tend to have big pharmaceutical partners because this sector's been in a bear market for five or six years. Also unlike other sectors, the entire drug development process is in front of the public before the FDA. You know what their clinical trial results were because they have to announce them. So it's an area where there's a lot of information. There are great Web sites on most of these companies. And the prospective rates of returns are very high. MONEY.COM: What sort of returns are you talking about? MURPHY: The ones that work are going to pay off with 30 to 40 percent a year. MONEY.COM: Are more drugs getting approved these days? MURPHY: No question. In 1998, we're probably going to get double the approvals of last year -- around 50 new drugs will pass the FDA this year. MONEY.COM: So what's stopping us all from buying biotech? MURPHY: It's risky. As I said, these are development stage companies. I'm sure of the stocks in any biotech portfolio today, at least one is going to go bankrupt. You just don't have a clue which one it will be. You know, somebody's going to have a major failure in Phase III, an unexplained failure, of some drug that looked great and then it doesn't work. So you need to diversify. But if you have an interest in this area, it's very badly followed on Wall Street. It's totally under followed. There are only three biotech mutual funds. Of all 7500 mutual funds there are exactly three biotech funds, which is pathetic. MONEY.COM: What are those three? MURPHY: Fidelity has the oldest one. The Fidelity Select Biotechnology fund, which is a low-load fund. Franklin Biotechnology started one last - about October - it's the newest fund, it's a load fund. And then we have the Murphy New World Biotechnology fund which is the only no-load fund. This year we're going to see a doubling in the number of drugs that will be approved. So I think we've really hit the hockey stick in terms of companies getting approvals and finally maturing from being research projects into functioning pharmaceutical companies. And once that happens, there are a lot more portfolios willing to buy them, as you can imagine, and the stocks tend to go up quite a bit. That's what we're in it for.