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

To: George T. Santamaria who wrote (4350)	5/20/1998 2:03:00 AM
From: Steve Fancy	Read Replies (1) \| Respond to of 6136

Table 1: Agouron Pharmaceuticals - Income Statement and Margin Analysis 1995-2002E ($ Millions Except per Share Data) Income Statement 1995 1996 1997 1998E 1999E 2000E 2001E 2002E Viracept Sales --- --- 57.0 359.3 438.1 454.6 478.3 482.8 Viracept Royalties --- --- --- 4.3 14.5 31.1 42.6 46.4 Research Income 26.7 56.0 75.1 60.8 35.0 35.0 35.0 35.0 Total Revenues 26.7 56.0 132.1 424.5 487.6 520.7 555.9 564.2 COGS 0.0 0.0 24.6 175.1 210.2 213.4 221.8 224.8 Profit Before JT 26.7 56.0 107.5 295.7 328.2 360.7 390.2 398.3 JT Payment 0.0 0.0 0.0 67.1 83.1 86.4 90.8 92.1 Gross Profit 26.7 56.0 107.5 228.6 245.1 274.3 299.4 306.2 Direct R&D Expenses 36.3 71.0 108.1 121.2 127.3 131.1 135.1 139.1 G&A 4.4 9.0 32.9 57.2 64.0 67.2 69.3 71.3 Oper. Income (14.0) (24.1) (33.6) 50.2 53.8 76.0 95.1 95.7 Net Interest 1.0 4.5 5.4 4.6 6.0 8.3 10.2 0.1 Pretax Income (12.9) (19.5) (28.2) 55.2 59.8 84.2 105.2 108.5 Tax Rate 0% 0% 0% 40% 40% 40% 40% 40% Taxes Paid 0.0 0.0 (42.9) 22.1 23.9 33.7 42.1 43.4 Net Income (12.9) (19.5) (42.8) 33.1 35.9 50.5 63.1 65.1 Avg. Shares 14.6 19.7 26.9 33.1 34.0 34.5 35.0 35.5 Reported EPS ($0.89)($0.99)($1.60) $1.00 $1.05 $1.46 $1.80 $1.83 Calendar EPS (1.58) (1.65) (0.31) $1.27 $1.26 $1.63 $1.82 ---- Year over Year % Changes Viracept --- --- --- 531% 22% 4% 5% 1% Total Royalties ---- ---- ---- ---- 234% 114% 37% 9% Total Revenues 64% 109% 34% -19% -42% 0% 0% 0% Profit Before JT 64% 109% 92% 175% 11% 10% 8% 2% JT Payment ---- ---- ---- ---- 24% 4% 5% 1% R&D 52% 96% 52% 12%5% 3%3%3% SG&A 47% 107% 265% 74% 12% 5% 3% 3% Operating Income NM NM NM NM 7% 41% 25% 1% Pre-Tax Income NM NM NM NM 8% 41% 25% 3% EPS NM NM NM NM 5% 39% 23% 2% Margin Analysis Corp. Gross Margin 100.0% 100.0% 81.4% 48.6% 45.5% 47.8% 48.9% 49.1% Viracept ---- ---- 56.8% 57.0% 57.0% 58.0% 58.5% 58.5% R&D 135.9% 126.9% 81.9% 25.8% 23.6% 22.8% 22.1% 22.3% SG&A 16.3% 16.1% 24.9% 12.1% 11.9% 11.7% 11.3% 11.5% JT Payment ---- ---- ---- 16.6% 17.0% 17.0% 17.0% 17.0% Oper. Income NM NM NM 10.7% 10.0% 13.2% 15.5% 15.4% Net Income NM NM NM 7.0% 6.7% 8.8% 10.3% 10.4% Source: Company Reports and Merrill Lynch Research Estimates

To: George T. Santamaria who wrote (4350)	5/20/1998 11:17:00 AM
From: tommysdad	Respond to of 6136

You asked for a comment on stock option plans. Specifically, for biotechs, if you don't have a generous stock option plan you cannot attract talent. Period. Why? Because Big Pharma can throw lots and lots of money at talented scientists in the form of signing bonuses ($10K is not unusual for a medicinal chemist, for example), matching 401-K plans (1:1 up to 5% is typical), housing allowances (paying the points and even a percent or two on the loan, maybe). Being cash poor but stock rich, Biotechs cannot do this. What they can do is offer a longer-term, potentially larger payoff in the form of stock options. If you want the kind of talent that discovered AG3340 and developed Viracept, you need to pay for it in some way -- Biotechs are forced to choose options to keep their burn rate low. I am not familiar with AGPH's stock option plan in particular, except that is not overly generous compared to other Biotechs. But it is not uncommon for stock options to have a 5-6 year lifetime. Could simply be a lot of AGPH employee options are expiring now.