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Biotech / Medical : MRE (medco research) -- Ignore unavailable to you. Want to Upgrade?

To: Harold V who wrote (98)	7/1/1998 1:11:00 PM
From: Harold V	Respond to of 192

MRE's recent price action has been wonderful! Given the one analyst's estimate that MRE's upcoming quarterly earnings will be impressive, but that after that, MRE will see a fall in its 1999 earnings in comparison to its 1998 earnings,I wonder what the excitement is all about. I've been guessing that the recent rapid rise in share price is due to fund manager's positioning their portfolios to reflect that they were holding and buying MRE as its price rose from $14.50 at the first of January to $25.50 yesterday. But today the stock is up another $1. Do any of you have information that would account for MRE's rise in price? And what do you foresee where the next days and weeks will take us? Periodically, MRE has reach "breakout levels," but the present breakout exceeds others this year. Thanks very much. Harold V

To: Harold V who wrote (98)	7/1/1998 9:35:00 PM
From: Xiaoping Zhang	Read Replies (2) \| Respond to of 192

Re: Tax Rate. I looked into the most recent 10Q (3/98) for clues why the past 5 Qs had very low tax rates. I found the reason as I suspected - carryover of the operation losses from previous years and credits for R&D. The next question then is how long the company can enjoy the low tax rates. I have been very busy with my research work and only late in the afternoon on Monday did I had a few minutes to send an E-mail to the company, asking the question. To my pleasant surprise, next day (Thuesday) noon I received an E-mail with a straightforward answer. I present a part of the E-mail below to share with anyone interested in this issue: "With respect to the tax rate, it remains to be seen what will be spent on adenosine for cardioprotection during the remainder of 1998, but at a constant rate of product sales, and no dramatic change in R&D spending, the company should paying the full rate midway or during the 3rd Q of 1998". I appreciate the frankness of the company. I pose this information to let everyone know so that no one will get shocked when the EPS number comes short of expectations. Do not get me wrong; I am very bullish on this stock. I just do not want some of the investors/traders to be unprepared and to sale the stock in panic. This company has very sound fundamentals (sales and EPS increase, lots of cash and no debt, a pile line of potential new drugs - especially the MEDR640 that drives everyone's expectations, an effective business model of outsourcing research and manufacturing - now in the transition from a royalty company to a sales-based company). The returning to normal tax rate around 36% is actually a welcome result of the turnaround of the company from being in red to in black. Even taking into account of the new tax rate, the past 5 Q EPSs are still good enough to consider this company to be undervalued when compared to other biotech or pharmaceutical companies in the same group. Finally, it looks that this coming Q (6/98) will not pay the full rate. X.Z.