Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Theragenics (TGX) on the up and up -- Ignore unavailable to you. Want to Upgrade?

To: Mike Hagerty who wrote (922)	7/2/1998 11:24:00 PM
From: Robert Henry	Read Replies (2) \| Respond to of 1055

Smith Barneys' Melissa A. Wilmoth 12 month target price $ 34.00 "We believe THRX will trade up to a 35X multiple on our 2000 EPS of $ 1.11 discounted back one half period at 30%, giving us our price target. We remain positive on THRX and reiterate our 1S buy rating"

To: Mike Hagerty who wrote (922)	7/3/1998 4:36:00 PM
From: dfloydr	Respond to of 1055

Here is the Smith Barney report as posted on Yahoo: JULY 2, AM Smith Barney analyst Melissa A. Wilmot says: Yesterdays' pricing pressure on THRX was a continuation of the negative sentiment that has been building against brachytherapy since additional companies have entered the market. We now count five current and near future manufacturers of radioactive seeds for prostate cancer. While the character of the market has been supply constrained since inception, the rapid entrance of competition is causing investors to take a closer look at twhen the situation reverses and becomes demand constrained. Our view of this market is: Prostate cancer incidence rates have recently been adjusted downward for a believed spike caused by the advent of the PSA test. The theory being that with the advent of a new test, incidence rates rise above the normalized rate because you are testing a larger pool of previously undiagnosed people. Once this pool has been tested, the incidence rate should fall back closed to actural. This solely in the United States. An additional 190,000 new cases of prostate cancer are expected to be diagnosed in 1998 in Europe. As the PSA test becomes more prevalent in Europe, the growth rate should experience some of the spike already seen in the US, however, we are assuming the same 5% growth rate given the lack of good data. Using these assumptions, we arrive at the following 1998 1999 2000 US 200,000 210,000 220,000 EU 190,000 199,000 208,950 Total incidence 390,000 409,000 428,950 US early stage 116,000 121,800 132,000 EU early stage 95,000 99,500 114,922 total treatable 211,000 221,300 246,922 Assuming 58% of cancers in US and 50% in Europe are early stages in 1999 and in 2000, 60% of US and 55% of Europe cancers are early stage Capacity assumptions in annual seed production 1999 2000 Nycomed 5.2 mil 7.8 mil Theragenics 2.3 mil 3.6 mil North American Sci 1.0 mil 2.0 mil Intl. Isotopes 1.1 mil 2.0 mil IBT .1 mil 1.0 mil Uromed .5 mil 1.0 mil Total 10.1 mil 17.4 mil The total capacity assumptions includes both palladium and iodine which use an average of 80 and 100 seeds per procedure respectively, we use an averag of 90 seeds per procedure. This represents a 50% penetration rate in 1999 for the total US and European markets. We believe that the European market has not been consistently included to its fullest extent in some analyses of market penetration and potention which sould be given more weight. We believe the 50% penetration level in 1999 is achievable given the excess demand that currently exists and point to attendance at the brachtherapy presentations at the American Urological Association meeting recently held. Important, J&J has not begun to fully market TheraSeed. Once J&J begins its marketing campaign, it will highlight the benefits of palladium over iodine, positioning it as the premium product for brachytherapy. Further, though there has been much talk, no competitor has yet produced palladium sees using a method other than cyclotron for which THRX holds intellectual property on. Theragenics has FDA approval for use of its seeds in all hard tumors regardless of location. Some of these markets are head and neck, liver, eye, breast and lung. We currently know of small scale trials being done for head and neck and eye cancers.We believe that use for other types of cancers will increase. Our 12 month price target on THRX is from $ 39.00 to $ 34.00 and our long term growth rate from 48% to 40%. After the dust settles , we assume THRX will trade up to a 35x multiple on our 2000 EPS of $ 1.11 discounted back one half period at 30%, giving us our price target. We remain at Smith Barney positive on THRX and reiterate our 1S (buy, speculative) rating.