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

To: Biomaven who wrote (4954)	7/22/1998 7:50:00 PM
From: scaram(o)uche	Respond to of 6136

atp.org.uk Issue number 50, select index item "HIV-Specific Immune Responses Restored by HIV Immunogen Plus Antiretroviral Suppression"

To: Biomaven who wrote (4954)	7/23/1998 12:31:00 AM
From: Vector1	Respond to of 6136

Tracking stocks. Biotech analysts fall into two categories on tracking stocks. Those that think it is a neat way to unlock hidden value and those who think it is a dangerous gimmick. The argument for: - It allows investors to choose between investing in an earnings producing entity and one that is research driven and likely to show losses for the next 3-5 years, but have home run potential. Some mutual funds will only invest in companies with positive and growing earnings. --It allows the profit making division to get the tax benefit of the losses of the loosing division without taking the cost of the main contributor of the loss--R&D expence of the research company-- against earnings. --It allows the smaller reseach company to gain greater exposure of its development prospects which can be overshadowed by the profitible division. The argument against: --It hides a companys true earnings by giving the profit making division too low of a tax rate. The profitable company has to support the research company with a capital contribution in exchange for treasury stock. Companies show less discipline in R& D spending because it will not hit their earnings. Any analyst worth his or her salt will adjust the numbers to apply a full tax rate. It makes it more difficult for a DuPont to buy the company at a substantial premium. -It makes an already complicated situation even more complicated. -The tracking stock for the oncology division will trade like crap and have no liquidity --Genzyme General's tracking stock Genzyme tissue repair has been a pig (yes they inject Porcine nerve cells into the brains of humans with Parkinsons). Genzyme general gets a multiple hit (it has the lowest PE among the few profitable biotechs) because most buy siders don't like the structure and think it artificially inflates theri earnings. -It is expensive. you now have tow sets of corporate officers, extra SEC reporting requirements and pay more money to lawyers Last comment-- Why did they have to announce the tracking stock on the day that Genzyme Tissue Repair issued its earnings showing its customary $10m plus quarterly loss. V1