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

To: Peter Singleton who wrote (4966)	7/23/1998 12:14:00 PM
From: Joe E.	Read Replies (3) \| Respond to of 6136

Seems to me that something less ineffable than judgement is trading costs. Unless AGPH gives the oncology division all of its cash, the division can hardly be worth $100 million. A tracking stock for the oncology research is going to be worth somewhere shy of $3 if done on a one for one basis, making the bid-ask spread objectionable. If done on a one for 20 basis (one tracking stock for each 20 AGPH shares) it might not as bad. But sticking shareholders with extra trading costs is a problem for me. The tracking stock concept invites future shareholder lawsuits, as the management must serve two sets of shareholders. This and the other costs might be trivial for General Motors with their multi-billion $ tracking stock businesses, but add a lot of unnecessary costs for a smaller company like Agouron, IMO. Management is starting to get really focused upon the stock price, seems to me. As examples, the letter to employees and the press release in the midst of the angiogenesis frenzy. And now this complaining to the analysts on the conference call. When I see this kind of whining about being misunderstood by the market, it usually means that the market thinks that management is not making good investment (R+D in this case) decisions. Thus the drop when Agouron inlicensed the HIV drug candidates. I think it is reasonable for the market to discount the R+D decisions of biotech companies that don't have the long history of success that the big pharmas have. Especially when they don't have a unique scientific technique or field. I don't think that management is making bad investment decisions. I do think they are letting the stock price start to cloud their decision making. If the stock is such a bargain, they should buy some in.