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Biotech / Medical : T/FIF Portfolio -- Ignore unavailable to you. Want to Upgrade?

To: scaram(o)uche who wrote (187)	10/31/1998 9:30:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 1073

Rick, Just as life isn't always fair, neither is the biotech stock market. The best-performing stock in my portfolio of late is ITRC, up around 80% since I bought it a little over a month ago. I actually have no idea why it's up - we're not talking brilliant science and we're certainly not talking brilliant management or financial backers either. (I bought it because it was one of the few stocks that seemed to fit the CHIR wish-list of having a potentially major late-stage cardio drug that wasn't yet spoken for, and it also seemed kind of oversold on its merits). On the other hand, I don't see how you can really put together a coherent portfolio populated with stocks like ITRC or XOMA. Their movements seem basically random to me. Of course I don't really know whether their movements are actually in fact perfectly rational, driven by some smart insiders or portfolio managers. I suspect not. What might reignite the third-tier? I doubt it is going to be the portfolio managers, who mostly can't tell good science from bad. Clearly the best bet is some M&A activity. The first and top second tier now have both cash and strong stocks to use as currency. Amgen apparently can't find anything better to do with its money than buy back its own stock, but CHIR, CNTO and others are all making the right sorts of noises, and of course DD and some of the lower-tier big pharma might still be looking. (After AXYS, I'm not sure that horizontal mergers are going to help matters.) So what second and third tier stocks might be gobble-able? I still think that NXTR is a possibility, although as it turned out SEQU was the better choice. ITRC as I mentioned, and possibly also CELG and TTNP. VGINF is a candidate, but it's not real cheap any more, and may be getting a little stale as takeover plays go. Notice these are all product-dominated stocks, rather than science-dominated stocks. The trouble with the science-dominated stocks is that the acquiror always has to worry that the science might walk upon acquisition. Of the T/FIF type stocks, I suppose MEDI could grab BTRN. The question of course is why haven't they already if they were going to. AMGN could I suppose grab NPSP if they like the way the calcimimetic is going. CNTO or CHIR might go after CVAS. Any other ideas of who might be a candidate? Your AGPH/DD suggestion hasn't panned out (yet), but it sounds like it may have been seriously considered, and at very least frightened off a few shorts. Peter