Everyone mentions GERN and ASTM but another company CEGE is way ahead of either of these two. One of these days and it will probably be pretty soon, CEGE is going to have a GERN type of rise and it will probably keep going. Here's a recent article. It mentions CEGE towards the end very favorably. See what you think
[Article] Beyond the Lab Dish
Dan Spillane, 11/98
Recent front-page stories in The New York Times, The Wall Street Journal,and The Los Angeles Times proclaimed hopeful messages surrounding the research activities of Geron Corp. (NASDAQ:GERN). Promising nothing less than the proverbial "fountain of youth", these stories attached bold significance to the "super-scientific" replication of human stem cells.
Naturally, medical science was going to be changed overnight, wasn't it? And so it was, with such promise in mind, that herds of investors bid the shares of Geron up nearly 250 percent in a single day...this notion of promise, then, was no doubt replaced by one of dismay shortly thereafter, as the shares of Geron have since plummeted. Indeed, there seems to be considerable difference of opinion in how to value Geron, given what amounts to no more
than experimental results produced in a lab dish -- far away from anything which can be applied to the real world. Perhaps the question is not one for Geron specifically; rather, there is a more general question that can be applied to a whole class of companies. More precisely, is there any objective way to value research-pipeline oriented companies? And in particular, which companies really stand out in the area of "super-science for the future"; i.e., similar to Geron in prospects, but perhaps further along in a real-world product development cycle? In other words, which promising companies represent compelling investment opportunities which are well past the lab dish, and are ready to be served up on Wall Street's plate?
Monsanto's Dishes are Done
Few companies can claim to have transformed an industry almost overnight.
And yet, it is without much fanfare that Monsanto Corporation (NYSE: MTC) has done just that. No news-flurry over lab dish results here -- Monsanto has an incredible research record going back many years, and a portfolio of patents behind it. Indeed, Monsanto is already selling its own brand of "super-science", as Monsanto's efforts have swiftly transformed the economics of agriculture forever. What's brought this about is Monsanto's success in the introduction of genetic engineering technology via what's known as "bioagriculture", the term used to describe genetic engineering of plants. Of note, bioagriculture has proven tremendously successful within a
relatively short time. Importantly, a large number of major crops in the US and abroad already rely on such technology, and this number is increasing (incidentally, this number also translates into Monsanto's top and bottom line). This quick adoption isn't surprising, given the benefits offered by Monsanto's improved plants. For example, Monsanto's current corn and soybean products offer farmers improve yields without the use of traditional pesticides and herbicides (a fact which may not make certain pesticide companies very happy). Importantly, the potential here goes way beyond the initial introduction of bioagriculture via food crops, but let's talk about another aspect of Monsanto first. Monsanto Boosted by Drug Portfolio
As if Monsanto's bioag prospects weren't enough, it is also a leading
pharmaceutical company, as embodied in its Searle Labs division. Notably, it is the first company in line to release a new advanced pain medication Celebrex ("a Cox-2 inhibitor") which is superior to existing products since it provides pain relief without dangerous or deadly side effects. Once again, Monsanto has demonstrated its ability to bring advanced science to market, and a profitable market at that -- the market for Cox-2s is estimated in the billions. In addition, Monsanto has a number of other drugs in the pipeline. Moreover, what sets Monsanto apart is the combination of genetic engineering
and drug research capability. It can leverage some of the same advanced techniques to apply to both, as few other companies in the world can. Makes DuPont Green with Envy Sure, it's impressive that Monsanto has proven it can take years of
progressive scientific research and turn this into blockbuster products --
obviously, this company has the critical element of business savvy. What's more exciting is an extrapolation of Monsanto's degree of success with bioag so far, given its upcoming product pipeline. In line with current products, future ones will provide even more benefits in the area of enhanced farm productivity, but will be healthier and more attractive to consumers: nutrition, taste and freshness can be enhanced. But that is by no means the limit Monsanto has set on itself...it is on the way to expanding its markets in a pervasive manner. This becomes clear when you realize bioag has a lot
more applications than might at first seem obvious. For example, plants can be modified to grow in arid conditions, or to produce their own fertilizer. Such possibilities are somewhat exciting, but don't illustrate the whole story. Rather, what's key is that multi-industry penetration by bioag products is possible, since there is major raw materials input from the agricultural industry into others such as chemicals and textiles. Dramatic improvements in the production efficiency of basic and intermediate materials seem imminent. If this all sounds like science fiction, think again -- Monsanto has a number of key partnerships in the area of gene-sequencing and advanced computer algorithms (including with IBM) which
will allow it to not only meet but go well beyond those goals described
above. What's clear is that bioagriculture has the capability to become pervasive, much like the Internet has relative to commerce. Taking a step back, what might seem like "overly zealous green-thumbing" to some is really much more than that. To wit, using genetic engineering Monsanto has effectively cornered a self-created market, which truly captures the essence of high-tech productivity enhancement at its best. Perhaps it is this more than anything else that explains chemical giant DuPont's recent scramble to
imitate Monsanto, even if just a little bit? Gene Therapy: Coming to a Body Near You Soon Whereas bioagriculture has suddenly arrived by storm, there is another exciting brink at hand. For many years, it has been suggested that gene therapy is the wave of the future. Basically, genes already control every aspect of your body, but they can be adjusted a bit to cure or repair any condition. The question is no longer whether gene therapy will work, but when it will work. It might surprise some to find out there are people alive today who might otherwise be dead if it were not for successful treatment
with gene therapy [The gene for "vascular endothelial growth factor" was recently used to treat a number of heart patients with incredible results, see link below.] Further, there are "miracle vaccines" in the works for several serious diseases based on gene therapy -- including serious cancers and AIDS -- that are showing promise in first- and second- phase human trials. It is important to note, however, recent results have come only at the expense of many years of disciplined research, subject to strict and constant review. Sadly, in many cases, it seems the gene therapy journey has been too long a wait for Wall Street, judging from the relative lack of
attention and capital afforded to key companies in this area. (How can an Internet company -- in an environment where barriers to entry get lower every day -- be worth a hundred times a gene therapy company?) The bottom line is there is enough information available right now which shows for certain that gene therapy offers major medical hope. In short, gene therapy is working in human bodies right now -- clearly, a far cry from what is happening in a lab dish. So, digging beyond what the news is carrying, can any companies be found which have shown steady progression in the area of
gene therapy, but have been long-since forgotten?
Cell Genesys: Rich in Pipeline and Patents
Cell Genesys (NASDAQ: CEGE) has been patiently developing gene therapy technologies for many years. Over time, it has amassed more than a hundred gene-related patents with applications for several hundred more. These patents cover a range of genes (areas to treat) as well as delivery systems (ways to get into the body). In fact, the company likely has the strongest gene therapy patent portfolio in the industry. Further, the company has a number of promising gene therapy clinical programs, including a cancer vaccine, a cancer therapy, and an AIDS therapy. In addition, Cell Genesys has pre-clinical programs for treatment of hemophilia and
Parkinson's. Importantly, several of the clinical programs are progressing well. Moreover, additional results are due out in late 1998 and early 1999.
Gold Mine of Gene Therapy
As for financial performance thus far, keep in mind that the company has been progressing through long research cycles. Although it has already received license payments from major pharmaceutical partners, it has not yet capitalized on the potential of gene therapy, since gene therapy is not yet widely deployed. However, we are now seeing the first dramatic signs of success in gene therapy, having paid the price over many years of research.
Therefore, a company like Cell Genesys seems like a compelling investment opportunity since large revenue growth is finally within sight. Even if other companies capitalize on gene therapy, with Cell Genesys's broad patent portfolio, it will also rise within a tide of license and royalty revenue.
In short, this company seems like a clear winner over the next few years.
This company has been building up a gold mine of gene therapy technology and patents; it's only a matter of time before this becomes clear -- and with recent developments in human gene therapy trials, it's clear such time is becoming short. Taking a step back, is the company holding many of the world's gene therapy patents really worth so little?
Related links
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Monsanto:
biz.yahoo.com
Gene Therapy/Cell Genesys:
cnn.com
"This clinical trial in 21 patients with advanced metastatic melanoma demonstrated
potent antitumor immunity as evidenced by the dense infiltration of immune cells
into metastatic tumors in 11 of 16 patients in whom biopsies were possible, as well as
the detection of antitumor T cells and antibodies specific for melanoma and the
destruction of tumor blood vessels." (Describing Cell Genesys cancer therapy trial.) |
