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

To: jeffbas who wrote (560)	2/14/1999 3:05:00 AM
From: scaram(o)uche	Read Replies (1) \| Respond to of 1073

Jeffrey: I'll respond to your other post in greater detail later. I started to read it at about 9:45, but I go to bed at about midnight and I'll resume reading in the morning. Should finish within a week or so. But, addressing this one....... I was trying to get an informed point of view on to what extent the GENZ relationship insulates GZMO from many of the problems "the fledgling ones in early clinical trials" have -- lack of experience running trials and dealing with FDA, lack of money, lack of manufacturing, lack of marketing, lack of management generally, lack of access to other products if one fails, etc. Neither of the other Genzyme spin-offs, Genzyme Transgenics and Genzyme Tissue Repair, have thrived to date. Therefore, your rationale certainly doesn't necessarily follow. Genzyme spins out early-stage projects that drain cash. They want them off of the Genzyme General earnings reports, and they hope that investors will do some of the funding. Nonetheless, patents and early-stage research do have value. A few weeks ago, I thought that GZMO was very much undervalued. I don't think that it is now. However, now they have Folkman's latest molecule, and I don't know what that will mean for future stock appreciation. I have a track record for getting out early and leaving a lot on the table. I own a little. I owned a lot more until Friday. It was a nice, fast ride. The key to investing in third-tier is knowing relative valuation, valuation relative to peers and patents. The other thing to consider is timing...... as I indicated, Genzyme Transgenics has not thrived. Many now consider it poised for success, and believe that a rapid appreciation phase is coming soon. Perception can also be timed. In 12/94, you wanted to be in the third-tier. In 10/97, it was "show me" time for patents and you wanted someone to scoop out your brain and grind it into mush for having invested in third-tier. If you pick through the "munch-a-biotech" thread, you will find rationale that leads some to believe that this will change, that we're headed back to more of a 12/94 scenario. I hope so, as it's the kind of market that I like, one that places value on innovation. GZMO might do well in an environment like that. But, will Genzyme's expertise and management cushion GZMO? You pointed at manufacturing and marketing expertise, and I think that you're correct to a degree. I'd also add regulatory, both from expertise and clout angles. However, the bottom line..... it's expensive, high-risk research, just like the rest of third-tier. Merck had some bad news a few weeks back regarding a molecule that was being developed an an anti-depressant. In the next couple of days, they lost $11 billion in market cap. There are some great little companies out there with strong patents and interesting development-stage projects that need funding. If the world were rational, some of them could break through to independence. See the "munch-a-biotech" thread. It would be fun to see it happen, and maybe some consolidation and creative, public offerings could pull the rug out from under pharma. Right now, the gap between pharma and top-tier biotechs has narrowed, and the gap between top-tier and third-tier is absurd. Something is going to give and give big-time. I see that I'm off-topic. Rick