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Biotech / Medical : Monsanto Co. -- Ignore unavailable to you. Want to Upgrade?

To: Exacctnt who wrote (1558)	3/10/1999 3:55:00 PM
From: Dan Spillane	Read Replies (4) \| Respond to of 2539

Pfizer could act a lot quicker <eom>

To: Exacctnt who wrote (1558)	3/10/1999 11:59:00 PM
From: Anthony Wong	Respond to of 2539

ANALYSIS-DuPont life sciences plan seen as fuzzy Wednesday March 10, 7:55 pm Eastern Time By Ransdell Pierson NEW YORK, March 10 (Reuters) - DuPont Co's (NYSE:DD - news) decision to create a separate tracking stock for its life sciences operation leaves many questions unanswered, but could make it easier for the company to expand that highly profitable segment of its business, analysts said. DuPont earlier Wednesday said it would file by late 1999 with U.S. regulators to launch the tracking stock, adding it hoped to create ''critical mass'' in its life sciences operations by forming alliances with one or more drug companies by the end of the year. DuPont's life sciences unit includes DuPont Pharmaceuticals, which co-markets with Merck & Co (NYSE:MRK - news) the AIDS drug Sustiva and hypertension drugs Cozaar and Hyzaar. The unit also includes crop protection products, genetically engineered seeds such as soybeans and corn, and DuPont's recently formed nutrition and health business. In 1998 life sciences products accounted for about $4.3 billion of DuPont's overall company sales of $25.7 billion. The lion's share of company revenues come from chemicals, its bread and butter since the early 19th century. DuPont's previously stated goal has been to increase the life sciences share of total company earnings to 30 percent by the time of its 200th anniversary in 2002. Tracking stocks are designed to isolate particular assets within a corporation that may have a particular value. Analysts said a DuPont life sciences tracking stock would probably be priced between 20-25 times annual earnings for those products, with shares of the core DuPont chemicals business trading at about 15 times earnings. ''The higher valuation for a separate life sciences stock would give DuPont greater flexibility to make acquisitions in the pharmaceuticals area,'' said William Fiala, an analyst for the Edward Jones brokerage of St. Louis. On the other hand, Fiala said a separate trading stock would ''muddy the waters,'' perhaps making it harder to gauge the overall performance of the company. ''It would be something of a smokescreen.'' He said DuPont no doubt hoped such a tracking stock would spotlight its fledgling pharmaceuticals business, which enjoys far higher profitability than the company's flagging mainstay chemicals operations. Investors were cheered by the prospect of a bolstered DuPont push into prescription drugs, bidding up shares $4 to $57.56 Wednesday in trading on the New York Stock Exchange. But HSBC Group analyst Paul Leming said he was not enticed by DuPont's announcement. ''All we got was a nice press release from DuPont saying they are going to craft some kind of alliance by year's end. The devil is in the details and we don't have any,'' he said. Leming said sales growth in DuPont's core chemicals business decelerated sharply over the last four quarters and turned negative in the fourth quarter of 1998. Moreover, Leming said he expected DuPont's chemical sales trends to worsen during the first half of 1999. DuPont needs to build critical mass in pharmaceuticals to become a world-class drug maker, Leming said, agreeing with DuPont's thesis. ''All DuPont has now is a solidly profitable but niche pharmaceutical operation'' with expected 1999 pharmaceutical revenues of $2.0 billion. Leming said DuPont's annual drug sales would have to triple to $6 billion to finance a research and development budget of $1 billion -- the scale needed to join the big leagues. Argus Research analyst James Kelleher noted there has been much speculation that DuPont and Monsanto Co (NYSE:MTC - news) of St. Louis had recently engaged in merger talks, although both companies have declined to comment. Monsanto, like DuPont, is a leading player in pesticides and bio-engineered seeds. Monsanto's G.D. Searle pharmaceuticals unit developed and co-markets with Pfizer (NYSE:PFE - news) the hot newly launched arthritis drug Celebrex. Kelleher said there was no way to judge which drug companies DuPont might hitch its fortunes to by year's end. ''But you might see DuPont life sciences form a joint venture with Monsanto,'' he said. DuPont might decide instead to forge alliances with, or buy one or more U.S. or European biotechnology companies, other analysts said. biz.yahoo.com