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Biotech / Medical : Sepracor-Looks very promising -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (3070)	5/27/1999 1:48:00 PM
From: BMcV	Read Replies (1) \| Respond to of 10280

>>If SEPR were to have no blockbusters, then the current discount to a Forest Labs or a Mylan should be even larger<< Maybe, but, there's no way of knowing whether we will or won't, is there? So the possibility will be in the stock price. Plus, take a look at Bob's pared-down estimate of the worst-case scenario. Still looks pretty good. There was some news about the converts today: freeedgar.com Maybe you can say what it means because I don't have a clue.

To: jeffbas who wrote (3070)	5/27/1999 2:04:00 PM
From: BMcV	Read Replies (1) \| Respond to of 10280

One more thing. I compared SEPR to generic because I thought their eventual size might be similar to some of those companies, not because their business is the same. SEPR should be able to price at a premium, since they will have demonstrated benefits, protected by their patents. It's possible the benefits will be limited to a specific group of patients, eg, those who report restlessness after taking albuterol, which could limit the market. But SEPR should be able to maintain margins, even despite spending more on R&D.

To: jeffbas who wrote (3070)	5/27/1999 6:30:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 10280

Jeffrey: Someone who has worked for many years in biotech suggested I buy some VRTX and put it away. VRTX has about 1/4 the market cap of SEPR, but only about 15% of the market cap if cash is removed from both companies' market cap. Can anyone comment on the relative merits of the two -- is one clearly cheaper than the other? I own a little VRTX (bought near the current price) and a lot of SEPR. VRTX has one recently approved drug (marketed by Glaxo) that is probably not enough by itself to take it to profitability. They have an interesting, but mostly early, pipeline and a respected research capability. Lots of cash. Although I believe VRTX is cheap at these levels, long term I feel it has a much worse risk/reward ratio than SEPR. Basically SEPR has over 15 drugs that with a fairly high degree of certainty are safe and effective. A few may well fail, and some may end up as nothing more than slightly souped up generics, but undoubtedly a number will make solidly successful drugs and the chances are reasonable that we will get a blockbuster among them. By contrast, even a good biotech like VRTX has a much riskier pipeline. A run of bad luck and their late/middle term pipeline could vanish. That's why I view VRTX as a good holding only as part of a basket of biotechs. It's more stable than the 3rd tier stocks because it has an approved drug and plenty of cash, but I still wouldn't feel comfortable having it be a substantial part of my portfolio. Peter