7
virus vector that encodes a cytokine
that stimulates the immune system to
recognize the cancer. The modified
cancer cells are then killed to inhibit
growth, and sent back to the hospital
for reintroduction to the patient.
Cell Genesys' most advanced
therapeutic product is GVAX lung-
cancer vaccine, which will begin Phase
III clinical trials later this year. Last
year, Cell Ge nesys reported updated
results from a Phase II trial, which dem-
onstrated a complete tumor response
rate of 12% and a median response
duration of at least 11 months, in 26
patients with advanced non small-cell
lung cancer who had failed chemother-
apy and/or radiation therapy. In addi-
tion to the responses in patients with
advanced disease, eight of the ten pa-
tients with early-stage lung cancer
who received GVAX lung cancer vac-
cine following surgery currently remain
free of disease, with a median follow-
up time of 12 months.
Cell Genesys is preparing for the
Phase III clinical trial. The company
recently purchased a manufacturing
plant to accommodate the patient sam-
ples in Memphis, TN. This was a stra-
tegic move, as Memphis is the hub for
Federal Express, which makes it easier
to receive and send patient tumor sam-
ples. We are enthusiastic about Cell
Genesys' therapeutic approach and its
business plan.
Another good example of a bio-
tech that has steadily held its own is
Gilead (NASDAQ: GILD). This com-
pany has not ceased to amaze us in its
ability to sustain its share-price value.
Gilead uses a deliberate approach to
developing novel antiviral agents that
have tremendous market potential. Gil-
ead has five products that it markets in
conjunction with others or alone, and
several in late stage development. The
products in late stage include an anti-
viral drug for hepatitis B infection, an
investigational drug for bacterial infec-
tions, and an angiogensis inhibitor for
age-related macular degeneration. All
three target areas are in need of new
therapeutics, which should bode well
for Gilead's future revenue streams.
Conversely, we highly admire
companies with strong contingency
plans, and that quickly kill faltering
programs and redeploy their efforts to
more promising areas. These are com-
panies with strong strategic plans, that
have chosen the right path to market
entry and can go the distance. An ex-
ample of this is Amgen (NASDAQ:
AMGN), which has made quick deci-
sions to cut faltering programs in
codevelopment with Praecis
(NASDAQ: PRCS), Guilford
(NASDAQ: GLFD), and, more re-
cently, Bioject (NASDAQ: BJCT), to
support other winning programs, such
as the acquisition of Immunex or the
second-generation EPOGEN and
NEUOGEN that Amgen was able to get
approved to penetrate additional mar-
kets. These are smart business deci-
sions that separate the men from the
boys. Amgen is a winner and will con-
tinue to be.
The Story
We've been publishing this news-
letter for five years, and the level of
interest that biotechnology has drawn
from investors has never ceased to
amaze us. Perhaps the single most im-
portant reason for this is that biotech-
nology has finally reached critical
mass. Additional reasons include the
wide array of products and technolo-
gies under development and the grow-
ing diversity of industry players. How-
ever, not all areas of biotech are
equally attractive to investors. Differ-
ent areas carry markedly different risk
profiles, timeframes, and potential pay-
offs. That has always been the case,
and continues to be a significant factor
in investors' decisions. However, an
additional issue is also looming large
in investors' analyses -- namely, the
business model, and how acceptable it
is (or is expected to be) in the public
markets.
With more than 300 publicly
traded biotech names, the bias in sec-
tor interest reinforces our view that
individual stocks can continue to out-
perform the market while the sector
may under perform. Selected individual
stocks will continue to demonstrate
robust performance, driven by positive
events. It is critical when assessing an
investment to identify near-term
events that appear likely to drive price
appreciation.
Finally, please note, we have
added a new feature to our website,
that highlights potential key catalysts
for our BioPortfolio to help steer inves-
tors in the right directions. ***
BioTech Stock Report, April 2002
" One of the first
flags that the com-
panies are not
thinking clearly or
executing efficiently
is when develop-
ment cycles are sig-
nificantly different
than relevant
benchmarks."
