5
BioTech Sage Report, January 2000
a humanized monoclonal antibody
that binds to ICAM-3 molecule on all
T cells to inhibit T cell activation.
This is not as specific as other anti-
body treatments being developed and
BSR is not enthusiastic about ICM3.
Ligand Pharmaceuticals is also in the
psoriasis market and is currently
evaluating their retinoid compound,
Targretin in Phase II clinical trials for
moderate to severe psoriasis. Reti-
noids are currently utilized as a treat-
ment for psoriasis and we expect Li-
gand will see Targretin approved in
the future. However, we suspect Li-
gand will not claim significant market
share as retinoids are only partially
effective. Thus, Ligand will not de-
rive substantial revenues from the
psoriasis market.
Final thoughts:
Earlier in November, The National
Psoriasis Foundation (NPF) urged the
pharmaceutical and biotechnology
industry to embrace the advancement
of breakthrough therapies to treat pso-
riatic arthritis and psoriasis, as there
is a vast unmet need for new therapies
to help manage these devastating dis-
eases. So, will the current treatments
in clinical trials prove successful?
Over 7 million patients with these
diseases hope so and you can bet that
the aforementioned biotech/
pharmaceutical companies are betting
that their compounds can help soothe
the itch.
#####
On the following pages are featured companies and a list of pharmaceuticals and biotechnology companies who have or are developing drugs or diag-
nostics for a disease(s). The list contains competing companies who in our opinion have interesting therapeutics and may not be mentioned in our newsletter due to
lack of space. The companies are either: (a) pharmaceuticals, (b) companies having drug product(s) approved for marketing, and have growing product revenues,
(c) companies having promising drug candidate(s) in late stage clinical trials, and are expected to turn profitable in the next few years and (d) companies in pre-
clinical testing or early stage human clinical trials, and are not expected to turn profitable for years. Some of these companies may not be suitable for every ac-
count, depending on investment objective, risk-tolerance and financial situation.
The stock price of emerging biotechnology companies with no significant commercial products may appreciate in value based on significant clinical
trials progress with potential new drug therapies, not on current revenue and earnings. Depending on the clinical trials phase results, the stock performance of
emerging public biotechnology companies may appreciate several times over the company's initial offering price. This price-appreciation potential creates signifi-
cant interest among risk tolerant, growth-oriented investors.
opment.
The year 2000 should be very in-
teresting. I think that the pace of con-
solidation will continue. Roughly $23
billion of equity was taken out of the
1999 marketplace and roughly $8 bil-
lion was added back through IPOs,
secondaries, etc, leaving $15 billion
available for reinvestment. BTN
thinks that consolidation is inevitable
and that it will continue. Partnering
activities that have been evident over
the last 10 years will continue in the
future at record levels fueling the
growth in research and development.
Unfortunately, the downside is that
several biotechs will be swallowed by
big pharma and lose their scientific
creativity.
So, which biotechs do we see as
future gainers? Before we start with
predictions, we want to state the fol-
lowing caveat, that a number of these
names have had tremendous growth,
which is great in terms of historical
performance. However, when looking
for significant and sustained growth
potential buy wisely.
The most recent biotech that we've
grown more enthusiastic about is Chi-
ron (CHIR), which is one of the top
biotech companies. It has been around
for close to 20 years and is reawaken-
ing from a five year slumber
prompted by a major equity invest-
ment by Novartis. We believe that the
awakening is the result of a new man-
agement team brought onboard during
the last year and re-focusing on bring
products to market and not just new
technology.
There are other big capped biotech
companies that I like such as Amgen
(AMGN) and Genentech (DNA).
Both have proven track records capa-
ble of delivering and commercializing
their products. Biogen (BGEN) is
another one high on my list. Al-
though Biogen is driven by one prod-
uct (Avonex) for treating multiple
sclerosis, it has not even penetrated
20% of the U.S. market yet. We think
its way too early to get off that train
even in the face of competition. This
is a major biopharmaceutical com-
pany in the making, and an investor
should be involved in Biogen for at
least the next couple years.
Investors owning the core group of
biotech stocks will want to stay in-
formed and don't need anything more
than a little hand-holding. But for
investors always looking for a new
name, keep an eye out. Its especially
true with these mid-capped compa-
nies; IDEC (IDPH) or MedImmune
(MEDI), or even to a lesser extent,
Immunex (IMNX), which has gone up
in excess of tenfold or so. These com-
panies just started to make money and
are more than likely to continue. Gil-
ead Sciences (GILD) is another bio-
tech I expect to break into the upper
level. Gilead has got one of the better
anti-viral platforms in the business,
including those of the large cap phar-
mas. Currently, it looks like its get-
ting back on board the gravy train,
therefore it hasn't lost its potential to
perform over the long haul.
Of the little guys, we pick Alexion
Biotech 2000
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