On Wednesday, October 23, Jim McCamant, editor of the "Medical Technology Stock Letter," joined Worth OnLine for a live "Conference Call." The "Medical Technology Stock Letter" provides expert analysis of developments and investment opportunities in the area of medical biotechnology. Although the biotechnology "crash" of 1992 has made positive returns hard to come by in recent years, the stocks recommended by McCamant's MTSL rose 108 percent in 1995. Follows is a transcript from the evening's event, edited for clarity. The opinions expressed are those of Jim McCamant, and do not represent those of Worth, Worth OnLine, or Capital Publishing.
OnlineHost : Welcome to "Conference Call," Worth OnLine's live chat show series. Tonight we welcome Jim McCamant, widely recognized as the leading authority on biotech stocks. Tonight, McCamant will talk about the buzz on biotech stocks before Oppenheimer's Seventh Annual Healthcare Conference. Welcome, Mr. McCamant. First we'll hear some opening remarks from our guest.
MTSL : This is a great time to look at biotech with the stocks up from July lows but still a lot of bargains available. More opportunities as we hit tax loss selling time... The key is that the science is making excellent progress and products are moving to market.
Question : Chris 44j asks: What is your short- and long-term outlook for Isis Pharmaceuticals?
MTSL : ISIP has been a buy recommendation for a number of years. Now a buy under $20. Short-term price action will be impacted by the large short interest and news on clinical trials or additional corporate partnerships. Long-term we think that their leadership in antisense and excellent management will make the company a winner.
Question : Vromans asks: What is wrong with XOMA? The balance sheet looks great but the stock price continues to decline.
MTSL : Investors seem to have been upset by their recent private placement, it is creating an opportunity. We think they will have some more good clinical results by year-end and the stock should move up.
Question : ArthurF916 asks: What are ImunoGen Corporation's prospects?
MTSL : We have its as a buy under $8. The company has one product in Phase III trials and more on the way. They are also a potential buy out as the stock is a big discount to private market value.
Question : DeboraMJ22 asks: Where is EMIS going? Is oral delivery of complex medications a distant hope, or a near future reality?
MTSL : It will take longer than most investors expect to get drugs to market, but the concept is finally being proven. The stock should stay volatile as a result.
Question : Fishfar asks: I understand that Acuson's ultra-sound technology is state-of-the-art, but too expensive. Can this company find a market and grow earnings?
MTSL : Acuson is a leader but this market is very competitive. I think they will be a long-term winner, but you should buy it when it is down not after it moves up.
Question : Which of the second tier biotechs have the greatest potential to move into the top tier?
MTSL : A number of companies are in that process. Isis which is mentioned above, Agouron and ICOS are ones we like. Also, Centocor, Nexstar and others which are turning profitable will be moving up.
Question : What do you think of Amgen?
MTSL : Amgen is the clear leader and is fairly valued on current earnings, our problem with the stock is the relatively weak pipeline. We think news on competition for their two existing products could hurt the stock and thus we would avoid it.
Question : Do you follow Martek Bioscience? What do you think about the company?
MTSL : The technology is interesting. Their additives for baby formula is needed and will be adopted. The question is how soon and when will completion emerge. We are neutral on the stock.
Question : When should we expect a turnaround in Chiron's stock price? Also, what is the potential for Chiron/JNJ's Regranex wound healing agent?
MTSL : Chiron's stock seems to be building a base and a move up could come almost any time. CHIR is favorite among the large biotech stocks. It has great products coming along and great science. We consider it a core position in the group. The wound healing agent has big potential and they will file for marketing approval next month. Maybe that will get the stock moving.
Question : ACavan asks: What are your short and long term thoughts on Enzo Biochem?
MTSL : Enzo is a stock that we are negative about. They never seem to fulfill the hype. The loss of the patent suit to Calgene removes a lot of the potential and we would sell the stock.
Question : What do you think of Glaxo, and its chances of coming around?
MTSL : Glaxo is a great long-term success story and will continue to prosper ou didn't mention Ligand among those second tier companies with the best prospects of moving up? How do you feel about their prospects?
MTSL : Ligand does fit into that category and we are recommending purchase below $14. We think the value may be slower to surface because it is a complicated story, but long term excellent. Value may be slower to surface because the technology is complicated, but great long term.
Question : Is AMAT still a buy here, what has been driving down?
MTSL : AMAT is in semiconductor equipment. We do not follow it.
Question : Which of the companies doing diabetes research do you like the best?
MTSL : Our favorite stocks in diabetes area are Amylin, which is product in Phase III, and Shaman which just signed a great partnership with the German Merck to develop drugs to treat type II diabetes. Both stocks are attractive at current levels with SHMN a real bargain.
Question : Biogen's pipeline looks very weak compared to Chiron's, so why has BGEN been on such a run and CHIR isn't?
MTSL : Most Wall Street analysts take a very short-term view. The biotech version of momentum investing. We think that is a big mistake and the long-term values in Chiron are much greater.
Question : Long- and short-term comments on Sibia Neuroscience, please.
MTSL : Sibia seems interesting but we do not yet have an opinion. The neuroscience area is very competitive and we think investors should move carefully in this sector. We have recommended both Cocensy and CytoTherapeutics in this sector.
Question : When do you think Somatogen will get market approval for OPTRO?
MTSL : We expect OPTRO to be approved in late 1988, or 1999. This would be about one year after filing. We think SMTG is very attractive at current levels, as some negative reports from UBS have driven the price down. There is also a large short position now, so any move will be accelerated.
Question : Any thoughts on AFFX?
MTSL : A very interesting company, with interesting technology, but we think that is already in the price of the stock. So we are neutral here.
Question : At the last Worth Chat, you mentioned a company called Celtrix. I can not find a symbol or any info on this company. Possibly, I jotted down wrong company name, would appreciate any info on this. Thank you.
MTSL : Celtrix is a smaller biotech company symbol CTRX. We like the IGF with its binding protein that they are developing. Big potential but not in the stock. It is also a take over possibility.
Question : Immunex has been a dead issue for several years, is there any life left in this company?
MTSL : Yes, in fact they presented some very positive Phase II data on their treatment for rheumatoid arthritis at the recent rheumatology conference. It showed a very high response rate and they are beginning a Phase III. Near term result will be helped by the approval of Noatrone to treat prostate cancer. We have it as a buy under $18.
Question : Is Somatagen still leader in blood substitutes? Any idea of approximate time to market? Where is your buy limit?
MTSL : Somatogen is one of leaders. We expect Baxter to be first to market, but they will be supply limited as they use outdated blood. Somatogen is most likely to be on market in 1999.
Question : What is your opinion on Cephalon's Myotrophin? Why did they sell the Beltsville, Maryland pharmaceutical manufacturing facility? Is that a bad sign?
MTSL : They sold plant because Chiron will manufacture for sale. Marketing application should be filed by year end. This product should get approval in about six months.
WorthOnLne : We have time to answer two more questions.
Question : What is the future for ATIS-Advanced Tissue?
MTSL : They have some interesting products and we think they will be modest success, but all of the positives seem to be in the price already and we like other stocks more.
Question : What is your favorite gene company, recombinant, protein expression, anti cancer approach, etc.?
MTSL : We think that gene therapy is a difficult area and have been cautious. Our one recommendation is GeneMedicine which has some interesting products in clinical trials and is very cheap at current price levels. We have it as a buy under $6.
WorthOnLne : I'm afraid that's all we have time for tonight.
OnlineHost : This concludes this edition of "Conference Call." Thanks for taking part in the chat. And thank you, Mr. McCamant, for joining us for this evening's "Conference Call."
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