Ralph
17.01.2001, 22:10
Eine sehr interessante Gegenüberstellung von Argumenten eines Bullen und eines Bären (gefunden bei den "Narren"):
Bull's Arguments
Everybody wants to compare biotechnology to the Internet these days. As venture capital investments in biotechnology soared last year, investing pundits everywhere sought to draw parallels between the emergence of these amazing new tools for drug discovery and the Internet, the amazing development in communications technology that triggered 1999's easy-money orgy of venture capital.
While this sport of Biotech vs. Internet is fun and sometimes even useful, there is one parallel that doesn't get the attention it deserves. It is a distinction that gets to the heart of the fundamental advantage enjoyed by Human Genome Sciences (Nasdaq: HGSI) over its competitors. The Internet business boom has shown that it's not a wealth of opportunity or information that creates success, but a business model that can quickly execute on a specific opportunity, making productive use of the right information.
Indeed, too much opportunity and information, with no clear plan, is often a recipe for paralysis. In our home, after years of seeing the Internet through a 1995 vintage 14.4 kbps modem, we recently broke down and updated our home computer, providing my wife with her first high-speed look at the full glory of the Net. To my surprise, her delight over improved performance was counterbalanced by a sense of intimidation. Suddenly, there was so much information available on her ongoing projects, so quickly, that just picking a place to start became overwhelming.
The best of the surviving Internet business models picked a smart place to start, early, and maintained laser focus in the face of exploding -- and potentially distracting -- opportunity all around them. In the same way, Human Genome Sciences (HGS) years ago split off from the race for more and more genetic information, as championed by human genome sequencer Celera Genomics (NYSE: CRA), to focus on the most productive and profitable means of exploiting the emerging information.
William Haseltine, Chairmen and CEO of HGS, used to work closely on gene discovery with Celera's Craig Venter, runner-up for Time Magazine's Person of the Year for 2000. But while Venter continued to pursue the minutia of genetic mapping, Haseltine become more interested in and inspired by the most promising medical opportunity to emerge from our improved genetic understanding -- protein-based drug therapies.
While Venter and Celera have received the bulk of the press recently -- and no one doubts the importance of their stunning accomplishments -- one suspects Haseltine and HGS may enjoy the last laugh. Suddenly, Celera appears to be in a trailing position, announcing last week that it plans to "transform [itself] into a drug discovery company," aping the move Haseltine made years ago. Too late?
<u>A smart place to start</u>
At HGS, it's not really so much about the information as it is about the process. Genes "express" themselves by producing proteins, and biological processes triggered by these proteins lie at the heart of disease -- indeed at the heart of all bodily functions. Even more specifically, HGS focuses on a particular class of these proteins -- the so-called "signal" proteins. These are the messengers that facilitate communications between cells and whole organs throughout the body.
This is the piece of the puzzle that Haseltine picked out early for HGS and that he remains focused on today. As Haseltine maintains in a recent BusinessWeek online interview: "These molecules tell cells what to do -- for instance, to grow or to die. They are probably going to be the most medically useful compounds." The early signs are that Haseltine might be right, as HGS already boasts four drug candidates in -- or very near to -- human clinical trials.
<u>The process is the pipeline</u>
"Pipeline" is the name given by established drug companies to their catalogs of specific drug candidates in various stages of clinical trials. Biotech investors are always encouraged to look for well-stocked pipelines as a marker for long-term profitability.
But even with its early success developing four specific drug candidates, still-emerging HGS continues to focus on the basic process that it employs to exploit the action of signaling proteins. Their website has a "Pipeline" link on the home page. You might expect that clicking this link would lead to a listing of specific drugs. Instead the linked page describes HGS's core process for drug discovery. They seem to be saying that "you ain't seen nothing yet," or perhaps the more business-friendly "the process is the pipeline!"
By focusing on the underlying biological processes in healthy versus diseased tissue, as opposed to the mere statistical correlations that emerge from more shotgun-style drug experiments -- those that cross thousands of drug candidates with a host of diseases -- HGS has mapped out a system for developing only the most promising protein-based drug candidates, those that target specific biological processes and only those processes, eliminating much of undesirable side-effects risk. Given the time and expense involved in shepherding drug candidates through FDA-mandated clinical trials, this basic understanding could prove to be HGS's essential competitive advantage over the long run.
In addition to these advantages in development time and money, protein-based drugs have other benefits over more traditional "small-molecule" drugs. They should be easier to patent and protect, as it's tough to develop cheap "knock-offs" by just altering chemical composition slightly, as can be the case with traditional drugs. They also offer the ability to help the body heal and regenerate itself, using its own naturally occurring processes, potentially leading to a fundamental shift -- a new horizon -- in the world of drug therapy.
<u>If you like risk...</u>
Of course nobody can responsibly argue the merits of biotechnology to investors without mentioning the substantial risks. I'll leave most of that litany to this week's bear, where it belongs, but I will stress here that HGS is not an investment for anything less than five to ten years, preferably more. Absolute best-case scenario has HGS commercializing one of its drug candidates in four years, but, realistically, it might take decades for momentum to kick in, assuming, of course, that Haseltine has the right idea and the money holds out.
Nonetheless, if you have a yen for following the complicated twists and turns of drug research and development, and you are a patient, long-term, business-focused investor with money you can afford to lose, you'd be hard-pressed to find a more exciting subject of study -- and investment -- than Human Genome Sciences. As Victor Kiam once said about his favor electric shaver, we Rule Breaker Portfolio managers "liked it so much, we bought the company!"
Bear's Arguments
I love Human Genome Sciences, and I'm an investor. However, I'm an investor in lots of risky stocks, including quite a large number of biotechs that, on balance, won't be in business in two years. When I approach volatile, emerging markets, I take a small stake in many companies -- the few that pay off big carry the whole portfolio.
That's just the problem: The odds are stacked against all of them, and only one or two will make it. Human Genome Sciences runs the very real risk of going to zero.
How real? Let me put it this way:
Of the few drugs that Human Genome Sciences has in its pipeline, none have even a 30% chance of getting to market. There is only a 74% chance that, at some time in the next 10 years, Human Genome Sciences will put even one drug on the market.
That's because no drug in HGS's pipeline is further along than Phase II. From here, it'll be a couple of years before any get approved -- or not -- for Phase III, and then years more before any get approved -- or not -- to go to market. In the meantime, HGS will probably introduce a handful of new drug candidates, with similar odds of succ
Bull's Arguments
Everybody wants to compare biotechnology to the Internet these days. As venture capital investments in biotechnology soared last year, investing pundits everywhere sought to draw parallels between the emergence of these amazing new tools for drug discovery and the Internet, the amazing development in communications technology that triggered 1999's easy-money orgy of venture capital.
While this sport of Biotech vs. Internet is fun and sometimes even useful, there is one parallel that doesn't get the attention it deserves. It is a distinction that gets to the heart of the fundamental advantage enjoyed by Human Genome Sciences (Nasdaq: HGSI) over its competitors. The Internet business boom has shown that it's not a wealth of opportunity or information that creates success, but a business model that can quickly execute on a specific opportunity, making productive use of the right information.
Indeed, too much opportunity and information, with no clear plan, is often a recipe for paralysis. In our home, after years of seeing the Internet through a 1995 vintage 14.4 kbps modem, we recently broke down and updated our home computer, providing my wife with her first high-speed look at the full glory of the Net. To my surprise, her delight over improved performance was counterbalanced by a sense of intimidation. Suddenly, there was so much information available on her ongoing projects, so quickly, that just picking a place to start became overwhelming.
The best of the surviving Internet business models picked a smart place to start, early, and maintained laser focus in the face of exploding -- and potentially distracting -- opportunity all around them. In the same way, Human Genome Sciences (HGS) years ago split off from the race for more and more genetic information, as championed by human genome sequencer Celera Genomics (NYSE: CRA), to focus on the most productive and profitable means of exploiting the emerging information.
William Haseltine, Chairmen and CEO of HGS, used to work closely on gene discovery with Celera's Craig Venter, runner-up for Time Magazine's Person of the Year for 2000. But while Venter continued to pursue the minutia of genetic mapping, Haseltine become more interested in and inspired by the most promising medical opportunity to emerge from our improved genetic understanding -- protein-based drug therapies.
While Venter and Celera have received the bulk of the press recently -- and no one doubts the importance of their stunning accomplishments -- one suspects Haseltine and HGS may enjoy the last laugh. Suddenly, Celera appears to be in a trailing position, announcing last week that it plans to "transform [itself] into a drug discovery company," aping the move Haseltine made years ago. Too late?
<u>A smart place to start</u>
At HGS, it's not really so much about the information as it is about the process. Genes "express" themselves by producing proteins, and biological processes triggered by these proteins lie at the heart of disease -- indeed at the heart of all bodily functions. Even more specifically, HGS focuses on a particular class of these proteins -- the so-called "signal" proteins. These are the messengers that facilitate communications between cells and whole organs throughout the body.
This is the piece of the puzzle that Haseltine picked out early for HGS and that he remains focused on today. As Haseltine maintains in a recent BusinessWeek online interview: "These molecules tell cells what to do -- for instance, to grow or to die. They are probably going to be the most medically useful compounds." The early signs are that Haseltine might be right, as HGS already boasts four drug candidates in -- or very near to -- human clinical trials.
<u>The process is the pipeline</u>
"Pipeline" is the name given by established drug companies to their catalogs of specific drug candidates in various stages of clinical trials. Biotech investors are always encouraged to look for well-stocked pipelines as a marker for long-term profitability.
But even with its early success developing four specific drug candidates, still-emerging HGS continues to focus on the basic process that it employs to exploit the action of signaling proteins. Their website has a "Pipeline" link on the home page. You might expect that clicking this link would lead to a listing of specific drugs. Instead the linked page describes HGS's core process for drug discovery. They seem to be saying that "you ain't seen nothing yet," or perhaps the more business-friendly "the process is the pipeline!"
By focusing on the underlying biological processes in healthy versus diseased tissue, as opposed to the mere statistical correlations that emerge from more shotgun-style drug experiments -- those that cross thousands of drug candidates with a host of diseases -- HGS has mapped out a system for developing only the most promising protein-based drug candidates, those that target specific biological processes and only those processes, eliminating much of undesirable side-effects risk. Given the time and expense involved in shepherding drug candidates through FDA-mandated clinical trials, this basic understanding could prove to be HGS's essential competitive advantage over the long run.
In addition to these advantages in development time and money, protein-based drugs have other benefits over more traditional "small-molecule" drugs. They should be easier to patent and protect, as it's tough to develop cheap "knock-offs" by just altering chemical composition slightly, as can be the case with traditional drugs. They also offer the ability to help the body heal and regenerate itself, using its own naturally occurring processes, potentially leading to a fundamental shift -- a new horizon -- in the world of drug therapy.
<u>If you like risk...</u>
Of course nobody can responsibly argue the merits of biotechnology to investors without mentioning the substantial risks. I'll leave most of that litany to this week's bear, where it belongs, but I will stress here that HGS is not an investment for anything less than five to ten years, preferably more. Absolute best-case scenario has HGS commercializing one of its drug candidates in four years, but, realistically, it might take decades for momentum to kick in, assuming, of course, that Haseltine has the right idea and the money holds out.
Nonetheless, if you have a yen for following the complicated twists and turns of drug research and development, and you are a patient, long-term, business-focused investor with money you can afford to lose, you'd be hard-pressed to find a more exciting subject of study -- and investment -- than Human Genome Sciences. As Victor Kiam once said about his favor electric shaver, we Rule Breaker Portfolio managers "liked it so much, we bought the company!"
Bear's Arguments
I love Human Genome Sciences, and I'm an investor. However, I'm an investor in lots of risky stocks, including quite a large number of biotechs that, on balance, won't be in business in two years. When I approach volatile, emerging markets, I take a small stake in many companies -- the few that pay off big carry the whole portfolio.
That's just the problem: The odds are stacked against all of them, and only one or two will make it. Human Genome Sciences runs the very real risk of going to zero.
How real? Let me put it this way:
Of the few drugs that Human Genome Sciences has in its pipeline, none have even a 30% chance of getting to market. There is only a 74% chance that, at some time in the next 10 years, Human Genome Sciences will put even one drug on the market.
That's because no drug in HGS's pipeline is further along than Phase II. From here, it'll be a couple of years before any get approved -- or not -- for Phase III, and then years more before any get approved -- or not -- to go to market. In the meantime, HGS will probably introduce a handful of new drug candidates, with similar odds of succ