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Biogen Idec Inc. Message Board

  • DavidSage DavidSage Sep 10, 1999 5:42 PM Flag

    Perspective

    IMO, it's
    getting a little oversold. The past month's speculative
    frenzy obviously could not last forever, and as regulars
    like corrchess, riverview5, small neurons,
    deanthedream, fduncano, and newcomers al bundy 2020, dallon72
    and aenany have said, this is a bump in the road for
    the long, as hard as it is to see those paper gains
    evaporate in two days, we're really only back ONE MONTH.
    That's right, IDPH closed at 103.25 on 8/6/99. As
    someone sitting on a substatial core position with a 10+
    year horizon, it just doesn't matter when the
    underlying fundamentals remain so strong. My only decision
    is when to buy more AFTER it turns back up, which is
    definitely a when, not an if IMO. And if the fundamentals
    WERE to change, to get the hell out. Doubt that will
    ever happen.

    We can see from the flurry of
    posts the past 2 days what page of the investment book
    different people are reading from. You've got your patient
    long term investors (sigh..), your momentum daytraders
    (ouch!), your short players (yipee!!) and your kids
    playing on their computer, trash-talking any stock in the
    news (just wait till your father gets home, you
    mealy-mouth brats!), all of whom make for great
    entertainment. Where was everyone when we were up 10, 15 points
    in 2-3 days? Waiting for a drop like this to get in,
    probably, but now too scared to pull the trigger. Be
    careful what you wish for, you just might get
    it...

    This drop was a dose of medicine, and it's going to
    take some time to repair the damage. If you bought in
    the past month with hopes of quick gains and you
    still hold the stock, you bought a great company but
    your timing wasn't so hot; the time to buy is right
    when a stock first breaks out of a good base pattern
    to make a new high (like, 62 in this case). For
    those on the sidelines, this could be a decent
    long-term entry point, but we could see some additional
    weakness for a while. I'd still say average in and watch
    for a solid base to build. Long term holders, you're
    still waaay ahead, don't sell out of fear, you'll be
    playing right into their (the big boys') hands and live
    to regret it. Too late now, most of the damage is
    already done. If you haven't been taking some profits
    during the rise you've learned your lesson; sell a few
    when times are good 'cause you just never
    know.

    Rastetter did the right thing by guiding the analysts
    lower. There's a lot going on here and the management of
    this company wasn't born yesterday. There's a good,
    responsible reason for every single thing they do, that isn't
    always readily apparent in the short term. This too will
    pass and we'll someday look back on $105 (pre split)
    in Sept 99 like we do $17 in Sept 98: amazing
    bargains. Meanwhile, whatever your investment strategy,
    thanks for your input. Takes all kinds to make a market!
    Just my two cents, (make that one and three quarters
    now;-) take it for what it's worth...

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I think we agree much more than we disagree, and
      I can certainly sympathize with your desire to get
      more information from the company. I am sure it will
      come as soon as they have something more tangible to
      say. However, there is one point that I'd like to
      address, and that is about institutional ownership of
      stocks. Actually, large institutional ownership of a
      stock with a small float means that one will almost
      certainly see large volatility in the stock price.
      Contrarians often focus on companies that have small
      institutional followings because, when the institutions hear a
      good story and start buying, they buy in blocks and
      drive the stock up like crazy - this is not necessarily
      rational behavior, but it happens all the time.
      Unfortunately, that works the other way too. Many funds that
      specialize in momentum and aggressive growth stocks are very
      quick to dump big blocks of stock at any hint of
      negative news, or sometimes just to move into another
      stock that is earlier in its runup, in their opinion.
      When this happens, the stock can do down just as
      quickly as it went up. For larger companies with a
      broader distribution of institutional ownership, this
      does not produce nearly the volatility as it does in a
      small company unless all the institutions decide to
      sell at once. However, for a stock like IDPH, just one
      fund company that has built up a significant position
      in the stock that decides to get out, or even cut
      their position by 50%, can cost the company 5-10% in
      stock price if there is not another institution willing
      to take a big position at exactly that time. This is
      what I mean by Thursday's drop being a very natural
      event in a stock like this. In the longer run, getting
      some of the hot money out of IDPH so that more stock
      is sitting in the hands of institutions and
      individuals with longer term horizons will be a very good
      thing, as long as the fundamentals continue to improve.

    • Corrchess:

      I don't quite agree with all of
      your points that you have made, but first let me say
      this. This is a very solid company that has done a
      tremendous job in bringing Rituxan to market. I think they
      will hit another home run with the radio-labled
      antibody as well, Y2B8. I forget what the new name for it
      is. They have also made up some significant time on
      Coulter's competing antibody Bexxar. The jury is still out
      on some of the other things in the pipeline;
      however, CHO expressed proteins and antibodies have come
      of age and have gotten several approvals in the past
      couple of years. It's quite obvious that these are
      therapeutics that work, and they work better than anything we
      have seen for some of these indications to date.


      Some of your statements regarding the 40% corrections
      of a stock like this is just to be expected I think
      are a little unfounded. Granted, the price shot up a
      great deal in a couple of months time, but if a
      companies earnings begin to justify that price then why
      would you expect it to correct by 40% or so?

      You
      also said that the market would have reacted the same
      way by punishing this stock if an official press
      release regarding the Rituxan earnings estimate was
      issued. That may very well have been the case; however,
      the point is that all share holders were not privy to
      that information in an equitable fashion. This is the
      point I have been trying to make.

      It seems that
      with a vast amount of information at our fingertips
      that it has become very difficult for companies to
      protect this type of sensitive information. I have seen
      postings on this board as well as the Immunex board
      regarding prescriptions sales of their repsective drugs
      that are as little as only a couple of weeks old. How
      do these people get this information
      anyway?

      When the analysts are armed with relatively the same
      information that the company has, they company needs to be
      very diligent in their guidance to the street.
      Earnings are important but they are not everything.
      Perception of the company is very crucial. People read way
      too much into "the silence". The misinformation
      continues to undermine investor confidence and degrade the
      stock price. Ok, enough of beating this
      horse.

      As I said in my earlier post. This is a short term
      correction, well relatively speaking for some. By short term
      I mean three or four months, and we should be happy
      again with IDPH. If Rituxan come in at 78 million or so
      I think we might see a big upside move on the
      stock. Remember that institutional holding is pretty
      high on this stock so there may only be 5 or 6 million
      shares in the float for the general public to buy and
      sell. This could lead to an internet kind of move, up
      10 or 20 in a single day.

      Hamsters Are Good
      For You!

    • Thanks for making me feel a little better but I
      find it very disturbing to own a stock that drops 10
      points on no news when the stock market is doing fine as
      what happened Thursday morning. Any other company
      would be in the headlines in CNBC with an action like
      that. Does anyone know what happened Thursday
      morning.
      Also does anyone know when the Rituxan is expecting
      approval in Japan this could boost earnings Idec depends
      completly on outside companies to do sales and marketing
      overseas. Are they attemping to penetrate other markets in
      Asia, possibly Australia?

    • It is always very nice to hear comments from
      folks who know the company first hand, as opposed to
      second hand, like most of us do. I've followed 5 or 6
      biotech companies pretty closely for nearly 10 years, and
      IDEC is just about the best about letting investors
      know what is going on with their products and their
      pipeline, which is what matters most. This contrasts for
      example to Xoma, who let the E5 sepsis fiasco go on 1-2
      years after it was clear that clinical benefits were
      marginal, and it never was going to get US approval.
      (Footnote - sepsis is a huge and exceedingly difficult
      issue for the medical/biotech community that I hope
      *someone* develops an effective treatment for soon; I still
      keep a small position in Xoma on the off-chance that
      they learned their lesson on E5, and that Neuprex will
      be an effective treatment.)

      In my opinion,
      IDEC has done a great job of focusing their resources
      on product candidates that have the maximum
      potential for benefit to the patient community as well as
      for shareholder return. Recent investors may not know
      that IDEC got crushed by the market in 1994 when they
      discontinued their 1st generation NHL product candidate
      (SpecifID, I think) in favor of the antibody that became
      Rituxan. They took the hit in the market when it was clear
      that SpecifID was an inferior product candidate,
      instead of diluting resources and trying to push it for
      an interim solution with lesser efficacy. During
      that particular "correction," I gritted my teeth and
      bought more because it sounded like they were doing the
      right thing for the long term. That $2.625 stock is
      still doing just fine, and if I didn't sell it at $140,
      I sure as heck am not letting it go in the low 90's
      while the company's fundamentals are still so
      good.

      So this company has won my confidence through eight
      years of corporate behavior that has led to tremendous
      growth and shareholder return. If they ever change, I
      will sell my position. Until then, I will keep IDPH as
      a core holding (5-10% of my net worth), and take
      advantage of pullbacks to occasionally do a little trading
      on the side. We are getting close to that point in
      this correction ... but I think the sector rotation
      and market sentiment are now the over-riding factors
      weighing on the stock. In 2-3 weeks, things may start to
      look a little brighter, but, absent some good news in
      the interim, things could get a little rough between
      now and the end of October. (For example, some
      financial geniuses will decide to sell IDPH for the tax
      benefits, which is about the dumbest bit of collective
      behavior I can imagine, but happens like clockwork at this
      time of year to any company that is down more than
      20-30% off its high.)

    • I read this message board every day due to my
      long connections with IDEC and I am sick and tired of
      hearing about these poor people who didn't make 100% on
      their money immediately. Most of the people whose
      postings I am interested in reading seem to have a
      timeframe of 5 years rather than 15 minutes. They
      understand that building a company for the next millenium is
      just as important as returning value to the
      shareholders, after all IDEC is not making plastic chairs, the
      products are a little more important. Therefore, I don't
      care if you bought at $141, $100, $41 or $4, if you
      don't believe in the company and where it is going and
      if you have nothing intelligent to say then get off
      the board and vent somewhere else.

      BTW - I am
      of the opinion that 3rd quarter sales will come in a
      lot closer to $80mm than most people think. I am
      expecting approx. $78mm.

      My 2c.

    • I bought in at 141 on the 7th this month. Either
      this CEO is the worst Ive seen at handling public
      relations maybe he could of simply stated he expects to
      meet estimates instead of commenting that the high end
      of estimates seems a little high or my worst fear is
      they are quiet because things are much worse than the
      outsiders can know at this time. Why did it suddenly tank
      big yesterday hours before Microsofts President made
      his comments. My Apple stock had a better week than
      this disaster

    • Great idea. I would suggest that you short 1,000
      shares at $45. also tell all of your friends and family
      too. This is a great way to become wealthy. I will
      wait in October for the short squeeze to suck your
      money out of your account, then comes your car and
      house.

    • Your points are well taken, and I share your
      frustration - even though a 40% (or more) correction is
      perfectly normal, it is still perfectly painful to us
      longs! If IDPH would have come out with a press release,
      I'm afraid the same thing would have happened - the
      stock would have opened down 30% the next morning.
      Given the ruthless efficiency of the market and the
      advantage in speed that the institutions have, it is hard
      for the little guy not to get trampled by the herd no
      matter how something like this is handled. This is a
      cruel fact of life.

      I would also really like to
      see an official estimate from the company, and I'll
      bet they'd provide one if they had it. But this close
      to the end of the quarter and to Genentech's
      earnings announcement (which I think comes before Oct. 15
      or so), their hands may be tied. In the electronics
      business, you have the same sort of uncertainty around
      end-of-quarter, when it can be a total crap-shoot as to whether
      you are above, equal, or below estimates depending on
      how many late orders come in.

    • you should not short this stock. I question if you understand this stock and the oncology market as a whole. $45 is kind of low but if your right then all the power to you.

    • I am aware of the relationship between IDEC and
      Genentech and realize that Genetech reports ahead of IDEC
      in the earning season; therefore, IDEC's sales are
      indirectly disclosed at that time. What I don't think any of
      us know is what the percentage of those proceeds go
      directly to IDEC. I would presume it is on a sliding
      scale.

      Further, you are correct in saying that
      there has been no formal announcement of an earnings
      shortfall. My point is that the CEO was quoted as saying
      they were not going to meet the high end of sales
      expectations due to the price increase of Rituxan in September
      and the distributors bought ahead of the price
      increase thus artificially raising the earnings for the
      second quarter and leading to a slighlty lower than
      expected earning compared to the prediction for the third
      quarter. I think this is more or less how the story
      unfolded.

      My point is this. Perhaps the CEO did not intend for
      this to be a profit warning but that is how it was
      perceived and people acted on that information. The damage
      is done, but the misinformation on sales continues
      to plague the stock price.

      What I am hoping
      for is a formal press release from IDEC or Genetech
      for that matter that puts an end to the
      misinformation that is circulating regarding Rituxan sales. What
      I really think will happen is that we will have to
      wait until earnings are posted in October and those
      figures will then speak for themselves. I beleive that
      once the third quarter and the fourth quarter earnings
      are under our belt that this stock will once again
      revisit its old highs. But until then its a painful ride
      down, and further we go down the longer it will take to
      go back up again. I hate to see the reputation for
      IDEC tarnished due to a few overzealous analysts that
      damn a company for a mistep in one quarters sales.


      My main gripe here is that the information regarding
      these factors effecting sales of Rituxan in the short
      term was shared with a small discrete group of people
      who had the ability to act on that information before
      is was widely known by all of the companies
      stockholders. I don't consider that to be fair to everyone. I
      would like to see IDEC fight back a bit and formally
      state what was shared in that conferance. Then we could
      all evaluate the same information. I'm afraid IDEC is
      a bit to conservative to do this and unfortunately
      we will have to wait until earnings come out see the
      real story.

      I guess what you have here is a
      buying opportunity. Who wants to call the bottom
      here?

      Hamsters Are Good For You!

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