A 2013 Top Ten Interview with Boris Peaker, Executive Director and Senior Analyst at Oppenheimer & Co. Covering the Biotechnology Sector: Pricing Power in Any Economic Scenario

Wall Street Transcript

67 WALL STREET, New York - December 10, 2013 - The Wall Street Transcript has just published its Top Ten Equity Analyst Interviews of 2013 Report . This special feature contains expert industry commentary through in-depth interviews with award winning Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Biotech: Oncology, Orphan Drugs, and Special Situations Stocks

Companies include: Amgen Inc. (AMGN), Celgene Corporation (CELG), Onyx Pharmaceuticals Inc. (ONXX), The Coca-Cola Company (KO), International Business Machine (IBM), Celldex Therapeutics, Inc. (CLDX), Immunomedics Inc. (IMMU), Keryx Biopharmaceuticals Inc. (KERX), Pluristem Therapeutics, Inc. (PSTI), NPS Pharmaceuticals, Inc. (NPSP)

In the following excerpt from the Top Ten Equity Analyst Interviews of 2013 Report, an expert Biotech research analyst discusses his methodology and top picks for investors:

TWST: Just following up on that, does that mean they don't have effective places to put the money?

Mr. Peaker: Well, that's not necessarily true. I mean, there are a couple of reasons why the capital returns happened. First, they have been investing internally. They both have significant R&D expense, as well as they were making acquisitions. Celgene (CELG) made a few small acquisitions. Recently Amgen (AMGN) expressed an interest in acquiring Onyx (ONXX) for $9 billion-plus. So they certainly are investing in their own R&D engines, as well as externally.

I mean, part of the reason is that they have the cash to actually buy back share, in addition to invest, and also they've levered their P&Ls, which is not unusual these days. Some of the large companies that are considered to be the established businesses of the Dow, like Coca-Cola (KO) and IBM (IBM) and so forth, those have certainly leveraged their P&L and used that capital to buy back shares. So some of these biotechs are following the same game plan. Basically, take advantage of the cheap debt and their excellent credit ratings to leverage their P&L and be more aggressive on the capital returns.

TWST: Let's jump back to an earlier conversation about the FDA. Are they becoming more accommodative?

Mr. Peaker: They certainly are trying to be more accommodative. There are a number of new developments at the FDA that people are just waiting to see that some of them, how they play out. I mean, one big area, it is the biosimilar front, which is kind of the generic equivalent for biologics. Not a true generic, but that's been something that's been an uncertainty for a long time, exactly how biosimilars are going to be viewed and how exactly they're going to be analyzed and how to bring one to market. And even though we are still in the early stages of this process, the FDA has had a lot of clarity, and we've seen a lot of companies make some substantial investment into the biosimilar area. So that's one area of FDA.

The other thing that the FDA has done is they've tried to help further identify drugs that are more significant, let's say, than an incremental drug or the drug that's more than an incremental improvement on something existing, and they've come out with a breakthrough designation...

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