One Guy's Investments

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Thursday, September 22, 2005 -- Subscribe free

Myriad reasons to buy more (MYGN)

Just bought an additional portion of Myriad Genetics, and it's a good thing I don't often get around to posting these the same moment I buy or you'd have an instant short-term contrary indicator. After I buy, look for it to go down at least a buck in the next day or two.

But anyway, that's not my time frame and I have no success in predicting short term movements in stock prices -- I just buy companies whose prospects I like whenever I have the money and they seem reasonably priced.

Bought this second MYGN position on September 20, 2005 at $20.55. Wish I'd waited a couple days to get it at $19 and change, but I think they should be moving up, not down, so can I help it if the market is misinformed?

Myriad Genetics I've written about before, and I really like their business plan for continued great sales and expanding markets in genetic testing and predictive medicine as well as their home-run potential with their stable of early-stage drug programs. Short term, I think we have some potential to see significant gains because there are some indications that the Alzheimer's Drug that leads their clinical candidates in Phase II right now might be working a bit better than the market expected. MYGN is priced as if this drug goes nowhere, so any good releases should move the stock -- latest press release is here.

Don't get me wrong, I'm not counting on a Flurizan home run here ... just wondering whether it might be a compelling enough drug to reach the market, providing us with some icing on the cake. In an area with such a lack of drugs like Alzheimers, maybe even a drug like Flurizan that appears to help a bit with mild early-stage patients is better than nothing.

What I'm really thinking long-term is that the market is underestimating the power of Myriad's genetic tests, which I think will continue to grow significantly for many years as predictive medicine becomes more accepted. Myriad might be fairly priced on that testing business alone if my optimism is warranted, but then you also get a compelling if very early-stage drug discovery program. And unlike with some other biotechs that primarily have early stage formulations in the clinic, or haven't yet even gotten to clinical trials, Myriad has proven that their folks know the science -- designing those tests gives them a leg up to understanding the diseases they're testing for, and, theoretically at least, a better shot at developing innovative therapies.

With this purchase, I've now invested equally in my three second-choice biotechs: Vertex Pharmaceuticals, CV Therapeutics, and Myriad Genetics. I still love the prospects for all three, though they fall a bit short of my number one biotech, Protein Design Labs. I'll be keeping a close eye on all of them.

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