More Protein Design Labs, please (PDLI)
Protein Design Labs (PDLI), bought August 30, 2005 at $26.05, April 15, 2005 at $16.84 and April 4, 2005 at $15.09.
When I was trying to put a little more money to work recently I considered a lot of candidates -- some I've mentioned in my wish lists, some in passing as I've posted over the past weeks, but I kept coming back to one of my favorite holdings and decided that was still the best place for my new cash. That's another Lynchism, for those who are counting: Sometimes the best stock to buy is one that you already own.
Protein Design Labs is one of my favorite companies and biggest holdings -- as I've written in a few previous posts, I love the biotechs that have a steady stream of income to support their ongoing drug research programs, especially if they have deep pipelines of promising drugs. Protein Design Labs is the best of that group, in my opinion.
The PDLI story is not that complicated, though simple folk like me definitely have trouble with the science part of it at times.
The basic story is this: PDLI developed and patented a special variety of humanized antibodies that can be used to develop drugs. (Humanized as distinquished from human -- these are mouse antibodies that have been adjusted to be well tolerated by the human body). Other drug companies use these antibodies in their drugs and pay a royalty to PDLI for the use of their patented science. That's where the current revenue stream and some of the future growth comes from -- the drugs using PDLI's antibodies and paying a royalty include some real blockbusters, among them Genentech's Avastin, perhaps the most signficant cancer drug out there right now.
And the back story, beyond this steady and growing cash flow from royalties, is Protein Design's own pipeline of drugs in the clinic and preclinical development, and their acquisition of a stable of on-market drugs and a deepter pipeline with their recent purchase of ESP Pharma.
In the pipeline are three particularly promising candidates for future blockbusterhood: Nuvion, Ularitide, and M200. Nuvion is closest to market and is still itself several years out, but Biogen Idec thought enough of the rest of the pipeline to partner on several of the compounds with a very PDLI-friendly 50/50 split of costs and revenues going forward in addition to a cash infusion up front.
PDLI seems to be on the verge of turning the corner. Will they be the next Genentech or Amgen? That's a lot to hope for, but with continued good managemend and success in the clinic and the lab you never know. We do know that they're projected to go cash-flow positive over the winter and the odds are heavily tilted in their favor with royalties on some very strong drugs, income from the solid offerings of ESP Pharma, and the long-term potential of their own drugs. I like this more than my other biotech holdings, and it's one of my favorite stocks. You'll note that I bought more even after our recent run up, which is unusual for a "buy on the dips" guy like me, but I am confident that the price is fair right now for what I'm getting. I really like CV Therapeutics (CVTX) and Vertex Pharma (VRTX) as well, which are the other core biotech holdings in my portfolio right now (I also have small positions in Myriad Genetics (MYGN) and Exelisis (EXEL) but want to learn more about them before adding more), but PDLI is the top of the heap.
That's all for now -- wanted to get this up since I've been remiss in posting for a few days, will come back later and add more on PDLI as I can. And I've still got some of my other personal favorites to write up in more detail -- not only CVTX and VRTX, but the oddest bird of my portfolio, SpaceDev, as well.
PDLI has a big fan over at the Fool, too, in Charly Travers -- lots of his articles available over there, including a bull/bear debate on PDLI here.
When I was trying to put a little more money to work recently I considered a lot of candidates -- some I've mentioned in my wish lists, some in passing as I've posted over the past weeks, but I kept coming back to one of my favorite holdings and decided that was still the best place for my new cash. That's another Lynchism, for those who are counting: Sometimes the best stock to buy is one that you already own.
Protein Design Labs is one of my favorite companies and biggest holdings -- as I've written in a few previous posts, I love the biotechs that have a steady stream of income to support their ongoing drug research programs, especially if they have deep pipelines of promising drugs. Protein Design Labs is the best of that group, in my opinion.
The PDLI story is not that complicated, though simple folk like me definitely have trouble with the science part of it at times.
The basic story is this: PDLI developed and patented a special variety of humanized antibodies that can be used to develop drugs. (Humanized as distinquished from human -- these are mouse antibodies that have been adjusted to be well tolerated by the human body). Other drug companies use these antibodies in their drugs and pay a royalty to PDLI for the use of their patented science. That's where the current revenue stream and some of the future growth comes from -- the drugs using PDLI's antibodies and paying a royalty include some real blockbusters, among them Genentech's Avastin, perhaps the most signficant cancer drug out there right now.
And the back story, beyond this steady and growing cash flow from royalties, is Protein Design's own pipeline of drugs in the clinic and preclinical development, and their acquisition of a stable of on-market drugs and a deepter pipeline with their recent purchase of ESP Pharma.
In the pipeline are three particularly promising candidates for future blockbusterhood: Nuvion, Ularitide, and M200. Nuvion is closest to market and is still itself several years out, but Biogen Idec thought enough of the rest of the pipeline to partner on several of the compounds with a very PDLI-friendly 50/50 split of costs and revenues going forward in addition to a cash infusion up front.
PDLI seems to be on the verge of turning the corner. Will they be the next Genentech or Amgen? That's a lot to hope for, but with continued good managemend and success in the clinic and the lab you never know. We do know that they're projected to go cash-flow positive over the winter and the odds are heavily tilted in their favor with royalties on some very strong drugs, income from the solid offerings of ESP Pharma, and the long-term potential of their own drugs. I like this more than my other biotech holdings, and it's one of my favorite stocks. You'll note that I bought more even after our recent run up, which is unusual for a "buy on the dips" guy like me, but I am confident that the price is fair right now for what I'm getting. I really like CV Therapeutics (CVTX) and Vertex Pharma (VRTX) as well, which are the other core biotech holdings in my portfolio right now (I also have small positions in Myriad Genetics (MYGN) and Exelisis (EXEL) but want to learn more about them before adding more), but PDLI is the top of the heap.
That's all for now -- wanted to get this up since I've been remiss in posting for a few days, will come back later and add more on PDLI as I can. And I've still got some of my other personal favorites to write up in more detail -- not only CVTX and VRTX, but the oddest bird of my portfolio, SpaceDev, as well.
PDLI has a big fan over at the Fool, too, in Charly Travers -- lots of his articles available over there, including a bull/bear debate on PDLI here.
This article posted by One Guy @ 8/31/2005 10:51:00 PM 0 comments
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