Oct Biomed2008

Club Biomed* - 15 October 2008

to study and better understand the biotechnology, pharmaceutical, medical device, and health care delivery industries

and to invest the assets of the Partnership solely in stocks, bonds, mutual funds or other securities (“securities”) in these sectors or an interest bearing cash account for the education and benefit of the Partners.

*Club Biomed is a partnership. Any member of the tri-institutional community can ask to become a partner and take on the responsibility of contributing to our discussions, making presentations, & investing their assets in the partnership (generally $250 to $1000 per year)

Do you think Mr. Market is unduly sullen or two optimistic?

Should we try to take advantage of his recent offers?

Warren Buffett, Benjamin Graham, and Mr. Market

2003 edition by Benjamin Graham and Jason Zweig

"by far the best book on investing ever written”

---Warren Buffett

NOTE: Library Shelf

Warren Buffett, Benjamin Graham, and Mr. Market

Graham's favorite allegory is that of Mr. Market, an obliging fellow who turns up every day at the share holder's door offering to buy or sell his shares at a different price. Often, the price quoted by Mr. Market seems plausible, but sometimes it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or ignore him completely. Mr. Market doesn't mind this, and will be back the following day to quote another price.

The point of this anecdote is that the investor should not regard the whims of Mr. Market as a determining factor in the value of the shares the investor owns. He should profit from market folly rather than participate in it. The investor is advised to concentrate on the real life performance of his companies and receiving dividends, rather than be too concerned with Mr. Market's often irrational behaviour.

QuickTime™ and aTIFF (Uncompressed) decompressor

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Dow on a semi-log scale

Plans for today

Introducing Mr. Market Financial report and minutes Review TEVA, ALNY, ISIS, GENZ & HOLX

“Clinical DNA Cluster” by Eric and members of the group

Covance: a company that profits by providing services to Biotech and Pharma

------- by Ensar and Eleanor

It there is time, we will discuss areas to explore and try to create groups

Biomed’s July 2008 Holdings

Account Totals:Value $32,660.61Gain $ $3,684.25Gain % 26.32%

Symbol Last Trade Qty Price Paid Total Gain $ Total Gain % Market Val

ALNY 28.55 200 $14.50 2,797.01 96.02 5,710.00GENZ 79.04 50 $70.00 439.01 12.5 3,952.00ISIS 14.8 200 $17.72 -597.49 -16.8 2,960.00TEVA 42.15 120 $33.33 1,045.72 26.06 5,058.00

CASH: 14,980.61

Biomed’s Sept 2008 Holdings



ALNY 27.51 200 $14.50 2,589.01 88.88 5,502.00GENZ 81.22 50 $70.00 548.01 15.6 4,061.00HOLX 19.41 150 $23.79 -669.73 -18.7 2,911.50ISIS 16.1 200 $17.72 -337.49 -9.49 3,220.00TEVA 45.47 120 $33.33 1,444.12 35.99 5,456.40

CASH: 11,427.00

Biomed’s October 2008 Holdings

Account Totals:Value $28,880.91Gain $ ($140.88)Gain % -0.80%


ALNY 22.92 200 $14.50 1,671.01 57.36 4,584.00GENZ 66.87 50 $70.00 -169.49 -4.82 3,343.50HOLX 14.5 150 $23.79 -1,406.24 -39.27 2,175.00ISIS 13.19 200 $17.72 -919.49 -25.85 2,638.00TEVA 39.13 120 $33.33 683.32 17.03 4,695.60

CASH: 11,444.81

Biomed’s benchmark portfolio (July 2008)



IBB 81.68 41 $73.00 355.88 11.89 3,348.88XBI 61.85 65 $46.00 1,030.25 34.46 4,020.25NBI 841.9 4 $746.00 383.6 12.86 3,367.60FBTAX 7.09 434 $6.91 78.12 2.6 3,077.06RABTX 25.2 126 $23.86 168.84 5.62 3,175.20XPH 31.964 87 $34.41 -212.8 -7.11 2,780.87IPH 69.82 38 $78.30 -322.24 -10.83 2,653.16FPHAX 10.15 281 $10.67 -146.12 -4.87 2,852.15CASH 1 1,000 $1.00 0 0 1,000.00

Biomed’s benchmark portfolio (Sept 2008)



IBB 83.16 41 $73.00 416.56 13.92 3,409.56XBI 61.71 65 $46.00 1,021.15 34.15 4,011.15NBI 857.72 4 $746.00 446.88 14.98 3,430.88FBTAX 7.09 434 $6.91 78.12 2.6 3,077.06RABTX 27.11 126 $23.86 409.5 13.62 3,415.86XPH 32.07 87 $34.41 -203.58 -6.8 2,790.09IPH 67.22 38 $78.30 -421.04 -14.15 2,554.36FPHAX 10.04 281 $10.67 -177.03 -5.9 2,821.24CASH 1 1,000 $1.00 0 0 1,000.00

Biomed’s benchmark portfolio (October 2008)

Account Totals:Value $19,417.07Gain $ ($5,522.57)Gain % -22.14%


IBB 0 41 $73.00 -2,993.00 -100 0XBI 50.65 65 $46.00 302.25 10.11 3,292.25NBI 683.51 4 $746.00 -249.96 -8.38 2,734.04FBTAX 6.06 434 $6.91 -368.9 -12.3 2,630.04RABTX 22.47 126 $23.86 -175.14 -5.83 2,831.22XPH 25.917 87 $34.41 -738.89 -24.68 2,254.78IPH 57.65 38 $78.30 -784.7 -26.37 2,190.70FPHAX 8.84 281 $10.67 -514.23 -17.15 2,484.04CASH 1 1,000 $1.00 0 0 1,000.00

Stocks owned by or studied by Club Biomed from September

(to encourage reflection)



DNA 93.12 100 $47.50 4,562.00 96.04 9,312.00IDEV 1.75 100 $7.45 -570 -76.51 175CTIC 0 300 $8.58 -2,574.00 -100 0OSIP 48.33 100 $45.00 333 7.4 4,833.00CJHMF 0 300 $7.15 -2,145.00 -100 0SEPR 17.54 80 $50.00 -2,596.80 -64.92 1,403.20PTN 0.1899 1,500 $2.31 -3,180.15 -91.78 284.85CEPH 77.14 100 $48.12 2,902.00 60.31 7,714.00BIIB 47.985 100 $37.94 1,004.50 26.48 4,798.50ZMH 67.89 40 $88.66 -830.8 -23.43 2,715.60

Stocks owned by or studied by Club Biomed from September

(to encourage reflection)



DNA 82 100 $47.50 3,450.00 72.63 8,200.00IDEV 2.07 100 $7.45 -538 -72.21 207CTIC 0.35 300 $8.58 -2,469.00 -95.92 105OSIP 38.9 100 $45.00 -610 -13.56 3,890.00CJHMF 0 300 $7.15 -2,145.00 -100 0SEPR 12.62 80 $50.00 -2,990.40 -74.76 1,009.60PTN 0.137 1,500 $2.31 -3,259.50 -94.07 205.5CEPH 66.6 100 $48.12 1,848.00 38.4 6,660.00BIIB 44.19 100 $37.94 625 16.47 4,419.00ZMH 55.22 40 $88.66 -1,337.60 -37.72 2,208.80

Stocks Sep-12 Oct-12TEVA 5,365.20$ 4,670.40$ ISIS 3,082.00$ 2,608.00$ ALNY 5,024.00$ 4,604.00$ GENZ 3,926.00$ 3,202.50$ HOLX 2,844.00$ 2,202.00$ TOTAL 20,241.20$ 17,286.90$

Money MarketPrevious Bal 14,980.63$ 11,427.02$ Funds Deposited Redeemed at Last Mtg 330.00$ Interest 15.12$ 17.81$ Dividend Payments 12.51$ Funds Added or Removed From Trading (3,581.24)$

TOTAL 11,427.02$ 11,774.83$

E Record of Money Market Value 11,427.00$ 11,444.81$

Value of the Partnership 31,668.22$ 29,061.73$

Total Number of Units 1024.93 1035.61Unit Value 30.90$ 28.06$

Number of units owned Number of votes

0-4 0

5-10 1

11-20 2

21-30 3

>30 4

Abner Louissant 2.00 Erik Kobylarz 31.56 lionel ivashkiv 31.63 Adriana Galvan 2.00 ethel cesarman 7.91 Lorraine Gudas 40.00 Alessia Delincerti 9.23 Fatima Soliman 3.11 Marcelo Nociari 4.09 Andre Shaffer 9.32 Florence Varodayan 7.77 Mark Wuttke 1.00 Andrea Hooper 32.75 Francesca Domenich 4.00 Martin Igor 7.8 Andy Bullock 9.12 Garrett Deyulia 3.00 Megan Fitzgerald 1.66 Anna Rodina 18.13 Georgia Tucker 8.04 Michelle Soltan 0.86 Anthony Sauve 12.02 Gianina Panaghie 1.28 Mike Keyoung 3.00 Armand Kherlopian 6.82 Hajira Begum 4.35 Neeta Roy 36.76 Arun Anantharam 1.00 Hibiki Kawamata 4.00 Neil Harrison 26.04 Ashwinkum Patel 4.58 Hsiou-Chi Liou 33.86 Omar Vandal 4.00 Asif Maroof 15.75 Imke Ehlers 1.41 Philip Cohen 9.47 Breset (Sterling)Walker 9.17 Jason Gray 16.43 Rachel Fishman 9.23 Carrie Adelman 4.00 Jeanne Farrell 17.76 Rachel Speer 5.44 Chuck Inturrisi 18.62 Jeffrey Horenstein 0.92 Rebecca Jones 4.66 Claudio Alarcon 4.00 Jennifer Kwong 9.00 Robert Samstein 7.77 Cynthia Kou 10.55 Jideafor Aniukwu 2.61 Ryan George 8.16 Dan Su 26.92 John W Wagner 116.34 Salihah Dick 0.93 Darren Veach 10.00 Jon Bourne 30.62 Sebastian Shaffer 5.50 Derek Sant'Angelo 40.00 Jordan Abbott 14.87 Siobhan Pattwell 2.92 Don Fischman 63.10 Judy Mesicek 4.16 Stephanie Backovic 2.64 Earl Gordon 4.00 Karen Wu 2.00 Steve Gross 62.11 Eleanor Allen 9.17 Karim Sharif 4.00 Sue Brown 2.00 Elizabeth Calder 7.77 Kenneth Hess 4.66 Xiao Peng 6.21 Enrique Mesri 10.13 Kim Younghwa 5.00 Xuehong Yu 7.77 Ensar Halilovic 6.82 Kindiya Geghman 9.23 Yousif Ganat 5.97 Eric Joseph 11.49 Laura Towart 18.55

Leyi Wang 6.47Matthew Bick 4.21

Approval of Minutes

Call for nominations

A Financial Partner will be responsible for:Keeping a complete set of books,Evaluating the value of the Partnership before each meeting (see item 7),Accepting capital contributions and assigning Units to Partners,Reporting the holdings and value of the Partnership at the beginning of each meeting, Report on any checks issued from the Partnership account,Assigning the voting rights and the number of votes to each Partner at the meeting,Be the official contact for written statements assigning proxy votes,Counting votes,Reporting the holdings and value of the Partnership on the web site,Reporting tax liabilities to each Partner (on schedule K1),Filing a Partnership Return (Partnership Return Form 1065).

Stocks & Stockwatchers

Teva (TEVA) Jason ALNY Eric & ISIS Eric & ???? GENZ Who did we appoint? HOLX Rebeca & ???

(interesting stock we are watching for buying opportunity) Millenium (MLNM) Yosif, Don, (watching; will make proposal if opportunity) SEPR Sebastian (we had an order at 50)

Stocks Biomed has owned Regeneron John & Neil (bought & sold)-lost and rebounded Celgene (CELG) Gianina/Anthony (offer at 38-never bought)-great sucess Amylin (AMLN) Deirdre (bought & sold winter 2003-4), promise fulfilled & up Cephalon (CEPH) Imke (sold July 2004)--we made a little, soared in

2005-6 Pfizer (PFE) Steve(24-35) fell, sold & climbed back OSIP Neil & John (we bought & sold loosing $) NVS Yosif, Rashni, and Haijra made nice paper profit & sold in

declining Market PTNPTN John, Sebastian, & Don stop loss save part of our shirtJohn, Sebastian, & Don stop loss save part of our shirt ZMH bought in April 2007 @ 88. Sold at a loss Biogen Idec (BIIB) Dasha, John, Neeta sold at 55 (nice profit)

Stock watch reports

TEVA ALNY ISIS GENZ HOLX

TEVA



ALNY



ISIS



GENZ



HOLX



COV revisited

By

Ensar

and

Eleanor

September 29, 2008CVD is terminating joint venture plans with WuXi PharmaTech to develop and build a pre-clinical facility in China, which was expected to be completed in '09. No reason was given for termination of the deal.

August 6, 2008CVD agrees to buy Eli Lilly's campus for $50M, and enters into a 10-year service contract worth a minimum of $1.6B.

October 6, 2008Covance Inc. has closed a 10-year, $1.6 billion research agreement with drugmaker Eli Lilly & Co. Covance will gain $90 million in annual business with Lilly under the agreement, along with the $70 million in annual work Covance already did for Lilly.

In addition to adding new jobs and construction, Covance is estimated to ultimately bring $1.2 million annually to the county's coffers in property taxes.

County officials forecast that in its first 10 years in operation, Covance will pay $8 million in taxes, minus the county's own $1 million incentive investment.

In its plans to take over part of a plot vacated by Eli Lilly & Co. last year, Covance Inc. is bringing to Prince William County 450 jobs, $175 million in investments -- and the wrath of the country's leading animal activist group.

PETA Urges Prince William County to Reject Covance's Animal-Testing Laboratory

"We don't have any reason to not support their relocation to Prince William," said Liz Bahrns, a county government spokeswoman. "Covance has corrected its issues. It has paid its fines. It is in good standing with the federal government at this time."

"These allegations have already been fully investigated by the United States Department of Agriculture and the United States Food and Drug Administration, as [being] well addressed by Covance," said Mona Terrell, a spokeswoman for Covance, which describes the animal rights group as "extremists."

"PETA's agenda is not solely against Covance, but against the use of animals in biomedical research and the development of life-saving and life-enhancing medicines generally."

Covance Inc. the world’s largest publicly traded contract research organization, has won the “Best Contract Research Organization” (CRO) award at the 2008 World Vaccine Congress, held in Washington, D.C.

- Covance as best-in-class when it comes to providing services that support vaccine development.

Covance Inc posted a 22.7 percent increase in profit due to increased revenue from early- and late-stage clinical testing.The net profit for the second quarter was $50.9 million, or 80 cents per share, up from $41.5 million, or 64 cents per share, a year ago.

Covance, one of the world's largest drug development service companies, estimates that it has helped develop one-third of all pharmaceuticals on the market today.

Covance has emerged triumphant in the latest episode of a long-lasting saga over a new US animal testing lab that it is building in Chandler, Arizona. 26-Feb-2008

This week a judge dismissed the final part of a five-part suit, the other four aspects had been dismissed in late January.

The dismissal of the last part of the lawsuit, now closes the door on the saga for Covance and opens the door for the firm to begin operating the 300,000-square-foot laboratory early next year.

Some companies-areas & recommendation & S&P

Cancer immunology therapyDendreon--was hot in summer, but needs

more to get by the FDA and trials are in progress (is it time?)

Neutraceuticals (promise w/o much science)Estee Lauder --5S skin careHerbal life--4 S, weight loss

Big companiesDNA 4S--great science and proven ability,

price down, possible buy-out (timing important)

Gilead--4S-best aids company, proven record

Forest labs--4S Novartis-4S good science and generics tooJNJ-nice company with good dividend and

broad product mixSTJ-St Jude- a medical device company

with 5S rating and 19 P/E

Other Infrastructure companies

Charles River 4S- money from animal models?

ICON 5S-contract research CNS drugs

Questcor Pharm QCOR--smaller company with 2 druds and others in development with a low P/E !!!!!

CancerOSI Pharmaceuticals, 4 star that we liked

once and sold Designer drugs / protease inhibitors

– VRTX-Vertex still losing money, but it has collaborators and promising drugs, including one for Hepatitis C

Will Glaxo Make Their Money Back??

“It can take up to 12 years or more and over U.S. $800 million to bring a new therapy from discovery to market.”

So…..many pharm and biotech are looking more and more to outsource drug development

Why should we care?

Who do they service?

1. Biotech 2. Environmental: ecotoxicology, environmental fate,

plant metabolism, genetic & animal toxicology 3. Food & Dietary Supplements: quality, purity,

consistency, stability, safety, efficacy 4. Pharma 5. Research: make Abs, animal supplier 6. Vaccines: DNA, recomb. protein, bacterial, viral

The bad stuff:

Early Development services– 47% of revenue

Late-stage development services- 53% of revenue

During the year ended December 31, 2007, the Company served in excess of 300 biopharmaceutical companies.

Covance Inc., leading contract research organization (CRO)

Covance

Charles River

DOW / S&P500

CVD reported 1st quarter 2008 earnings of $0.73 per share.

Beat last year's 1st quarter results by 21.7%.

Revenue increased by 15%.

Expect low -mid teen growth in revenue, 20% annual growth in EPS

CVD was named primary provider of a new client, a top-10 pharma, which should result in significant revenues.

CVD's PE ratio is among the highest of any stock in the Biotechnology & Drugs industry and signals that investors have high hopes for this company's future business prospects

12 Month Period Ending: Currency is US Dollar

12/31/200312 Months

12/31/200412 Months

12/31/200512 Months

12/31/200612 Months

12/31/200712 Months

Revenue and Gross Profit

Total Revenue 974 1,056 1,250 1,406 1,632

Operating Expenses

Total Operating Expense 858 916 1,075 1,213 1,403

Operating Income 117 140 175 193 229

Income Before Tax 116 143 178 201 246

Net Income 76 98 120 145 176

Normalized Income

Basic Normalized EPS 1.23 1.57 1.91 2.28 2.69

Diluted Normalized EPS 1.21 1.52 1.88 2.24 2.64

Income Statement

12 Month Period Ending: Currency is US Dollar

12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007

Assets

Total Current Assets 450 509 547 640 770

Buildings 230 259 292 370 430

Machinery/Equipment 371 394 429 487 525

Construction in Progress 6 22 64 44 104

Total Assets 808 925 1,057 1,298 1,560

Liabilities

Total Current Liabilities 190 219 253 290 358

Total Long Term Debt 0 0 0 0 0

Total Debt 0 0 0 0 0

Total Liabilities 244 287 325 374 450

Shareholder Equity

Total Equity 564 638 732 923 1,110

Total Liabilities & Shareholders� Equity

808 925 1,057 1,298 1,560

Ttl Comm. Shares Outs. 63 62 63 64 64

Balance Sheet

Global pharmaceutical R&D spending in 2007 - $65 billion to $70 billion

Growing at about 8%-10% annually for the past decade.

The CRO market is estimated to be about $16 billion, 23% R&D spending.

CRO market has been expanding about 10%-12% a year, slightly ahead of the growth of R&D spending over the past several years, as pharmaceutical companies are increasingly outsourcing

Market

Covance and WuXi PharmaTech Form a Joint Venture to Provide World-Class Preclinical Services in ChinaTuesday June 24, 4:15 pm ET

• Operations will be located at ~300,000 square-foot-facility in Suzhou, China, expected to be completed in 2009 and designed to meet the Food and Drug Administration and worldwide regulatory standards.

• Will provide GLP toxicology, drug metabolism and bioanalytical chemistry services.

The benefit to Covance is clear:

It gains a presence in China, where scientists' wages are considerably cheaper. Higher margins should help it compete for pharma and biotech business.

Covance Opens Top-Tier Research Clinic

June 16, 2008 - Covance Inc., announced today that it has relocated and significantly upgraded its clinical pharmacology research unit in Evansville, Indiana.

The $12.4 million facility is a premier clinical research unit for conducting first-in-human studies and other complex trials requiring special attention.

Goldman favors Covance shares over Charles RiverTuesday June 24, 2:22 pm ET

Covance has emerged triumphant in the latest episode of a long-lasting saga over a new US animal testing lab that it is building in Chandler, Arizona. 26-Feb-2008

This week a judge dismissed the final part of a five-part suit, the other four aspects had been dismissed in late January.

The dismissal of the last part of the lawsuit, now closes the door on the saga for Covance and opens the door for the firm to begin operating the 300,000-square-foot laboratory early next year.

The outsourcing trend for biotech and Big Pharma is definitely higher and increasing.

Whether or not a drug is approved, money will be spent doing trials.

CROs like Covance really have a good chance to benefit from the clinical trial boom that is ongoing right now.

Planning for next fall

A topic from the DNA sequence group in October Forrest (Robbie and Ryan) in October

– Does anyone else want to join them? Anthony Gotto on the role of the scientific advisory

board--he declined Steve Gross on his experience with clinical trails

Evaluating a company-the Club Biomed way

Category and history of company Existing products/patent positions/ability to extend product line and profits

from them Promised products and potential income. Scientific and discovery strategy?

Where and how many are in the pipeline? Clinical trials? FDA approval? marketing strategy & competition

Size of market and competition in the market Ability to market product Financial analysis Profits and loss, promised profits, cash flow, financial

position, balance sheet, potential liability problems Quality of people (leadership, advisory board, scientists, clinicians,

marketing) Alliances and cooperative agreements Impact of government policies on company success

Some companies-areas & recommendation & S&P

Infrastructure companiesCharles River 4S- money from animal

models?ICON 5S-contract researchCavance--5S, growing profits

Cancer immunology therapyDendreon--was hot in summer, but needs

more to get by the FDA Neutraceuticals (promise w/o much science)

Estee Lauder --5S skin careHerbal life--4 S, weight loss

Big companiesDNA 3S--great science and proven ability,

price downGilead--4S-best aids company, proven

recordForest labs--4S Novartis-4S good science and generics too

Bread and Butter BiotechExelixis--4S--cance therapy with bid

piplineSciele--4S--successful marketer with low

P/ELifeCell--liked by Jay walk, wound healing

Another foreign generic DrReddy--4S--nice sales profits from India A drug distributor with high profits

McKesson 5S dividentd stock with growth A favored imaging company

Hologic--5 S--Breast screening and other women’s health care

MiscellaneousGenezyme--4S, collaborating with ISIS,

making money

Is the World Ready for Libido in a Nasal Spray?Now entering Phase 3 clinical trials: the first real, honest-to-God,

horny-making, body-shaking, equal-opportunity aphrodisiac.

Oct Biomed2008

Economy & Finance

Transcript of Oct Biomed2008