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No. of Recommendations: 7


I must agree with Tom Jacobs that using the term value play/stock (currently) for INCY is incosistent with what I have used thoses terms to mean (e.g., typically little debt, p/e of less than 12, dividend earnings of 2%, some potential growth at rate of 5%)

On the other hand, (subtract out the cash) and virtually any company looks like a value play compared to CRA.


I can see why "maggos" might hold some CRA stock at this time. History and current trends suggest that it will respond quickly out of this depressed market. But, if that is the strategy, I'd buy HGSI, VRTX or PDLI on one of these dips. (If I had any cash, that is exactly what I'd do.)

I am surprised and the nature of the comments from "a former associate analyst at a leading biotech hedge fund focused on genomics." INCY has patent protection on about 550 genes and likely will become the #1 or #2 gene patent company (rival with HGSI). But, INCY's patents are basically a give away to its subscribers. The real IP protection that INCY has is trade secrecy (not affected by the patent uncertainties) and the bilatteral contracts that INCY has with its subscribers defining the royalty rights of INCY.

I am not aware that CRA has any human gene patents and the raw sequence of the human genome will eventually be publically available from the HGP via INCY. Government-funded researchers will then spend the next 100 years annotating it in the public domain.

INCY's data base (claimed to have over 100k "genes")seems to have all the DNA that codes for protein and if others are right about how few these are (e.g., 30K-60K) them INCY must have a large number of codes that are transcribed to mRNA, but not translated to protein. These would sound like important "genome regulating" and "protein folding" mRNA's to me (but I am crazy).

I do not agree that INCY's business model is untried/unproven. I look to QCOM (market cap over $65B)a an example of a royalty-based success.

http://biz.yahoo.com/p/q/qcom.html

"QUALCOMM owns patents that are essential to all of the CDMA wireless telecommunications standards that have been adopted or proposed for adoption by standards-setting bodies worldwide. QUALCOMM has licensed its essential CDMA patent portfolio to more than 80 telecommunications equipment manufacturers worldwide."

Compared to drug development, manufacture, marketing, INCY's strategy is absolutely low cost, low uncertainty, low risk.

I believe that INCY is looking beyond drugs to gene therapy (e.g., its collaboration with CRXL)

Not only is INCY the hands-down leader among genomics analysts for drug companies, it is the gene source of choice for Aligent, Motorola, and Corning.

INCY just acquired a proteinomics firm that was also the industrial leader at assisting drug companies.

When INCY strikes a deal with an academic/research institution it is designed to lead to marketable products.

For the life of me, I do not see what the interest in lisensing the genome sequence to academic institutions. The CRA academic subscriptions do not appear to lead to any CRA royalties and have bogged CRA down in pissing matches about academic freedom. I guess I could argue that the entire exercise is not about the genome data but rather about getting Applera hardware and software into the academic institutions.

How can anyone compare CRA a tracking stock; to INCY a real company? INCY has made it clear what it is and where it is going. CRA appears to be totally unsettled and inheriently unstable. I do not see how it can continue for long in its current state (and have said so elsewhere).

In the final analysis, INCY is a long-term hold/accumulate type of stock and CRA is a momentum stock (about as close to a dot.com as found in the biotech area). Tactically, you might be safe waiting another year or more before buying into INCY, but then again you never know what the latest news release will bring. The thing that I expect to be most likel.y that would send INCY's stock up dramatically in the nex 18 months (barring a general rise of the biotech market that is possible) would be a dramatic merger or acqusition (not a new drug or new gene).



















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