Genzyme shows the risks

After a few weeks of intense decorating I am gradually surfacing again. Maybe I would be better off hiding for a few more weeks judging by the market performance at the moment and especially Genzyme.

I stated a few weeks ago that the risk - reward ratio with GENZ was incredible. I still stand by that statement, even though GENZ is down over 10%.

GENZ has been displaying the risks of investing in biotech; the rewards will come later.

Biotech companies issue bad news sometimes. That is a fact of life. Not all trials will go your way. But if your pipeline is deep enough then long term the good news should outweigh the bad news. This is the case with GENZ.

CEO Henri Termeer recently stated that the company should double its revenues in the next five years based on its current products alone. This is a nice starting point.

Even if Tolevamer fails to ever be commercialised there are enough other drugs in the pipeline to significantly add to revenues over the next five years.

GENZ is on a 2007 PE of 18 and a 2008 PE of 15. That is fantastic value for a company growing at 20%.

Sadly I already have a full portion of GENZ but this is one for the long term.