Saturday, February 16, 2008

Hello World

Well after two weeks of either having 'flu or looking after family members with 'flu I am finally attempting to surface.

I have been keeping half an eye on the market but there has been very little to cheer me up. The market is still highly volatile but seems to be edging downwards.

My purchases of British Airways and CSR in a volatile market now appear ill-timed as these shares have been severely punished as the market worries about consumer spending and a possible global economic slowdown. However they are both great companies and the share prices will no doubt recover.

One bright spark in my portfolios has been Genzyme (GENZ.) The GENZ share price has been remarkably resilient amongst all the market uncertainty, reflecting the defensive nature of its revenues. GENZ is now my biggest holding, a situation I am very comfortable with and I am not selling any. I would like more but I am resisting that temptation.

GENZ released their Q4 results this week and it was a case of more of the same. There are some short term issues with the manufacturing of thymoglobulin and Myozyme but revenue keeps growing at a rate of 20% and EPS at a slightly higher rate as GENZ leverages its size and buys back shares.

In terms of pipeline GENZ should file for the approval of Mozobil this year and launch it early next year. Mozobil is a stem-cell transplantation drug with the potential to obtain annual sales of $400 million.

There are other drugs in the pipeline but most exciting is Alemtuzumab for multiple sclerosis. This product is scheduled for launch in 2011-2012 and has the potential to be the best drug in a $8 billion market.

In terms of valuation GENZ is on a 2008 PE of 18. That is cheap for a company growing income at a rate of over 20%.

I am not buying any more GENZ but as the share price grows it will become a bigger component of my portfolio and that is fine by me.

Now I need to find some more biotechs as attractive as GENZ.

Happy hunting.