Millennium: Predictive Medicine

02/21/2003 12:00 am EST

Focus:

Tobin Smith

Founder and Chief Research Analyst, NBT Equity Group

Tobin Smith, editor of ChangeWave Investing , maintains a portfolio called Legacy stocks. These are high risk, high potential companies that can be bought for potentially significant gains over the next decade. He says one Legacy biotech play is a huge 'home run' or 'strike out' and notes that this should not be in your portfolio unless this is money you would not miss." But for those willing to take the risk, he sees huge, long-term potential for Millennium Pharmaceuticals.

"Millennium Pharmaceuticals (MLNM NASDAQ) is a biotech concern that specializes in drug discovery. It targets disease in three major groups: cancer, metabolic disturbances, and inflammation. 'Predictive medicine' is Millennium's claim to fame. This is a type of treatment where genetics are used to assess your risk for disease, as well as predict what medications and treatments will best serve you if you do have a specific disorder.

"Meanwhile, biotech is in a free fall and has dropped at twice the rate of the market. What we should see here is analysts coming to the rescue with buy recommendations, which is what is starting to happen. All companies in the biotech sector fall fast--especially no-earnings biotech--when the market is in a free fall. Meanwhile, MLNM will move in a huge trading range as their drugs under development move up from Phase II to Phase III trials.

"Millennium said it would be profitable in 2006--in line with my target. MLNM hopes to soon receive 'fast track' status for Velcade, an anti-cancer drug for the treatment of bone marrow cancer multiple myeloma. This could bring approval as soon as six month after the submission. With Velcade now looking better every month as a real blockbuster, and drugs potentially worth $11 billion in the pipeline, this is the prototypical Legacy stock. It carries a huge upside potential. Millennium has more than $7 a share in cash and $10 in book value. Just remember, these stocks are for your long-term Vegas money. Buy under $10. But any time it gets under $9, it's a jewel."

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