Two Picks for IDEC

06/06/2003 12:00 am EST

Focus:

Paul Tracy

Editor, The StreetAuthority Market Advisor

"IDEC is a rarity in the biotechnology industry--the firm has posted consistent profits since 1998," says Paul Tracy, editor of Street Authority Market Advisor. Stephen Leeb, editor of Personal Finance agrees, saying, "Unlike most biotechs, IDEC is an earner and a grower. The only question is how fast it’s going to grow." Here are their comments on the issue.

"IDEC Pharmaceuticals (IDPH NASDAQ) is developing therapeutics designed to stimulate a patient's own immune mechanisms to treat various illnesses. Although it depends almost exclusively on one major drug--non-Hodgkin's lymphoma treatment Rituxan--to fuel its current sales and profits, IDEC is developing a variety of new antibody-based drugs to combat cancer and autoimmune diseases. One such approved product is Zevalin -- an injectable radiation therapy the firm developed in 2002. Used in conjunction with Rituxan, Zevalin is a monoclonal antibody that uses radiation to target and kill cancerous cells while leaving other cells relatively unharmed. And in an effort to expand its product base, IDEC is currently conducting clinical trials on a number of other novel drugs to treat psoriasis, asthma, arthritis, and other widespread diseases.

"Since 1998, sales have increased at an average annual clip of 47%, jumping from $87 million in 1998 to over $400 million last year. Meanwhile, earnings have skyrocketed an average of 62% per year, climbing from $21 million to nearly $150 million. Yet the shares are not without risk, as the company depends so heavily on one product. If high volatility is too much for you to stomach, then the biotech industry isn't for you. But if you're willing to take a longer-term perspective, then IDEC remains a solid ‘Buy’. Investors willing to ride this volatile stock for the next several years will be rewarded handsomely over the long haul."

Adds Stephen Leeb, "We are adding IDEC Pharmaceuticals to our ‘frontier portfolio’. Its non-Hodgkin’s lymphoma treatment, Rituxin, already has more than a billion dollars in revenues, which should continue to drive the company’s growth at a 20% clip or better for the next several years. The potential is even greater. First, Rituxin is being tested for a wide variety of autoimmune diseases such as rheumatoid arthritis. Equally exciting is the company’s second-generation drug Zevalin, which is able to deliver nearly perfectly targeted chemotherapy. Because of reimbursement issues, revenues to date have been disappointing. The long-term potential, however, is enormous. For risk-tolerant investors, IDEC is a buy up to $37."

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