Nano-Biotech: SKYE's the Limit
07/25/2003 12:00 am EST
Nanotechnology is gaining attention among scientists, investors, and the media - a boon to long-standing industry expert Josh Wolfe, editor of the Forbes/Wolfe Nanotech Report. The service's stock portfolio has outperformed the S&P 500 by 84% since inception (from 3/02 through 6/19/03). Here's his outlook and a current favorite.
"Nanotechnology is the technology working with matter that is at the scale of one-billionth of a meter (1 nanometer), or 1/75,000th the size of a human hair. Manipulating atoms allows scientists to create new building blocks which produce new materials with the exact properties they desire: smaller, stronger, tougher, lighter, and more resilient than what has come before. It is predicted that nanotechnology will lead to incredible advances, from mundane items like scratch-proof glass to precision drug delivery systems, to computers the size of a sugar cube which could hold the entire Library of Congress."
One of Wolfe's favorite stocks has been nano-biotech player Flamel Technologies (FLML NASDAQ), which has risen more than ten-fold since his initial recommendation last August. He now rates the stock a hold and while he cautions investors against chasing the stock, he notes that it is "still not egregiously overvalued in relation to its peers". The advisor's current preference among nano-biotech firms is SkyePharma (SKYE NASDAQ). Here's his assessment:
"I prefer SkyePharma as a safer way to invest in nanoscale drug delivery. The company is sitting on an enviable pipeline with five diversified technology platforms, nine products on the market, and 21 others in various stages of development. The company met two critical milestones for its Geomatrix technology. The FDA approved Sanofi-Synthelabo's New Drug Application for alfuzosin hydrochloride extended-release tablets, developed using SKYE's Geomatrix oral controlled-release technology. The US launch is scheduled for the second half of 2003, with SkyePharma earning a royalty on sales. SkyePharma also entered Phase III clinical trials of the oral controlled release formulation of GlaxoSmithKline's Requip for Parkinson's diseases - also using SKYE's Geomatrix technology.
"SkyePharma has just achieved its first full year of profitability (net income of nearly $2 million in 2002 versus a net loss of $15 million in 2001) after years of investing in cutting edge research and development. The company generated revenues of more than $116 million in 2002, up 51% from the previous year. CEO Michael Ashton recently issued guidance of $167 million for 2003 revenues, while SG Cowen projects revenues as high as $195 million and earnings per share of $0.25 in 2003."