Biotech Stock Mailbag: Geron Fans Gone Wild

Welcome back to the Biotech Mailbag: The Hate Email edition.

I'm feeling a bit punchy lately -- too much work, too much winter weather. Where's spring? I need a good laugh and maybe you do, too, so I decided to devote a large portion of this week's Mailbag to reproducing my hate email because, generally, it makes for fun reading.

I know some of you read this column for actual biotech investing advice, so I'll start with the smart reader email first. All the hate email is tacked to the bottom of the Mailbag unedited except for "Bleeping" out the extra naughty bits. Enjoy.

From Peter R., a question about Amgen (AMGN):

"What's your feel on Amgen? Speculation was it was a potential target of Pfizer (PFE) before the Wyeth (WYE) acquisition. Amgen seems quiet these days. Do you think they'll make their own large purchase this year or will they sit back and rely on their pipeline?"

Amgen sold off to around $46 recently, in large part due to investors concerns about how the company, and the biotech group generally, will fare under President Obama's health care reform plans. When Amgen sank to $46 last week, I thought it was oversold, so I added the stock to the model portfolio of my Biotech Select subscription newsletter.

On a price-to-earnings basis, Amgen trades below the biotech peer group. Later this year, probably in the third quarter, the company will be releasing phase III data from cancer studies of its bone-building drug denosumab. [Denosumab should also receive FDA approval in osteoporosis in the fall.] Lastly, with Roche sealing the takeover of Genentech (DNA), the minority shareholders of Genentech will have about $40-50 billion in capital freed up to reinvest somewhere. My hope and bet is that a good amount of that money flows into Amgen.

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