SAN FRANCISCO -- Why do investors come to these conferences? It's surely not for the presentations, during which investors often can barely keep their eyes open. In these presentations, Jim Vincent of

Biogen

feels compelled to introduce himself (!). Vaughn Kailian, president and CEO of

Cor Therapeutics

(CORR) - Get Report

, walks everybody through how a heart-attack patient gets treated. If the investors hear one more "safe harbor" statement, barnacles will start forming on their backsides.

In these presentations, companies studiously say nothing nobody has not heard. And anyway, anyone who doesn't know the gravelly once-and-current Biogen CEO is a major figure in the industry (maybe the introduction was false humility), or who doesn't know what happens to a patient who's having a heart attack might rethink investing in this whole volatile area.

No, investors don't come to the

Hambrecht & Quist

health-care conference, the king daddy of biotech meetings, for the presentations. They come for the whispers that course through the hallways, the lunches, the one-on-one meetings and, of course, the breakout sessions, where only investors are allowed. It is then that the CEOs loosen their lips to buoy their ships.

And there were whispers Tuesday:

Medimmune

(MEDI)

is expected to handily beat the Street's $65 million fourth-quarter sales estimate for its

Synagis

drug for a respiratory virus in babies. Two East Coast hedge-fund managers (both long) said they expected $75 million. But one added that she didn't want the whisper number to get too high. But could fourth-quarter sales reach $80 million?

That would be a big quarter for Medimmune. The question is sustainability. The company sold a less convenient form of the drug called

Respigam

before Synagis won approval. Will doctors switch immediately to Synagis from Respigam? And sales most likely will slow in the spring and summer, when babies suffer less from respiratory viral disease. Will this seasonality scare investors? And what if the intensity of the season varies from year to year? How easy is it to model the financial performance of such a drug?

Pathogenesis

(PGNS)

had quite a day Tuesday. The company put out a press release before its presentation saying, among other things, that it had discontinued its program in an oral tuberculosis drug called rifalazil. Investors got scared and traded the stock off as much as 10 1/2 to 46. Then the company presented and CEO Bill Gantz sort of mentioned it in an offhand way. Investors were assuaged, and the stock ended down only 2 3/8 at 54 1/8.

Upon hearing that the stock was down, John Borzilleri of

State Street Research

said, "If that's the reason for the slide, then it's a buying opportunity." State Street is long the stock. "It narrows the pipeline, but the big money is in inhaled antibiotics."

The company was a short favorite earlier this year, and the short argument won out for much of the year. But Pathogenesis, on the strength of stronger-than-expected sales of

TOBI

, its inhaled version of a common antibiotic for cystic fibrosis patients, roared back and finished the year up 56%. Now, you can't find a single short who will admit to failing to cover in the low 20s. Yeah, right.

Longs are excited about TOBI's prospects in a very severe lung disease in the elderly called bronchiectasis as well as the larger market of severe bronchitis. Gantz said in the breakout session that sales of TOBI were up in the fourth quarter from the third quarter's $14.8 million. Shorts have argued that the drug sales would be flat.

Now that the company is sporting an almost $900 million valuation, the shorts are back. "The cancellation

of the TB drug is a tremendous blow," says one Florida hedge-fund manager (a bit hyperbolically). He says he has no position currently, but was short early last year. "There was a good deal of its market cap based on the prospects for that drug." A hedge-fund portfolio manager from New York who is mulling a short position adds, "The data on bronchiectasis are not clinically meaningful," meaning that in the real world, they aren't significant. "The drug doesn't treat the underlying disease, which is necrosis of the lung tissue."

Centocor

(CNTO)

, in its presentation, said it expects to report 1998 sales of antiplatelet drug

ReoPro

of $355 million total, up from $254 million a year earlier. (The company gets a bit more than half the drug's sales in its agreement with

Eli Lilly

(LLY) - Get Report

.) And the company indicated it would report sales of its clot-buster

Retavase

of $19 million in the fourth quarter, up slightly from the $18.5 million in the third quarter. But, whoops, its execs forgot to tell investors about

Remicade

, the Crohn's disease drug that everyone is focusing on.

In the breakout session, according to two investors (one long and one short), the company said it expects to report Remicade sales for 1998 of $27 to $28 million. The drug had sales of about $4 million in the third quarter. That means sales of $23 million to $24 million in the fourth quarter, down from the Street's original $30 million estimate. The long contends, "It's in the stock."

Cor's Kailian was similarly forgetful. Cor's drug

Integrilin

, a competitor to market dominant ReoPro, has had a severely disappointing launch. That could explain Kailian's lengthy treatment of the dynamics of heart-attack care, to the exclusion of detail and projections about Cor's financials. The CEO did say Integrilin has reached a rate of around $700,000 in sales a week, which is rising. The Street's expectation is that the company will report $10 million in sales for 1998, and it should hit that. But are expectations still too high for this year? Many investors think so.

Medicis

(MRX)

, a long-standing controversial stock, is having to defend itself about a big-time warning letter from the

Food and Drug Administration

. Much to the consternation of the shorts, the dermatology company has found success aggressively selling drugs that some claim have few advantages.

The warning letter was made public last week and whacked the stock.

In the 10-page letter concerning the company's marketing of

Dynacin

, a generic acne drug with a brand name, the agency took the company to task for promoting its drug as superior to other versions. The FDA says in the letter, "Any claims by Medicis that its generic

version is superior in safety or effectiveness to any other

version are false and misleading and misbrand Dynacin." The FDA goes on to cite Medicis' ads as riddled with claims of superiority.

The agency demanded that Medicis retract the ads and send a "dear doctor" letter to health-care providers correcting the false advertising. "Because of the scope of Medicis' violative promotional campaign, the Dear Healthcare Professional letter and Medicis' action plan should be submitted" to the FDA for approval, the letter reads. It also requires that Medicis publish the letter in all journals that contained ads for Dynacin over the last 12 months.

Jonah Shacknai, Medicis' chairman and CEO, was surprisingly defiant about the letter and unchastened. "We have a strong strategy of making the FDA aware of all the scientific efforts that support our position," he said in an interview. "The company reserves the right to give support for the full weight" of evidence that shows Dynacin to be superior. "We will respond by Jan. 21 and would expect a discussion with the agency. We feel there is a strong scientific and legal basis to defend our actions."

But the shorts think that the letter is the kind of rap on the knuckles that can break a hand. They argue it's unwise to pick fights with the FDA. One short-seller predicted that if the company doesn't comply, it could have its drug pulled from the market.

Perhaps more realistically, the short-seller contended that the letter could hurt the company's aggressive marketing strategy: "Obviously, it goes to the heart of the foundation of their business." And he points out: "This is not a negotiation with the FDA. They are telling him what they want."

But one West Coast short was giving up. He said he'd been covering recently after having a position on for more than two years (he's under water). He thinks that the letter won't cause doctors to stop prescribing a drug that they've been prescribing just because there are some rescinded claims.

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