<BREAKFAST WITH THE FOOL>
Monday, December 21, 1998
"Life and business are rather simple, after all. To make a success of either, you've got to hang on to the knack of putting yourself in the other fellow's place." -- William Wrigley Jr.
David Triumphs Over Goliath
The world's largest biotechnology firm Amgen Inc. (Nasdaq: AMGN) won exclusive rights to develop and market a new version of the world's best-selling bioengineered drug as an arbitration panel rejected claims by Johnson & Johnson (NYSE: JNJ) that it has rights to the drug under a 1985 licensing agreement. Amgen's new anemia drug candidate, novel erythropoiesis stimulating protein (NESP), stimulates the production of red blood cells and may allow for less frequent dosing than its predecessor, Epoetin alfa. Separately, Amgen, which finished up $2 1/16 to $88 1/8 Friday, said it is "comfortable" with the current range of analysts' 1998 earnings estimates of $3.20 to $3.23 per share.
NESP is in its final phase of clinical trials for treatment of kidney dialysis patients and in early trials for treating pre-dialysis patients. NESP could reach the market within two years. The trials so far involving dialysis patients indicate that NESP may be effective taken just once a week, compared with three times a week for its predecessor. In 1985, Amgen licensed to Johnson & Johnson exclusive rights to sell Epotein alfa for non-dialysis in the U.S. and for all uses internationally. The biotech company had kept U.S. rights to market the drug for the treatment of dialysis patients under the brand Epogen.
The surprising binding arbitration ruling in Amgen's favor strikes a huge blow against Johnson & Johnson, which already faces a weak drug pipeline, tough competition in medical devices sales, and lackluster consumer product sales. Epoetin alfa accounted for roughly $1 billion of the $7.7 billion J&J made in drug sales last year. Most analysts had expected it to win the arbitration, and the company may still try to talk Amgen into another licensing agreement. In the meantime, J&J is working with Alkermes Inc., a Cambridge, Massachusetts-based biotech, to develop its own version of the drug.
News to Go
Mobile phone maker Motorola (NYSE: MOT) today will announce that it's buying Lucent Technologies' (NYSE: LU) consumer wireless business for an estimated $100 million to $200 million, The Wall Street Journal reported. The deal will give Motorola a needed R&D (research and development) boost and allow Lucent to start divesting certain businesses in the wake of ending its unsuccessful cellular phone joint venture with Philips Electronics (NYSE: PHG).
Internet users have grown to 80 million today from just 5 million in 1995, and the tally could reach 150 million by 2000, according to influential Internet analyst Mary Meeker of Morgan Stanley Dean Witter, who is featured on the cover of Barron's this week. But even Meeker says she's concerned about the high prices being paid for Internet stocks, adding that she'd "love nothing more than for the stocks to trade down 25% to 50% to make them more reasonable to buy."
After announcing it would increase its stake in Isuzu Motors on Friday, General Motors (NYSE: GM) is reportedly in talks with Toyota (Nasdaq: TOYOY) regarding expanding their alliance in advanced vehicle technologies such as electric vehicles, fuel cells, and other areas, according to The Wall Street Journal, citing "executives familiar with the situation."
Home equity lender FirstPlus Financial Group (NYSE: FP) announced the resignation of five independent directors "not as a result of any disagreement with the company" but because of the significant time commitment involved. FirstPlus said it will maintain a small board while it undergoes restructuring, and thus will only seek to fill one of those vacancies.
Lawn, garden, and pet-supply products distributor Central Garden & Pet Co. (Nasdaq: CENT) said it is increasing its stock buyback program to up to $55 million from $25 million in shares.
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