Rule Breaker Portfolio

Rule Breaker Portfolio
Talk About It Here
News alone is just news

By Jeff Fischer (TMF Jeff)

JUPITER, FL (Nov. 15, 1999) -- Amgen (Nasdaq: AMGN) announced positive indications from a late-stage clinical trial of a drug that it calls Kineret (also known as IL-1ra), which is hoped to treat rheumatoid arthritis.

When taken with methotrexate, which has long served to treat this ailment, Kineret showed a meaningful ability to reduce inflammation and to slow bone and cartilage destruction in 42% of patients, while only 23% of the patients receiving methotrexate alone saw improvement. Given the positive findings, Amgen is aiming to file a marketing application for Kineret with the Food and Drug Administration in the next handful of months.

The market size in treating this chronic disease is four times larger than the population of Washington, DC. It is estimated that over 2.5 million Americans (hang on -- I need to stretch my hands) suffer from rheumatoid arthritis. This progressive inflammatory disease attacks the immune system and a body's healthy tissue, beginning with the hands, joints, wrists and feet, before moving to all the joints. It isn't certain whether excessive work with the hands helps instigate the disease or worsen it, but to be safe, I will not rewrite, nor even summarize, the far flung studies on the topic.

Amgen will be far from a first mover with this treatment if Kineret wins FDA approval. Two treatments are already on the market, one from Johnson & Johnson (NYSE: JNJ) in the form of its strong-selling Remicade drug, and one from Immunex (Nasdaq: IMNX), which sells Enbrel. Amgen's drug is still likely to find a niche in this disjointed market, however, mainly among the patients who don't respond to the two existing drugs on the market. For many, the two existing drugs don't work, but Amgen's may. However, if a patient responds favorably to all three drugs, or to even just two, Amgen's drug is not likely to be the drug of choice for them.

Why?

In its current form, Kineret must be injected daily. This means that you either have a nurse visit you daily, or you bite the bullet, buck up, and give yourself a daily shot in the leg, stomach fat, or arm. Immunex's Enbrel, in contrast, is injected only twice a week, while J&J's Remicade is given in an intravenous drip once every eight weeks. I don't know about you, but I would take Johnson & Johnson's Remicade treatment, and not just because Drip Port owns the stock.

We should keep in mind that, as Amgen has done with Neupogen and Epogen, the company will likely improve the dosage scenario for Kineret, decreasing the needed dosage frequency. This would likely be achieved, if at all, at least one year or two years from the drug's initial launch, though -- at best. In the meantime, we'll keep an eye on Amgen's pipeline and its hefty $800 million in annual research and development expenditures. Many more great, human-helping products are likely to roll from Amgen's labs, and that helps reassure us as investors (and as humans). (Talk about Amgen here.)

Next: have you begun to shop for the holidays yet? Today Excite@Home (Nasdaq: ATHM) launched a new shopping service throughout its portal in an effort to capitalize on Christ... mas. The holiday season, long ago renamed the "holiday shopping season," is around the corner and there's money to be made. Management at Excite shared that over 2,500 merchants are participating the site's new shopping service. The company's revenue-sharing commerce program means that it could generate as much as $1.50 per retail transaction generated on its site. Multiply that by potentially millions of shoppers, and it ain't chump-change.

Excite@Home's commerce service is slightly different from the services offered by a myriad of other non-retail Internet sites (Yahoo!, AOL, Lycos) that offer e-commerce. First, if a business doesn't have an online store already, it can simply build one using Excite@Home's "StoreBuilder." (This StoreBuilder service originated from Excite@Home's July acquisition of iMall, proving that management was thinking ahead. As shareholders, shout "Hooray!") Secondly, Excite has integrated retail sales functions throughout its portal site, rather than confining it to a single online shopping channel. The key is to provide sellers as many eyeballs as possible, while providing site surfers value, rather than annoying them. (Talk about Excite@Home here.)

3dfx (Nasdaq: TDFX) officially announced its new Voodoo Scalable Architecture processor, the VSA-100, and said that it would first be used on its new Voodoo4 and Voodoo5 products, both of which sound like the ultimate gift for gamers this year. David Gardner is a gamer. So is about 33% of Fool HQ, mainly (not to stereotype by any means) the techies. (Talk about 3dfx here.)

In the "down but not out category," Iomega (NYSE: IOM) announced an expansion of its recent Zip CD-RW product line with today's introduction of an external ZipCD USB (Universal Serial Bus) drive. This puppy allows you to put 650MB of data on a common CD format. Although it ships this quarter, unfortunately this new ZipCD drive won't be in stores until January, where it'll retail for about 279 clams. (Talk about Iomega here.)

To talk about anything related to Rule Breakers (to ask a question, to request a topic for the column, to share a Foolish story, to suggest a good company) visit the Rule Breaker companies and Rule Breaker strategies message boards. These boards are also linked below, because sometimes we like to repeat ourselves. That is, until we remember to be restrained with our hands, what with carpal tunnel and arthritis possible. Gotta run.

--TMF Jeff on the message boards

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Rule Breaker Portfolio

11/15/99 Closing Numbers
Ticker Company Dly Pr Chg Price
AMGNAMGEN INC-2 3/16$89.75
AMZNAMAZON.COM-1 7/16$73.50
AOLAMERICA ONLINE7/8$151.38
ATHMAT HOME CORP CL A-1/2$44.06
CATCATERPILLAR INC9/16$55.56
CHVCHEVRON CORPUnch.$91.38
DDDU PONT (EI) DE NEMOURS9/16$62.13
EBAYEBAY INC13/16$140.69
GTGOODYEAR TIRE & RUBBER CO5/16$37.13
IOMIOMEGA CORP1/4$4.25
SBUXSTARBUCKS CORP-1/16$28.19
TDFX3DFX INTERACTIVE-1/2$9.25

  Day Week Month Year
To Date
Since
8/5/94
Annualized
Rule Breaker .35% .35% 10.33% 49.80% 1,406.35% 67.12%
S&P 500 -.12% -.12% 2.31% 13.44% 204.19% 23.45%
S&P 500(DA) -.12% -.12% 2.31% 14.02% 218.44% 24.52%
NASDAQ -.05% -.05% 8.53% 46.83% 347.05% 32.78%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
8/5/942200AOL0.917$151.3816,405.83%
9/9/972640AMZN3.188$73.502,205.87%
5/17/951960IOM1.280$4.25231.92%
12/16/98580AMGN42.889$89.75109.26%
12/4/98900ATHM28.040$44.0657.14%
2/26/99300EBAY100.527$140.6939.95%
2/23/99300CAT46.964$55.5618.31%
2/23/99180CHV79.169$91.3815.42%
2/20/98260DD58.844$62.135.58%
7/2/98470SBUX27.955$28.190.83%
2/23/99290GT48.715$37.13-23.79%
1/8/98425TDFX25.667$9.25-63.96%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
8/5/942200AOL$2,017.62$333,025.00$331,007.40
9/9/972640AMZN$8,415.03$194,040.00$185,625.00
12/16/98580AMGN$24,875.50$52,055.00$27,179.50
12/4/98900ATHM$25,236.13$39,656.25$14,420.13
2/26/99300EBAY$30,158.00$42,206.25$12,048.25
5/17/951960IOM$2,509.63$8,330.00$5,820.37
2/23/99300CAT$14,089.25$16,668.75$2,579.50
2/23/99180CHV$14,250.50$16,447.50$2,197.00
2/20/98260DD$15,299.44$16,152.50$853.06
7/2/98470SBUX$13,138.63$13,248.13$109.50
2/23/99290GT$14,127.38$10,766.25($3,361.13)
1/8/98425TDFX$10,908.63$3,931.25($6,977.38)
  Cash: $6,381.51  
  Total: $752,908.40  



Note
The Fool Portfolio was launched on August 5, 1994, with $50,000. It was renamed the Rule Breaker Portfolio in October 1998. The investing strategy began with the first investments of the Fool Port and has evolved with time and experience. In July 2001, the portfolio began adding $12,500 each quarter (We missed Jan. 2002, so we added $25,000 in April 2002). We skip a quarter if we have enough uninvested cash or cash available in stocks we would prefer to sell to make new investments. All transactions are shared and explained publicly before being made, and returns are compared in each week's column to the S&P 500 (including dividends where noted) and the Nasdaq composite. For a history of all transactions, please click here.