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Millennium Pharmaceuticals
In Reply To:
Why Own MLNM?

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By Caesium
November 6, 2002

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MLNM has been an extremely disappointing stock in terms of price and looking back over the past year feel it might be time to chalk this one up to a loss and move on the more worthwhile companies.
gary


Gary,

I'll do my best not to put you to sleep, but in light of your comment above you were instead probably best advised to buy MLNM and put that holding to sleep for several years.

I do not consider any company I buy to be either disappointing or a success based on it's stock over a short term period. One year is to me a short-term period for any Company but even more so when the Company is a Biotech development company, where 5 years would be a bare minimum for assessment, provided they execute according to their business plan during that period. The fact the stock market does or does not reward it during that time is immaterial to me. The stock market will only ever reward future profit generation and that is some way off for MLNM, as we write in Nov. 2002.

One can only assume if you are having doubts about them now, that either you bought them for a quick appreciation (although I am unsure where you felt that would come from when you bought back in Nov. 2001), or you feel they have "lost" their way in their execution.

This latter reason is understandable as they begin to bleed cash without any revenue growth outside of Integrilin, which was paid for in stock dilution so no immediate benefit to us as existing shareholders.

However, as I wrote back in April, without concrete evidence of Velcade progressing there was not a lot to hold the share value and stem it falling away. As we have seen despite encouraging news on Velcade, no one can add value to MLNM until we know for sure it will gain approval, and no one can predict that, scientific background or otherwise.

Instead we have seen 2 drugs "fail", one being discontinued and one showing "disappointing" phase II figures, although not yet officially dead. This is a concern, as it disproves MLNM having a unique discovery program, which eliminates time and cost in the drug approval process and MLNM becomes just another Biotech trying to make a drug. This remains disproved until MLNM proves otherwise.

If Velcade gets approved, it offsets some of that belief, as well as of course acting as a great boost to its share price. What will really prove MLNM's stated ambition is if it gets backed up with Scientific breakthroughs and drug candidates come out of pre-clinical work and seamlessly into clinical trials, in an ongoing procession of targets.

MLNM's management has not changed in the past year and it still remains one of the chosen places to work for within the Bio-Pharma industry. It still has a mini blockbuster drug in Integrilin and a potential blockbuster in Velcade and it still has a 120 strong sales force to promote and market them. It still has $1.4B in cash as well as a "promising" pipeline.

If you are considering selling and that can only be your decision based on your personal investment profile and your personal risk/reward ratio, but I would have said right now there is more upside than downside in this stock. I would at least wait another 6 months and see the results of the Phase III trials on Velcade, which are due to complete early 2003, before I reviewed my decision to own MLNM.

Anyway, good luck with your investing decisions.

Caesium


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