Protein Design: Rising Star In A Depressed sector?

The incessant decline of biotechnology stocks this year can largely be put down to concerns about the sector's leadership and a string of product disappointments, most recently Synergen's Antril (anakinra; interleukin-1 receptor antagonist) for sepsis (page 18).

Matt Geller of Oppenheimer notes that after disillusioinment with Genentech, Amgen and Chiron, he feels that today's first tier companies may not be those of the future, and that some of the second and third tier companies have products which are close enough to the market to allow them to chase pole position in the near future. The key factors which should be looked for when assessing biotechnology stocks include a multiplicity of products in latter-stage clinical testing, corporate alliances, and a strong cash position. Mr Geller also evaluates each company on the probability of each drug being approved.

PDL Satisfies Criteria One critically undervalued company, Mr Geller believes, is California's Protein Design Labs. This computer drug design company has more than 13 compounds in its pipeline, and some are in an advanced stage of development. Its lead product - a monoclonal antibody-based agent called anti-TAC (T-cell activation) for graft-versus-host disease (GVHD), organ transplantation and autoimmune disease - is close to completion of a Phase III trial and could be approved by the US Food and Drug Administration next year.