NIBM Update 10-16-2001

NIBM Update	October 16, 2001
	Debut Issue


Welcome to the NIBM Update	In This Issue
As a Subscriber to NIBM and the BiotechMonthly web site, you get much more than the monthly NIBM Newsletter. Twice each month, you also get this NIBM Update packed with information biotech investors need to make good investing decisions.	Cover - Intro to the NIBM Update -- Big Pharma on the Move
In each Update, you'll get news, analysis, and commentary on biotechnology and medical device companies. We examine recent news affecting the stocks in the NIBM Model Portfolio and identify scientific, regulatory, or financial trends.	Page 2 - Alliance Pharmaceuticals moves ahead
The same team that beat the S&P-500 by over 60 points and the NASDAQ by nearly 80 points over a 29-month period also gives you their take on the overall stock markets.	Page 3 - Genta's Genasense in the news
Future NIBM Updates are available only to Subscribers as are future issues of the NIBM Newsletter and NIBM Alerts.	Page 4 - Macro Market Notes & Analysis
If you invest in biotechnology or medical device companies, you're missing out if you are not a NIBM Subscriber.	Page 5 - NIBM Model Portfolio Updates
For more information on subscribing, click the red box!	Page 6 - News Briefs
Big Pharma making noise
Biotech and device companies live and die by cash flow. It's not earnings, it's not revenue. It's cash. A major source of that cash (and, just as importantly, a way to reduce expenses) are partnerships with big pharmaceutical companies. When big pharma starts making a bigger move towards acquisitions and partnerships, that bodes well for development stage biotech companies and their shareholders. A Reuters Feature Article in early October did a good job of outlining recent forays by big pharma into partnerships. The increase in partnerships and acquisitions is driven by a scary reality at the big pharma level: They are running out of blockbuster drugs in their development channels. Additionally, drug companies are experiencing a deterioration in revenues from off-patent drugs as generic competitors capture market share much faster than expected. Both events are dramatically reducing the reliability of their growth rates, thereby harming their market value. It is tempting to draw parallels to what happened in the agricultural biotech sub-sector in the mid-1990's. Big ag companies paid eye-popping sums for smaller seed companies in order to lock up crucial germplasm (patented, high-quality seed lines) and technology, securing future growth rates. During this phase, small seed companies were regularly going for 5-10 times share price premiums. That phase ended badly, as you may know, when the adoption of bioengineered seeds hit major snags in the face of massive anti-biotech campaigns by environmental groups. There are significant differences between that experience and what is going on in human biotech and devices. What may well be the same is the effort by cash-rich drug companies to buy science as a way to stuff their pipelines much faster than they could otherwise do themselves. Also the same will be the impact on small biotech companies -- upward pressure in stock prices. We're already seeing the first forays in deals like the blockbuster between Bristol Meyers (BMY) and Imclone (IMCL). Savvy investors will keep a sharp eye on such deals. Continued big-dollar deals will draw investors to the sector looking for take-over and partnership premiums. Volatility will increase, but so will investors' profit potential by owning those small firms with the best partnering potential.