Thursday, November 20, 2014

Biogen Idec; Hansen Medical

I realized my expertise in Biogen Idec (BIIB) had gotten out-of-date, spent a day doing research, and wrote it up. It was published at Seeking Alpha yesterday:

Biogen Idec, PML Deaths, and Hemophilia Therapies

Writing a summary article about a large biotechnology company presents some difficulties. This article was longer than most people will read. Yet I had to be very selective about the current drugs and pipeline that I covered in any detail. There always has to be room to discuss whether the stock is at an attractive price, given the likely future path of earnings.

Checking my records, I originally bought BIIB for $61.57 on 2/6/2008, when I was first beginning to shift my attention from information technology to biotechnology. I accumulated BIIB for a while, but in 2012 sold half my holdings at $137.19, thinking the P/E had gotten too high. As you know, despite fluctuations, the general trend has tended up. As I write it is trading at $301.56. I think Biogen is again attractively priced, but it is already about 6% of my holdings, so I am just watching for now.

Hansen Medical (HNSN) is an entirely different matter. I bought some today at $0.80 per share, which is about as low as it has ever been. I have owned some since 2009, but sold some for $2.35 earlier this year. For perhaps a variety of reasons Hansen just can't seem to actually sell very many of their robotic catheter surgical machines. They keep announcing new procedures the machines can do, in particular the Magellan machine designed for peripheral vascular procedures. Today they announced the first successful use of Magellan in the U.S. to do a prostatic artery embolization procedure for Benign Prostatic Hyperplasia. Which translates to a safe and effective procedure to treat enlarged prostate glands, which affect about 75% of men by the time they reach 80 years of age. It could be big, but of course it competes with other types of surgery as well as with drugs as treatment options.

That said, if past sales of Hansen surgical robots is an indicator, even $0.80 is not cheap. But there have been lots of field tests of Magellan, so maybe Q4 will surprise us with more than token sales.

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