Sunday, October 22, 2006

Hit #119 (Icos)

Eli Lilly is buying out its partner Icos (ICOS) for $2.1 billion in cash. The offer, of $32/share represents a gain of 17.7% over my average cost per share of $27.19/share. Since my initial purchases there were multiple opportunities to buy the stock at much lower prices, but I balked everytime due to lack of insider buying.

I had bought Icos shares expecting exactly this buyout, though I was hoping for a much higher price. After reading various comparative studies of Viagra, Cialis and Levitra, I concluded, wrongly, that Icos' Cialis would gain a much larger marketshare. That was not to happen.

While on this topic, it seems like male sexual dysfunction has received all the attention from the medical/investing communities. According to studies, female sexual dysfunction could be a much larger problem, and potentially a much larger market. Big firms have essentially ignored this segment, leaving only a few small players to do early stage work. Most companies involved in this research are extremely small and hence make for very speculative investments. Except for Palatin's Bremelanotide , most treatment candidates are nowhere close to making it to the market. But if you are willing to take some risks, you should checkout Palatin (PTN), BioSante (BPA), Vivus (VVUS)) and Novavax (NVAX).

WIRED carried an interesting piece on this topic a while ago, mentioning Palatin's progress. I own a few shares of Palatin and Vivus, and will consider adding more.

Previous hit - NetRatings (#118)


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