In the spirit of such laconic writers as David Fry and Lou Basenes (who can say a great deal in just a few paragraphs) I want to share with you two examples of how biotechnology company can be fiscally "green" and as well as responisble.
The one whose trademark you see above, Genoptix (Nasdaq:GXDX) impresses me so much I bought some Thursday at around $35.81. I like what it does, I like its profit and operating margins, I like the fact that it has no debt, and I like the fact that it has over $137 million dollar in cash sitting on its balance sheet.
Now that's what I call being "fiscally green"...a form of good financial management that equates to a kind of "monetary conservation" that also allows them to have over $23 million in levered free cash flow (trailing twelve months).
According to Lou Basenese and Marc Lichtenfeld who write for The White Cap Report (of which I'm a subscriber), GXDX presented at a JPMorgan conference in NY and the interest was, to say the least, overwhelming.
Lou wrote, "Apparently, the company packed the room, with people lined up three or four deep in the back." The interest was so strong that Marc couldn't even muscle his way into the Q&A session, which occurred in another room.
In all seriousness, the extra attention bodes well for our pick. Institutional interest should perk up as these analysts return home and start spreading the word.
"Yes, the company's aggressively pursuing growth, adding sales personnel, middle management and expanding its facilities," as Marc notes. But if it manages it well, "the growth could be enormous." And I couldn't agree more. If you go to their web site as I did, you can't help be impressed. Add in their key statistics, management and growth plan and as Lou said, "If you still haven't put some shares in your portfolio, you might want to do so now." Their web address is here.
Another company that I'm watching for all the same reasons is Gilead Sciences (GILD). Terrific looking, "fiscally green" balance sheet, an impressive cash flow statement, and remarkable profit and operating margins has put this company at the top of my biotech radar screen.
It has a user-friendly, very informative web site that every prospective investor should carefully examine. Click on this link to peruse it.
Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet need. With each new discovery and experimental drug candidate, we seek to improve the care of patients suffering from life-threatening diseases.
Gilead was founded in 1987 in Foster City, California. In just over 20 years, Gilead has become a leading biopharmaceutical company with a rapidly expanding product portfolio, growing pipeline of investigational drugs and approximately 4,000 employees.
In 2008, Gilead’s annual revenues surpassed $5.3 billion. BusinessWeek has ranked Gilead #1 in its 2009 listing of the 50 best-performing companies, up from #2 last year.
As it approaches its 200 day moving average of around $45.90, it is selling at only a little over 17 times current earnings and less than 15 times next year's projected earnings.
I like their self-proclaimed mission as well:
Gilead's mission is to discover, develop and commercialize therapies that will improve the lives of patients with life-threatening illnesses around the world. With 12 marketed products benefiting hundreds of thousands of people and a pipeline of late-stage drug candidates, we are putting this mission into motion. But we strive to do much more than make market-leading therapies. Our commitment extends to being an exemplary corporate citizen and contributing to the well-being of the communities to which we belong.
Here are two biotech companies that make, from our perspective, good, "green" sense, and are built on a solid foundation of fiscal responsibility and sound governance. Check them out for yourself and see what you think.
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Disclosure: I am currently long GXDX
