Thomas Barnard

Big Pharma: Where's the Risk Management?

It seems to me news that Amgen's co-founder has joined Generex as Scientific Advisor after reviewing the evidence is a very good sign that Big Pharma has missed the boat.

And that is my point: sour grapes is no way to run a major pharmaceutical company.

Big Pharma: Where's the Risk Management?

Here's my counter: if easy administration of insulin is so desirable that Pfizer spent $2.8 billion and Novo-Nordisk hundreds of millions, why should I be concerned about Ecuador and India?

The key is Phase III approval. A larger market will allow scale to bring costs down.


On Jul 18 01:08 AM larry luv wrote:

> Sir,you artiulate well in your blog however let's get to the brass
> tax of things..
> Oral-Lyn has been marketed in Ecuador for 4 years now 4 years..
>
> You do not hear a peep out of Generex pertaining to sales-revenues
> and efficacy. Now lets get to India,where it has been reported that
> at least 1/3 of the worlds population of diabetis live in India.
>
> Oral-Lyn renamed in India Oral-Recosulin was halted from sales due
> to regulatory isues,as no human clinical trials were conducted in
> that country.
> Also prior to the halt of Oral-Lyn in India,there were ONLY 100 orders
> in the whole country' Please Sir' before you go praising Generex,what
> do you have in response to my comments?
> How can anyone expect an FDA approval of Oral-Lyn if its already
> failing in Ecuador And India?
> thank you//

Big Pharma: Where's the Risk Management?

My point was simply that Pfizer thought easy administration of insulin was worth $1 billion a year, and they wrote down $2.8 billion. Generex's Phase III seems to be going along okay. After all, it is not a new drug, just a new method of intake, and inhaled insulin was already approved for Pfizer).

Sour grapes is no way to run a business. Pfizer should have locked up the rights to this a year ago because it works, and (more importantly), patients will use it.

This Is Where Sisyphus Starts Huffing and Puffing

Very interesting. I wondered if this held true. I had a devil of a time find historical interest rate data going back beyond 1960, but here's what I found with the 10 year Treasuries:

1919 4%
1932 3.5%
1942 1%
1949 1.5%
1974 8%
1980 11.5%

It looks like your relation holds for the periods 1974 and 1980, but otherwise, no.


On Jun 01 12:34 PM pslater wrote:

> Once again P/E ratios are a function of interest rates. With the
> average non-financial company in the S&P 500 having a BAA credit
> rating, that rate (currently around 8%) implies a P/E of about 12.5
> (100/8). It's no coincidence that in 1981 the P/E of the S&P
> was around 7 - because interest rates were around 13% (100/13 = 7.7).
>
>
> If you want to know what an appropriate P/E ratio is use an appropriate
> interest rate. As for valuations, use your imagination as to what
> the earnings component should be....I would suggest that 10 year
> trailing earnings isn't it.

This Is Where Sisyphus Starts Huffing and Puffing

Yes, I agree. Schiller uses a 10 year average of earnings in his calculations to take this worthless stuff out that you are talking about.


On Jun 01 03:02 PM thiazole wrote:

> I still think P/E is a worthless metric for valuation if any of the
> companies in the index are losing money. It means that the "value"
> of the index increases if you eliminate all the companies losing
> money. How does that make any sense? A stock can only go to zero,
> so it can't have a negative value to an investor.

This Is Where Sisyphus Starts Huffing and Puffing

Today certainly confirmed your decision. And it could go higher, the big Mo is with you. But I get a little nervous when guys like Art Cashin comes on saying that volume is slight.


On Jun 01 10:58 AM Larry House wrote:

> Your conclusion seems right on, Thomas, but the market has a mind
> of its own. I am staying with positions a bit longer (probably too
> long). The trend is your friend until it isn't.

This Is Where Sisyphus Starts Huffing and Puffing

Schiller uses a 10 year average of earnings to smooth out the numbers. It would be reasonable to assume that if you used current data you might get 123x or 46x, but how meaningful is it? Everyone knows that those numbers are artificially high. I'm staying with Schiller


On Jun 01 09:24 PM David White wrote:

> Interesting article. I am not sure where Robert Schiller got his
> data from. However, both Barron's and Ockham Research have recently
> come out with very different estimates of the S&P500's current
> PE. Barron's estimates it at 123x. Ockham Research estimates it at
> 46x. Given the fact that the S&P500 earnings were 30+% lower
> in Q1 2009 than in Q1 2008, I find it easier to believe the other
> groups than Robert Schiller.

Why Jim Rogers and Robert Shiller Aren't Buying U.S. Stocks Yet

Nice piece of work. My own thinking has run along these same lines. The problem for investors is that there have only been a few opportunities to buy. Since 1974 was the last moment to buy, that left no opportunity for the current generation to buy. Moreover, when people get money through inheritance and pay and bonuses, often do not coincide with these rare buying events. It's been over 30 years since we've had one those events, so one may be coming up.

There are other decent moments to buy 1983-84, 1987. But for the last 20 years the high PE levels means risk has been higher than normal.

Shiller is right. CAPE is still too high. The current feeling of returning to normal may only mean we are in the eye of the storm.