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The impressive results that Enzo Biochem (
ENZ
), has so far achieved in the so-called phase 1 clinical trial of a new genetically based anti-HIV product (HGTV-43) have pulled Enzo's stock out of its recent lethargy. It jumped from 48 a share to 57 on Oct. 2 when the results were announced. The stock has since slipped back to 48.
But investors can look forward to more good news: Late in October, Enzo will release positive phase 1 trial results on its medicine against hepatits B, as well as on its liver cancer drug, says one Enzo insider. And perhaps more important are prospective alliances or partnerships with major U.S. and European pharmaceutical companies.
The rapid progress on the clinical trials, plus Enzo's leading role in the field of
genomics, may push Enzo into partnering with a couple of major drugmakers sooner than later, says one Enzo insider. "We now realize," he says, that Enzo will "need a partner or partners soon to fast-forward the speed of our clinical trials and expedite meeting our goals on various proprietary therapies and enabling technologies that detect, identify, and modify genes."
ONGOING TALKS. Several large drugmakers in the U.S. and in Europe have approached Enzo for some kind of a deal -- including an outright purchase of Enzo, says one large investor familiar with the company. He says Enzo's first move may be to partner with a European company for its liver cancer drug. It may also form a partnership with a U.S. drugmaker on its HIV therapy, says this pro. "Defintely, talks are going on with interested parties for possible alliances," says one money manager close to the company.
Enzo's stock flew as high as 139 a share in early January, 2000, when the biotechs
appeared to be in sync with technology stocks in their upward spiral. But since
then, shares of Enzo, a leading biotech and life sciences company, have been on a
roller-coaster ride, hitting a low of around 30 in May. A sudden investor bailout
since April from biotech and tech stocks created tremendous volatility and weakness in these stocks, including Enzo's.
On Oct. 2, Enzo announced specifically that a phase 1 trial of its anti-HIV gene-therapy product showed that Enzo's engineered cells successfully engrafted themselves in the bone marrow of HIV patients enrolled at the clinical trial and
spawned new cells designed to fight the HIV.
"THE RIGHT TRACK." "What this means is that we may have come upon a revolutionary way to treat HIV," says Enzo President Barry Weiner. It shows, he adds, that Enzo's gene medicine and technology designed to fight HIV, the virus that causes AIDS, is very much on the right track. No other technology has been successful, he explains, "in engrafting cells expressing a cloned gene in the bone marrow of adult subjects without first ablating the patient, a process in which blood cells are destroyed."
While the data is admittedly still limited and must await further validation, says Weiner, "it is highly encouraging" for AIDS patients. "We have advanced well in our efforts to reconstitute an individual's immune system with resistant cells," adds Weiner.
Geoffrey E. Harris, biotech analyst at investment bank UBS Warburg, who rates the stock a buy, says Enzo "represents an investment in a company with two profitable and rapidly growing core businesses as well as the opportunity to participate in the potential upside associated with successful commercialization of therapeutic products."
A MONEYMAKER. He thinks the stock is worth 76 a share, based on the company's core businesses. Enzo is the "leading life-sciences and biotech company, focused on developing technologies to understand genetic processes and then applying these technologies to develop novel research tools, diagnostics, and therapeutics," argues Harris. And the company has been making money. He expects Enzo to earn 19 cents a share in the year ending July 31, 2001, on revenues of $60.2 million, and 42 cents on sales of $94.3 million in fiscal 2002.
The stock may appear quite rich based on its trailing price-earnings multiple of 190. But if any one of Enzo's therapeutic products reaches commercialization, the stock's value, says Harris, could possibly jump several-fold over its current price.
Copyright 2000, by The McGraw-Hill Companies Inc. All rights reserved.
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