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Four analysts, two experts and top management from thirty-seven sector firms examine the Biotechnology sector in this special 179-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info423.htm

TWST: Michael, what impact do drug launch delays have on companies and on their stock prices?

Mr. King: It’s significant. Mary Ann put it very succinctly: one has to ratchet up the risk factor; the risk-adjusted rate of return needs to go up just to keep the stock price the same. That’s because the problem with the FDA right now is that if they were being more cautious in an objective sense, then companies could adjust their behavior accordingly and, hopefully, provide the FDA with the data they require to receive approval in a timely manner. But that doesn’t seem to have been the case. The FDA has reverted, in many ways, back to not being clear in its communication as to what it will take from a sponsor, i.e., a biotech or pharmaceutical company, to allow that drug to be approved. The other effect that it’s having, is almost perverse. We keep track of the products that are in the FDA late-stage clinical development or in the final throes of FDA approval, and typically, putting your money in those companies that have drugs coming onto the market that are finishing Phase III clinical trials is the best way to invest in biotechnology. Now it’s almost the best way to short stocks. You could go down the list of some very well-known companies here. Amgen (Nasdaq:AMGN) has three products awaiting approval, including Aranesp, Kineret and Abarelix; Genentech (NYSE:DNA) has Actelion; Genzyme (Nasdaq:GENZ) has Fabrazyme; and Idec (Nasdaq:IDPH) has Zevalin. You could go down that list and say, well, these are the guys that are expecting approvals, we know it’s going to be delayed because of the way the FDA is behaving, and we’ll just go out and hit their stocks. Again, what has worked in the past as the correct method or approach to investing in biotech has actually wound up being, in some cases, the wrong one, because you wind up investing in companies whose products are getting delayed rather than getting approved.

TWST: Michael, you threw out several names among the large caps and the mid-caps. Which two would you identify as your best investment ideas at this point?

Mr. King: Let me just say that I like Peter’s picks. So not to be redundant, I guess at this point we would say MedImmune and I would add Genentech. Genentech, as Elise pointed out, is a franchise name in the big cap biotech space. They are a world-class company. They are selling at a very reasonable p/e to g ratio as well. The reason for that is because a couple of their drugs have experienced delays. However, I do think that these delays are probably not as bad as the market is making them out to be. And meanwhile, the core business at Genentech remains extremely robust. You heard Mary Ann mention the product Rituxan. That is a product that Genentech owns the lion’s share of through an arrangement they made a number of years ago with IDEC. So I would say that Genentech is probably one of our best picks at this time too.

This special issue includes:

1) Biotechnology - In an in-depth (13,900 words) Analyst Roundtable, Peter Drake, Managing Director at Prudential Securities, Inc., Mary Ann Gray, Analyst focusing on both public and private healthcare investments at Federated Kaufman Fund, Michael King, Jr., Managing Director at Robertson Stephens and Elise Wang, Managing Director at Salomon Smith Barney, examine the outlook for the sector including new approaches to diseases, outlook for tools and technology companies and share specific stock recommendations.

2) Searching for Executive Leadership in Biotechnology - In an in-depth (2,600 words) Expert Interview, Robert Hennessy, Managing Director at The Hennessy Group, examines the outlook for the sector.

3) The Biotechnology Transformation - In an in-depth (2,500 words) Expert Interview, John Rhodes, Managing Partner for Pharmaceuticals and Life Sciences at Deloitte & Touche, examines the outlook for the sector.

4) The TWST confidential Off-The-Record survey of management performance at nineteen sector firms asked market insiders about the ability of management teams to create shareholder value.

5) CEO and Sponsored interviews (average 2,500 words). Top management of thirty-seven sector firms examine the outlook for their firm and the sector.