From: "J. Orlin Grabbe" 
Subject: SNET: [Fwd: The Age of Conspiracy]
Date: 3 Feb 1998 09:03:43 -0500
To: snetnews@world.std.com


->  SearchNet's   SNETNEWS   Mailing List

This is a multi-part message in MIME format.
--------------BFD230C2AA5F2A13CC71B62B
Content-Type: text/plain; charset=us-ascii
Content-Transfer-Encoding: 7bit



--------------BFD230C2AA5F2A13CC71B62B
Content-Type: message/rfc822
Content-Transfer-Encoding: 8bit
Content-Disposition: inline

Path: news.alt.net!wnfeed!204.127.130.5!worldnet.att.net!newsadm
From: gcruse@ateetee.net (Gary Cruse)
Newsgroups: alt.current-events.clinton.whitewater
Subject: The Age of Conspiracy
Date: Tue, 03 Feb 1998 08:32:35 GMT
Organization: AT&T WorldNet Services
Message-ID: <6b6kqq$e0n@bgtnsc03.worldnet.att.net>
Reply-To: gcruse@att.net
NNTP-Posting-Host: 12.64.105.134
Mime-Version: 1.0
Content-Type: text/plain; charset=ISO-8859-1
Content-Transfer-Encoding: 8bit
X-Newsreader: Forte Agent 1.5/32.451


February 2, 1998
Wall Street Journal

 By ALAN ABELSON

 Whatever its claims to infamy -- and there's no shortage of them
 -- this is indisputably the Age of Conspiracy.

 Conspiracies, which in more measured times were the exclusive
 province of ignoble Romans, Shakespearean scoundrels,
 medieval knaves and their ilk, today are a universal indulgence.
 In some ways, that's a mighty tribute to the triumph of
 democracy, not the least of whose blessings is that every man,
 no matter how humble his station, can choose a conspiracy of
 his liking.

 Technology, of course, has been an enormous boon to the
 propagation of conspiracy awareness. In those benighted days
 before talk radio, for instance, the opportunity to expound on
 conspiracies, great and small, was limited to whisperings
 between individuals or, at best, such occasions as church
 socials or gatherings of the Elks and the Lions. Now, by
 contrast, the latest plot can be broadcast to millions before it's
 fully hatched. Sometimes even before it's hatched.

 But even talk radio can't hold a candle to the Internet as a force
 for the furtherance of conspiracy sensitivity. Not for nothing is
 it called the Web. Quick as a click, the scholar and the merely
 curious alike can discover conspiracies galore on the subject
 matter of his choice. An astonishing breakthrough that has no
 precedent in the long history of conspiracy and holds out vast
 promise for the future growth of conspiracy theory.

 Government -- commonly referred to among conspiracy
 cognoscenti as "they" -- is the prototypical agent of grand
 intrigue. Everyone knows, for example, that "they" have gone to
 extraordinary lengths to keep ordinary citizens from seeing and
 communicating with the crews of visiting UFOs. For one reason
 and one reason only -- "they" don't want anyone to learn about
 those covert extraterrestrial contributions to recent Presidential
 campaigns.

 Not all government figures, we're happy to report, are engaged
 in the fomenting of conspiracy. Indeed, a recent heartening
 global trend is the willingness of prominent persons to expose
 and publicly decry such machinations. The prime minister of
 Malaysia, to cite a well-publicized example, fearlessly fingered
 George Soros as masterminding a scheme to undermine his
 nation's economy. And Mr. Soros was compelled to confess
 that he had knowledge, passed along to him by a Malaysian
 dissident, that the currency of a country that lives beyond its
 means inevitably .. declines!

 And just last week, Hillary Rodham Clinton charged that a
 right-wing conspiracy was attempting to drive her husband
 from the Oral Office. What's more, she named the special
 prosecutor probing Whitewater, Kenneth Starr, and Senator
 Helms and Senator Faircloth, both of North Carolina, as
 ringleaders of the sinister cabal. Mr. Starr retorted that the
 whole idea was "nonsense" and immediately contacted
 Senators Helms and Faircloth to tell them they'd better use new
 code names.

 A conspiracy that bears directly on our own small sphere of
 interest desperately needs airing. It concerns the recent Super
 Bowl. Do "they" really think we're so naive as to believe the
 Denver Broncos beat the Green Bay Packers fair and square?

 In truth, Denver "won" the Super Bowl only because Alan
 Greenspan wanted it to win. Mr. Greenspan has been worried
 for quite a spell now that the stock market was too high, but he
 was loath to take any action for fear a crazed broker or one of
 the Beardstown ladies would break both of his kneecaps.

 So, we can exclusively reveal, after huddling with that old Wall
 Street hand, Robert Rubin, Alan Greenspan decreed (secretly,
 need we say?) that Denver, an AFC team, beat Green Bay, an
 NFC team, activating the infallible Super Bowl Indicator and
 assuring a down year for the market in '98. Think on it: Why else
 would Green Bay deliberately allow Terrell Davis to walk into
 the end zone with the winning touchdown?

 Sell everything!

 Last week, we penned a note on Organogenesis, the company
 that has been laboring for longer than we care to remember to
 bring its skin substitute, now dubbed Graftskin, to market. What
 occasioned the remarks, which, let the record show, were
 decidedly skeptical, was the impending review of the premarket
 approval application for Graftskin by the FDA Advisory Panel
 on General and Plastic Surgery Devices.

 Our comments featured some pithy observations by Evan
 Sturza, who writes an investment letter concentrating on drug
 and biotech stocks. Ev doesn't think much of Graftskin's
 chances as a commercial product and has recommended that his
 subscribers sell the stock short. His reservations are rather
 inclusive, from what he perceives as flawed research to the
 great disparity in cost between Graftskin and competing
 remedies.

 He conjectured that the FDA panel would turn thumbs down on
 the request. Actually, he calibrated the odds as 70% for
 rejection, 25% for conditional/or limited approval and a mere 5%
 for unconditional approval.

 Well, Jimmy the Greek blew a few, too, and on Thursday, the
 panel by a vote of 5 to 4 recommended approval, without
 ostensible conditions. The FDA itself will consider the
 recommendation and offer up its decision. Most of the time --
 but not always -- it follows panel recommendations.

 Couple of things worth noting. The panel found that Graftskin
 was more effective than the other therapy used in its tests for
 venous leg ulcers only when the wounds have existed for at
 least a year. That represents only roughly 10% of all venous
 ulcers, according to Ev.

 At the same time, however, the panel found that for newer
 ulcers, Graftskin offered only marginal benefits over standard
 therapy. The cost difference is staggering: somewhere between
 $1,600 and $2,400 for Graftskin, versus $4-$6 for alternative
 treatment.

 Further, the four members of the panel who voted against
 unconditional approval were concerned primarily with an
 increased risk of infection attendant to the use of Graftskin and
 wanted Organogenesis to do a post-marketing study of
 infection rates.

 Biotechs turned in a middling performance in 1997. The Amex
 index of the sector was up 12.6%, a fair cut below the 33.4%
 gain in the S&P. But even that comparatively moderate advance
 is deceptive, skewed by outsized runs by momentum favorites,
 a not very large fraction of the 400-odd publicly traded biotech
 stocks. A number of blue chips like Amgen suffered through a
 drab year, while a slew of lesser shares stagnated in
 not-so-benign neglect or worse.

 This year could prove dramatically different, says Mark
 Lampert, who runs the Biotech Value Fund and whose informed
 views we've quoted from time to time. Although tilted to the
 short side last year (and with some scars to show for it), his
 hedge fund was up nearly 16%, and since its first trade in the
 summer of '93 has appreciated some 330% (compared with a
 53% rise in the aforementioned index and 141% in the S&P).

 Specifically, Mark sees a big bear market developing in '98 for
 the stocks that, thanks to the enthusiasic play they've gotten
 from the momentum crowd, have been hogging the limelight. At
 the same time, he thinks this is the year that value will out in
 biotech and an extended bull market will begin in scores of
 deserving stocks (a category that, coincidentally, just happens
 to include ones he owns), many of which got left behind in '97.

 He's convinced last year's big winners will run out of momentum
 (and the momentum crowd will run out of them) because the
 fundamentals never justified the lofty levels they reached and
 reality is about to intrude. As he explains in his recent letter to
 his limited partners, a lot of the companies whose stocks took
 off introduced their first products last year. The excitement that
 accompanied those launches is waning, and now comes the
 hard part -- in most cases, alas, the just about impossible part --
 of living up to the wildly optimistic sales and earnings
 forecasts.

 As it becomes painfully clear that expectations won't be met, the
 momentum crew will dash for the exits and the stocks will take
 gas. Some of the companies that geared up -- and spent big
 bucks to do so -- for booming demand that never materialized
 might go belly-up.

 If things work out the way Mark anticipates, it's not too much of
 a stretch to envision interest flowing from the falling momentum
 stars to the value-laden laggards. Biotech, after all, is a
 terrifically vibrant and intriguing field. And once you get past
 the smog of Wall Street's pseudoscientific speculation that
 envelops the group and obscures fact from fantasy, you can
 spot companies whose prospects and valuations are both
 inviting.

 A company, for example, like Advanced Magnetics. Mark has
 owned the shares since '94 and recently bought another slug.
 From January '96 through the end of '97, the stock, which is
 traded on the Amex, lost 70% and is now changing hands at 11
 and change, down from an all-time high of 30.

 Advanced Magnetics admittedly labors under some serious
 handicaps. Unlike so many highly touted biotechs, it has two
 solid products on the market and another especially promising
 one that seems primed for FDA approval late next year. Even
 worse, it boasts a splendid balance sheet. Not a trace of debt. A
 rock-solid book of some $6.45 a share, including something like
 $5.50 of cash. And, the most formidable drawback of all, it has a
 good shot at making some real money in a few years.

 The big knock on the company is that, as Mark observes, it
 lacks the stuff that whets the appetites of professionals these
 days. That it's loaded with cash, for example, means it doesn't
 need the services of an investment banker, and so analysts
 have zero incentive to provide research coverage. And sure
 enough, a quick check failed to turn up any recent reports on
 the company. Moreover, the float is small (6.7 million shares,
 35% owned by insiders) and trading leisurely. That turns off
 institutions, which have a thing about "liquidity" (a quality that
 protects an institution against owning a stock that every other
 institution doesn't own).

 The company has been around since '81, and its leading
 specialty is the development and manufacture of magnetic
 resonance imaging -- MRI, for short -- contrast agents for
 diagnosis of cancer and other diseases. Feridex, its initial
 product, aimed at enhancing MRI of liver tumors, won FDA
 approval in August 1996, and its second product,
 GastroMARK, made its commercial debut last year. Advanced
 Magnetics has hooked up with some heavyweight marketing
 partners: Berlex Labs for Feridex in the U.S. and Canada,
 Mallinckrodt for GastroMARK and Eiken Chemical for Ferdix in
 Japan, where sales are just getting under way.

 These arrangements, Mark notes, have saved the company the
 considerable expense of building and feeding a sales force.
 Which means, among other things, that when the dollars begin
 to pour in, their path to the bottom line is relatively unimpeded.

 Clincial development of the company's third product, Combidex,
 a contrast agent used for MRI of lymph nodes, is, Mark reports,
 nearly completed. So he deems the "technical risk" of the
 product low.

 "Investors," he contends, "have at least three independent
 chances to win big with Advanced Magnetics." The first is if
 sales of Feridex in the U.S. and Europe gradually pick up steam.
 The second is if the potential for Feridex in Japan, which has a
 high incidence of liver cancer and where MRI is used liberally,
 is realized. And the third is if Combidex turns out to be, as he
 thinks it may, a big product.

 Any of the three by itself could enable the company to earn a
 couple of dollars a share, in Mark's view. And, of course,
 together they represent the possibility of very hefty earnings
 power several years from now.

 The downside in the stock, he feels, is limited by those pristine
 financials, particularly that lovely stash of cash.






            Copyright ) 1998 Dow Jones & Company, Inc. All Rights
Reserved.


-- 
Gary


Question Time:
   What's the definition of mixed emotions?
              When you see your Mother-in -Law backing off a cliff
              in your brand new car.

--------------BFD230C2AA5F2A13CC71B62B--


-> Send "subscribe   snetnews " to majordomo@world.std.com
->  Posted by: "J. Orlin Grabbe"