What a market! Cold one day and hot the next.

What is an investor to do? Invest. Don't trade or be a short term speculator. Leave that to the old pro's (like me) who probably have been doing this for 10 years before you were born. And we can get nailed too, and don't let any of the gurus imply any differently.

When these markets get choppy like they are now, with the broad uptrend stalled, it's especially important to have a long term perspective, say 3-5 years out. You must do your homework and buy companies with solid products, an important market niche, and good financials to weather any storm and be able to make the investments and acquisitions it takes to stay ahead of the pack.

I am particularly fond of companies that have superior science, and a pipeline of innovative products. As I love bargains, beaten-up solid stocks are always on my radar screen. Two of those are Compaq and Oracle. Their downside possibilities may be 3-5 points at most, but their upside potential is likely to be in the 10-20 point range or more, which is my kind of odds.

In our article of May 21, 1999, we wrote about one of my favorite Biotechs, Isis Pharmaceuticals (ISIP). We promised to tell you about their product pipeline and their collaborators in our May 24 article, but the great retreat of the Internets that day prompted a different article.

Isis has a solid pipeline of new drugs. In the pre-clinical stage they have 2 drugs to treat inflammation, and one for Hepatitis C. Their investigational new drug candidates are drugs for psoriasis and ulcerative colitis. Their Phase I drugs are for treating cancer and cytomegalovirus retinitis (an improved version of their approved drug). Their phase II drugs treat kidney transplant rejection, and two drugs for treating cancers of the ovaries, lymph glands, lungs, kidneys, pancreas, and colon.

Their potential jackpot drug is ISIS 2302, which they are testing against a variety of inflammatory diseases and conditions, including asthma. The big thing here is that in a phase II study, this drug has had encouraging results against Crohn's disease, where many patients have been able to reduce, and some completely eliminate, their steroid use - the most common treatment for Crohn's disease.

Because of these positive results, they began a pivotal quality trial in 1997, which should be completed in late 1999. The clinical end points will be disease remission and weaning from steroids. If the data are supportive, they plan to move for FDA approval DIRECTLY FROM PHASE II, WITHOUT EVER GOING INTO PHASE III !

With competing drugs, the cost to the average patient is $10-15,000 per year. The potential annual market in the U.S. and Europe is $200-400 million. I think that for a stock that closed today at 10 1/8 up 1/4, you get a lot of bang for the buck. And don't wait for year-end, because they are not happy with the low price of the stock, because issuing stock or convertible securities would be too dilutive. So I wouldn't be surprised if some good news would be coming out of there over the next few months, which should be a boost to the stock price.

Finally, their technology is also confirmed by their collaborators, as far as I'm concerned. They are Boehringer Ingelheim, Elan, and Novartis, the latter resulting from the merger of Ciba-Geigy and Sandoz, and is now one of the largest pharmaceutical companies in the world. Keep a close eye on Isis as well as Ligand Pharmaceuticals (LGND) which I wrote about on May 14 and 18. I own them both, and it's not because I like to lose money. Stay tuned.

The Market Pro - May 28, 1999