Tuesday, February 28, 2006

Meow: We Nailed That CATG Call

Shares of Cambridge Antibody Technology Group (CATG) soared 6% in after hours after getting a nod on CNBC's Mad Money. You'll recall our "watch this stock" memo back on 1/31:
The best biologic drugs on the market approved for psoriasis include Genentech’s (DNA) Raptiva and Abbott's Humira.

Humira's growth is so impressive, we finally took the time to research the company whose technology spawned it — a little UK company called Cambridge Antibody Technology Group.

CATG engages in the discovery and development of human therapeutic antibodies. The story behind CATG is royalties. CATG should get close to 3% of the $2B in sales of Humira in 06. Moreover, Genzyme (GENZ) has drugs close to market where CATG will make excellent additional royalties.

Abbott anticipates filing further BLAs for Humira in Crohn’s disease in 2006 and chronic plaque psoriasis in 2006/2007. Should Abbott get the nod, that new royalty stream will hit CATG’s top line like a ton of bricks.

CATG’s antibody technology is just starting to get noticed. With $300M cash and less than $2M in debt, CATG is worth following.
We still think that CATG is takeover material, as is our other biotech pick, Vaxgen (VXGN).

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