Protein-Rich at Ciphergen?

Institutional investors are warming up to Ciphergen Biosystems (CIPH ), which hit 35 a share in November, 2000. It has since tumbled to 4.45, along with the market's massive fall and the cooling of interest in biotechs. Ciphergen, however, has what analysts call "exciting products" in proteomics, the study of proteins. And there is talk that Ciphergen is buyout bait--like Vysis, a maker of clinical products for the evaluation of genetic diseases, which Abbott Laboratories agreed on Oct. 24 to acquire.

Ciphergen has developed a proprietary system called ProteinChip, which helps drugmakers identify and characterize proteins. It is a novel tool in protein research: It helps pharmaceutical houses to understand the role of proteins in the biology of disease and its progression--as well as the therapeutic effects of drugs. Customers including Pfizer, AstraZeneca, Novartis, and GlaxoSmithKline use ProteinChip in preclinical development of drugs.

"We view Ciphergen as the leading pure-play proteomics company and rate it a buy," says analyst Eric Schmidt of SG Cowen Securities. Carl Gordon, a partner at OrbiMed Advisors, which holds a 9% stake, thinks Ciphergen would be a "perfect fit" for the likes of Applera's Applied Biosystems, which makes instrument systems and software for life-science research. He says Ciphergen in a buyout would be worth more than $8 a share. Revenues have been building up, he says, from $8.9 million in 2000 to an estimated $18 million in 2001. Ciphergen should be in the black in 2003, says Gordon.

By Gene G. Marcial

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