A Quick One -- Alerted to this -- by a friend of the blog. . . .

. . . .And, just now, asked a question about it, by another reader on another board, I'll offer just a touch about the Forbes piece [UPDATED --Pharmagossip's "Quote of the Week" comes from Mike Krensavage, as well]:

Question: . . . .did you read the forbes.com story about Mike Krensavage, the highly rated Raymond James pharma analyst? Krensavage is going to start his own hedge fund and he says SGP is a big time buy. . .

Answer: The Raymond James guy?!

Are you serious? Wasn't he the same guy¹ who said that the SGP 6% Preferred Converts due 2010 were a strong buy back when they were worth $238, in early January 2008 -- then they dipped to $160s -- now back around $194. . . and he makes SGP common a "buy" at this level?

Ahhh. Yeh. Just because Forbes writes about someone, it doesn't make them right -- not on pharma, and not at this time, particularly.

I think the Forbes headline analogy is apt. Pharma will be "pushing tin" for quite a while -- it has become a "show me" (actual results needed) sector, no longer a "tell me" (you're a believable source) sector. Quoting, now:

". . . .His trick is to value drug firms based on how much cash they generate, as with carmakers and retailers. He advises buying when pharma is trading at low multiples of earnings, sales, cash flow (in the sense of earnings before interest, depreciation, taxes and amortization but before capital spending) or all three. That way, he figures, you get the pipeline for free. . . ."

Well, by those measures, SGP should be on his "Sell" list.

Didja' check what is projected for free cash flow at SGP for all of 2008? [Maybe I'll write on it, later today. Yeh. I think I will. Stay tuned.]

With the convert interest payments piling up, and rising other debt service costs from Organon, some unspecified cash-portion of PTP charges, and a myriad of other cash-drains, as well as the 22.25% drop in Vytorin/Zetia cash-flow. . . SGP is looking just a little cash-strapped, of late.

But that's what makes a market, no?

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FOOTNOTE 1: Thus far, I have been unable to find, once again, the specific article quoting the specific Raymond James analyst who recommended the SGP 6% Converts as a "buy" -- repeatedly, in January and February 2008 -- but it was a Raymond James recommendation. There were several sources with that quote.