Ebb & Flow

Genentech got a 12% bump on Monday when partner OSI (OSIP) reported that its Tarceva small molecule EGFr inhibitor significantly increased survival in a Phase III trial in recurrent non-small cell lung cancer (NSCLC). The pop put DNA within a stone's throw of Amgen's market cap. As of Friday, AMGN was still the largest biotech, with a market cap of $72.2 billion, but DNA was only $7.5 billion behind with a market cap of $64.7 billion.

As the gap between AMGN and DNA narrows, the difference between their sales and P/E ratios becomes more stark. In the first quarter, AMGN posted sales of $2.2 billion - almost three times DNA's sales of $763.3 million. On the Street's 2004 EPS estimates, DNA trades at a 78 multiple, while AMGN is getting 24x. ...