Geltex Pharmaceuticals is developing non-absorbed, polymer-based pharmaceuticals that selectively bind and eliminate target substances from the intestinal tract. For the 9 months ended 9/30/00, total revenue totaled $36.9M, up from $6.2M. Net income totaled $8.5M vs. a loss of $26.6M. Results reflect increased contract revenue due to a $20M milestone payment from Sankyo Pharma earned upon the receipt of marketing approval from the FDA for WelChol.

December 5, 2000

Geltex Pharmaceuticals develops and markets non-absorbed polymer drugs that bind and remove target substances in the gastrointestinal tract. The company's first commercial product, Renagel, is used to treat elevated phosphorus levels for dialysis patients, and currently brings in about $14 million for the company each quarter. Currently, GELX has 21.75 million shares outstanding with 50 million shares authorized, so a 2:1 stock split is a possibility. We'll keep you posted on any split developments that may occur. As for the stock, shares just broke above their recent high of $56.69 and held on to close at an all time high of $57.13. A long uptrend separated by several momentum runs leads us to believe that GELX could challenge the $60 mark. Good volume of 500,000 shares or better will likely be needed if the stock is to advance above this level. Should this scenario come to fruition, we'll look for a tougher challenge to reside at $65. If light volume accompanies GELX to either of these resistance levels, then consider locking in profits or tightening stops. As for support, the recent base at $56 is bound to offer some degree of support. Just lower, the $55 mark should present a firmer base, with the 5-dma of $55.40 and an intermediate high of $55 offering strength to this level. Set stops at $52 to protect against a reversal in trend. Consider reconfirming your entries with strength in the AMEX Pharmaceutical Index (DRG) prior to opening positions.

December 7, 2000

GELX is likely to experience strong growth over the next few years for its kidney and renal treatments thanks to an aging population. As for the stock, shares were able to take a quick intra-day peek into new territory yesterday at $57.75. Good volume accompanied a pull back from these highs, but equally strong buying eventually came in and helped form a near-term bottom at $56. On a short-term basis, this suggests that sellers are still willing to purchase at higher levels, which is a good indication that we are still on target for a possible run to $60. Today’s consolidation held within yesterdays range, but came on much lighter volume (462,000 shares). If volume can exceed 500,000, we’ll look for an advance above the $56.38 mark to set the stage for a breakout. On the downside, the 5-dma of $55.69 will hold our first support. Just lower, the $54 mark should present a firmer base with the 20-dma of $53.77 and an intermediate high of $55 adding strength to this level. Set stops at $52 to protect against a reversal in trend. If good mid-day volume (250,000 shares or more) can accompany a bounce off these support levels, then look for a low risk entry point.

Picked on November 16th @ $57.13
Change since picked -0.44
Stop Loss @ $52.00