Dow Jones 10679.28 +42.19 10:07 am PST, July 28, 2005  NASDAQ 2191.98. +5.76 For info, visit access.smallcapnetwork.com S & P 500 1241.56 +4.77 Change your subscription status here Russell 2000 677.98 +3.10 VOLUME 05: ISSUE 57  Feature: Why You Need To Own Biotech. And Soon. We are putting the final touches to an extremely interesting and, we believe, potentially very profitable biotech company idea--which we are planning to have in your email box after the close Monday next. We are confident that this Phase I/II Company has superior investment potential and, as a hint, swims in the pool of, among other amazing therapies, cutting-edge cancer treatments. We believe that the biotech sector, particularly smallcap biotech, is quickly becoming the major focus of investors for the long-term. You'll likely want to refer a friend(s) to sign up for the SmallCap prior to Monday for this and future biotech trading ideas. We believe that they'll be glad you did. Are You Ready? As a precursor to Monday's piece, we are bringing you our latest thoughts on the biotech sector, drugs and an extremely useful metric to help you pick a biotech investment. This background is critical to our rationale for the potency of Monday's new biotech opportunity as well as those to come. So, a moment of your time would be appreciated. We are confident that it will be time well spent. There are nearly 80 million baby boomers. The first members of this group, which at 28 percent of the population represent the largest demographic in US history, begin to turn 60 within a year. These folks are going to want, need and indeed demand the best healthcare that money can buy--especially with regard to cancer treatment. The promise of decades of biotech research has arrived. At the very least, we on the cusp of what we believe will be exponential, multi-decade growth for both patients and investors. We first made our call on the Amex Biotech Index (AMEX: ^BTK) on June 14th with the index at 540. Currently at a level of roughly 624, the BTK continues to look constructive: evidencing a return, or, more accurately, a re-awakening of investors to the biotech sector. This monthly chart continues to outperform the NASDAQ and recently breached a critical resistance point as noted at the .618 point blue line. As it broke above that point, the Index still shows compelling strength. Should the index close above the blue line at the end of the month, we expect to see a very sustained upward move. While volatility may continue with some strong pullbacks, we view these dips, should they occur, as excellent entry points to the biotech sector and its constituents. Let's Talk Cancer. The overall cost of cancer treatment is approaching $200 billion annually. Just less than half of that is in direct medical costs. Cancer is the second leading killer in the US. If one subscribes to the theory that the rising tide of aging Americans will quickly raise those numbers exponentially, the need and potential for biotech therapies, drugs and R&D comes into extremely clear focus. While significant progress in cancer treatment has been made, we're a long way from a cure and, as a result, new and improved treatment regimens and therapies will likely enjoy the fastest and most robust growth now and over the next several years, if not decades. Obviously, that's good news for patients and investors.  Those smallcap companies that have the most promising therapies and a solid plan to bring them to market as quickly as possible will be the largest winners, again, both for patients and investors. Our job is to bring you those names. We have and will continue to do so with Monday's rollout. We sincerely believe we have entered a new phase of biotech interest and investment.  In 2005 there will be almost 1.4 million new cancer cases in the US. Look for that number to rise significantly in the coming years. As we said, the medical community and patients will, without doubt, want and demand the latest and most promising therapies.  For investors, we believe that we are on the threshold of the largest and longest growth period of the biotech sector in history. Will it happen tomorrow? No. Is it already quietly underway? We believe so.  Although we are using cancer as an illustration, there are a myriad of other afflictions, both deadly and debilitating that will require the most cutting edge drugs and therapies available. There's only one place those will come from--the biotech sector. In that vein, one area that is also looking interesting is the drug component of biotech. Yes, we have a chart. We initially profiled the Amex Pharmaceutical Index (AMEX: ^DRG) in our July 16th piece at a level of 327. While stalled around that level for now, the Index has outperformed the overall NASDAQ, albeit in a somewhat stealth-like fashion. This monthly chart shows a long-term triangle wedge which to technicians is evidence of a large break looming--either up or down. The sector appears to have been under heavy accumulation for a while, even though it hasn't participated in the recent overall rally. While we can't be sure, we do believe that the fundamentals and technical picture are showing a potential break to the upside and the beginning of a long-term rally. Buyers should beware though that the index could break lower before embarking on that rally. One thing's for sure, a strong trend is in the offing and we believe it will be positive relatively soon. How do investors find the companies with the most potential? Glad you asked. Obviously there are many parts to that process. We feel that one major part of the answer lies in looking at market caps for biotech companies at various stages of development. It's an interesting metric and one that has paid off handsomely in the past. We feel that this trend will continue for years to come. Listen up. Companies at the Phase I/II level tend to have market caps at the $70-$100 million level. Once advancing to more Phase II and commencing Phase III trials the number rises to a level of $300-$500 million. As Phase III studies get more established, these companies begin to flirt with billion dollar market caps. The Company we will launch on Monday is in the Phase I/II category and, we believe has the potential for significant growth and profits for investors as it advances both its R&D, Phase trials and moves to eventual commercialization. If you want to guess the company's name, save us both the bandwidth. You'll have to wait until Monday. The trick is not only to find exciting, promising companies at the Phase I/II that are flying under the radar, but that have the technology, business plan and money to advance through the three stages. We have seen that investors have become much more savvy when it comes to assigning and raising valuations based on where on that progression a company finds itself. As illustration, I give you two such companies, Celgene (NASDAQ: CELG) and Gilead (NASDAQ: GILD). The former has a market cap of $8 billion, the latter $20 billion. Each currently trade in the mid-forties. It has not always been so. Investors had years to buy them cheaply. Throughout the 1990's Celgene vacillated between $3.20 and 80 cents a share. Early, patient investors who saw the potential were, as you can see, richly rewarded. Gilead stalled around $1.60 in the late 1990's and the story for investors was much the same. Bet you wish you'd bought those names when they were at the Phase I/II stage. Our contention is that finding companies at the right stage of development with viable, exciting products reduces the risk and, we believe could well deliver faster market gains than were seen with the likes of Celgene and Gilead given the looming demographic landscape.  After decades of R&D and billions of dollars spent, we believe that there are a significant number of companies out there on the threshold of greatness both for patients and investors. And we'll be bringing the best we can find to our readership, beginning Monday.  We suggest that you do not miss this opportunity.     We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 3525 Del Mar Heights Rd #334 San Diego, CA 92130 Subscribe Information is power and timely information is profitable. 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