re: Mike Murphy:
LSD, bank robbery, investment advice -- makes sense to me-:) Thanks Rick, PB, Peter, DAK, and Mike for links and comments.
Murphy's basic method is to add the amount of money a biotech has spent on research to its cash value. In theory, research produces value, but you can see the problem. Murphy doesn't calculate the _value_ of the research, nor the viability of the program, nor amount of competition in the target field. As a result, he tends to accumulate companies that have been around a long time, raising and spending cash on dubious projects that sound good. XOMA is a good example of a Murphy company -- they've raised fortunes, and spent them, accomplishing the transmutation of money into emptiness.
Murphy could easily correct his model just by subtracting from value after the company gets to be X years old without producing value. At some point, it has to be acknowledged that the R&D expenditures were not fruitful nor additive to value.
This is a list of the biotech/med stocks that Murphy followed a year ago. Sorry I haven't gotten a more recent list, but he's not a person I listen to.
AMLN, ANRG, ARRS, CTRX, CHIR, COCN, CGEN, CORX, CORR, CVAS, CTYL, GNTA, GERN, HGSI, IDPH (MM recommended selling in 12/97), ISIP, LGND, MCDE, NBIX, NPSP, PCYC, PRCY, RZYM, SCIO, SQNA, SUGN, SNAP, TRGA, VICL, XOMA, CPRO, INSV, MATX.
CORR, PCYC, IDPH, SCIO, SNAP have been decent investments. In addition I would consider HGSI, MCDE, SUGN, and VICL. Look at the belly-ups: AMLN, CTRX, GNTA, CPRO. Consider the all-stars missing from the Murphy list (SEPR, BGEN, MEDI, IMNX, CNTO, MLNM). The only first-tier biotech on Murphy's list was Chiron, the lone first-tier stuck in the mud. Perhaps CHIR is weighted down by his rec. |
