Peter,
This morning I reviewed your post which started this thread and the list of munch candidates which followed. It certainly was an extremely wise and prescient post! Further, I note that a goodly number on the munch list have been devoured over the past year. Thank you for starting such a great thread and thanks to all who contributed.
The key reasons you cited for munching remain true, if not even more so. Wallets are still bulging and pipelines remain thin at many pharmas and some big biotechs. While lower tier biotech valuations have improved in general, most are still cheap. As Rick Harmon would remind us, some with great science are silly cheap. Importantly, the sheer number of bio firms itself portends eventual industry consolidation.
In 2000, hunters will have a critical need to satisfy their appetite before the year is over - - the expiration at the end of the year of purchase accounting and the ability to write off R&D costs. Most hunters will have an urgent desire to feed heavily in 2000 in order to minimize earnings 'indigestion' <G> in later years. This point has not been lost on Wall Street and, based on several recent contacts with Street people, I believe preparations for a feeding frenzy are underway. IMO, at least some of the recent biotech gains is in anticipation of the munching likely during 2000. When munching starts in 2000 and the urgent need to satisfy appetites is given wider publicity in the investment community, most bio-boats should rise (or sink less in a poor overall market).
With the new year near at hand and the case for munching seemingly as strong as ever, updating the munch list may a good idea. I'll start by suggesting ILXO and the recently regurgitated CEGE <G> be added.
Thanks again for starting this thread and Seasons Greetings to you and yours.
Walter |
