Rick,
How I read John post and what I think he have in mind (He will correct me if I am wrong) is that sector as unit was under-performing market regardless that enormous progress was made in every field relevant to drug discovery and development.
So, when rally started six months ago many bios (generaly) were 3-5 X under-valuated in their MC. Now, if they rallied by 6-10X, actual growth in MC is 1-2X. Not sufficient to cover all opportunity and very good perspective in coming years.
That in current situation sub-sector like gen.com (media exposure) and craps (common luck of knowledge and basic information) rallied as well isn't anything unexpected.
I agree with almost all yours points. Specially with: "The promise is still strong, love the concept. Without more "MLNM"-like deals, however, we'll see more modest valuations IMO."
That gen.com and maybe some mAb.com will correct at some point I have no doubt. However, will this correction effect pipeline and platform reach bios with the some strain is *big question*.
We are now in different time than in 91 correction and after-95/96 slow down. I see confidence growth among *large* and *small* investors that bios CAN delivery expectation. Street is now better informed about bios and their science.
If I can build basic knowledge about what is going on in bio-science and how this can effect pharmaceutical industry in future than *anyone* can do it.
So, when (and if) correction for high-fly stocks which rallied the most come we will have again buying opportunity. However, mu guess is that we may first experience money *re-balancing* inside sector. Some sub-sector bios are still cheap on relative and maybe absolute base.
If momo money continue to expect yearly 100% return and this doesn't come (which I do not thing that it will on non-selective base) where else they can go? To generate another *hype* somewhere else? If market can't offer sector which can generate +30% annual return (for instance in next 5-10 years) and leverage basket of the bios can, than smart money will find its way to bios sector. Latest huge finance is first indication for this. And there are still plenty of fresh and old $$$ which are waiting for correction (general market correction).
Nonetheless, interesting and exciting times are coming.
Cheers,
Miljenko.pipeline.com |
