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Biotech / Medical : VD's Model Portfolio & Discussion Thread

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To: Spekulatius who wrote (7936)	5/8/2000 1:25:00 AM
From: Spekulatius	Read Replies (1) of 9719

More Biochem - For those interested in finances: Biochem set up a R&D vehicle Clinichem in 1998 with CAN 150M$ in cash to 'reimburse' BCHE for part of the R&D expenses and make BCHE bottom line appear better. Clinichem basically reimburses BCHE for R&D at a rate of about CAN 13M$ per quarter.Once the Clinichem cash hoard is gone, BCHE will buy back the Clinichem stock it spun off earlier. This 'clever' financial engineering never got well received however and that is why BCHE trades at this low P/E ratio - the bottom line is that the quarterly earnings have to be reduced by the Clinichem contribution (core earnings). Nevertheless, the R&D money seems to be well spent and even when BCHE earnings are reduced by CAN 50M$, the stock trades at a PE in the low twenties. Well,this is just to make picture complete; now I will stop praising BCHE and wait for the word of the mighty gurus from this thread!

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