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Biotech / Medical : Biotech Valuation
CRSP 52.18-2.5%3:59 PM EST
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To: enervestor who wrote (1673)9/16/2000 10:54:34 PM
From: Biomaven  Read Replies (2) of 52153
 
enervestor,

I have a very small "get-my-toes-wet" QTRN holding bought recently at a little under $15.

The CRO's main drivers are really Phase III's or the occasional big Phase II's. This means that it's quite a while before most of the dollars that have flowed into the biotechs shows up in the hands of CRO's. Note that it's not just the biotechs that use them - some big pharma trials also utilize them. Over the last few years the industry has been pretty stagnant, with flat sales, falling margins, and some big trials that got cancelled.

An interesting comment I heard from Southwell (SEPR's CFO) is that the "majority" of SEPR's (pretty considerable) R&D spending goes to CRO's. This provides some support for the notion that a fair bit of the biotechs' cash will eventually end up in the coffers of the CRO's.

I actually know little about the details of the CRO industry - I was attracted to QTRN because I liked their co-marketing ideas and their attempt to integrate medical billing information with their marketing and CRO practice. The stock also looks cheap - trading around book value and at 1x revenues. Plenty of cash (they got $400 million cash and 35 million HLTH shares from the sale of Envoy).

Anybody know which biotechs use which CRO's? Be interesting to see who MLNM, SEPR and VRTX use.

Peter
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