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Biotech / Medical : Biotech Valuation

CRSP 52.51

+2.7%

Nov 14 9:30 AM EST

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To: NeuroInvestment who wrote (1700)	9/19/2000 12:55:42 PM
From: Biomaven	Read Replies (1) of 52153

Thanks NeuroInvest and tommysdad for the comments. As alluded to in your respective comments, there are two significant reasons why biotech Phase III's are riskier than Pharma Phase III's. 1. Biotechs (especially smaller ones) tend to skimp on the Phase II's. They don't have the time or the money to run big enough trials or enough different trials to really nail down issues like dosage vs. efficacy and side effects. 2. Pharmas can kill compounds out back in the dead of night; biotechs have to do it in their front yard, naked and with all the analysts watching. This means there is a tendency to go ahead with a drug even though they may know in their hearts they shouldn't. Pharmas are much readier to go to a backup compound and are less willing to overlook possible flaws that might emerge. By the way, there's a new IPO out (Pharsight) that attempts to "scientifically" manage the selection of Phase II parameters to maximize the information you can expect to get from the trials. Seems mostly to have worked with pharmas rather than biotechs so far. Peter

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