Following several exchanges on the Biotech Valuation thread regarding the place years of cash has for valuing a biotech, I have decided to start a 2-3 year thread for the purpose of exploring the conventional wisdom\dogma about avoiding biotechs with less than 2-3 years of operating cash. While we were all agreed that ultimately good science and management were ultimately far more important, it may have SOME value in valuing a company and assessing risk\reward since cash on hand, as it may effect terms of partnering, the ability to delay partnering for a better deal or even not partnering, or negotiating "munch" prices. TRGA was recently bought out for a massive $1.35\share with less than 2 qtrs operating cash on hand.
What I'd like to do is follow at 10 or so companies with at least 2-3 years of cash for operations on hand given recent burn rates, and 10 or so with less. My problem is that I don't follow enough biotechs to confidently supply such a list. I have compiled an initial list from several sources - a few I follow, some recommended for this purpose on the Biotech Valuation thread, some that some of the several of the SI biotech notables follow, some from the VD's Model portfolio thread.
Please consider reviewing the following and provide some feedback. I really want to limit this study to those companies with good science\platforms. For example, while I've owned TTP, they acquire compounds and do not have any "in-house" programs, hence my excluding them.
So if there are some companies that should be included, please let me know. If there are those that you do not think should be included, please let me know also. Just please DON'T present a company just because you own it.
Practically, I realize that past burn rate is not a great predictor of future burn rate due to advancing stages, new compounds entering trials, programs being cancelled, partnering, M&A activity... I will post an initial portfolio with cash & marketable securities on hand, past 12 month burn, Mkt Cap, shares outstanding, 12\31\2000 price, % price change, any secondaries during the study & % dilution, M&A & comments.
I'll start out with data from their most recent qtr report & adjust for news items that materially effect cash or shares, then adjust the shares, cash & burn rate for end of year data when it becomes available. There were a couple proposed that I left out since I could not get any kind of clear picture on the cash & burn rate due to recent M&A activity.
The initial list is (no particular sequence)
INCY, GLGC, CEGE, AGNT, GNSC, EBIO, CRIS, NBIX, REGN, VPHM, MLNM, ABGX, INCY, BTRN, TRMS, SEPR, VRTX, PRCS, VICL
Any interest? It may be that this will show that this item of popular wisdom is without any merit. But just in case this shows an area where some trends emerge, it may provide a tool or 2 to add to our bag of stratedgies.
Scott |
