The traditional "optimal" business model in biotech...... (1) develop a superior research tool or a tool that you can at least represent as superior, (2) make competitors afraid that, if they don't access your RT, they'll not be competitive, and (3) use said tool to wander down "independent pharma" status with in-house research while also selling it to the scaredy cats.
Sands is talking about that route/model, and it never has matured (and never will mature) within a two year time frame.
Sands is talking the "Millennium" business model. I don't remember if I owned MLNM prior to 8/97, but I did buy some shares then at (split adjusted) $3/share. The market cap was approximately $375 million. It is now about $7.7 billion, down significantly from recent highs. Along the path, it was better than a thirty bagger.
You were suggesting that the guy or gal that had a 4 bagger with LEXG would be wise to have split. That's my style as well, and I sold MLNM after roughly a double.
That is, I stuck it out for two of those 30 bags.
The traditional biotech investor doesn't worry as much about profit as they do about profit potential. Why? Because we're talking "tradition", and there weren't any profits in the old days. Those who laugh at us come and go, but we just keep tucking away the big wins.
LEXG has a clever trick to describe the function of some genes. Their goal is to describe spanking new pharmaceutical targets. They have a "research premium" of about 230M. Pharmaceuticals are high margin products that often address markets of $500 million plus.
Scenarios, therefore...... if they CAN describe spanking new targets, they're under-valued. If they can't, they're over-valued.
>> What do you think he means? <<
I think that he's trying to convince us that (1) being "a leader in biopharmaceutical discovery for the post genome era" is important, and (2) that LEXG fits scenario "under-valued".
It's the biotech investor's job to access expertise that can distinguish between the two scenarios. The CEO is, at best, only a good starting point.
Someone walks up on the street and sells you a twenty for a buck. If you turn around and sell it for $4, are you going to feel wise?
I own a very small stake, and I'm still trying to distinguish between the two scenarios....... don't agree with your logic, but not saying that LEXG is a twenty. |
