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Biotech / Medical : Biotech Valuation

CRSP 52.51

+2.7%

Nov 14 9:30 AM EST

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To: Biomaven who started this subject	4/4/2002 10:33:21 PM
From: IRWIN JAMES FRANKEL	Read Replies (2) of 52153

Diluting earnings for Big Pharma - BMY When someone suggests that a biotech that is losing money could be purchased by a large profitable drug company, we hear the complaint that the dilution would not be acceptable. On the other side of that issue is that the older profitable drug company may have a weak pipeline. We have seen just how big the hit can be to a drug company when the reality of the poor pipeline sets in. BMY has dropped from a market cap of $140 billion to $62 billion. They could have purchased a company like Sepracor. Say they exchanged shares and paid $8 billion when they had a good currency. If BMY had taken the same hit it would have only cost them $4 billion (Ok so that is 3 times the current value of SEPR. Maybe they should do it now. :-) With 2 billion shares outstanding the dilution would only amount to about $0.06 per share (after taxes). BMY would then have lots of "future" to talk about. I would rather be doing that than explaining how I stuffed the channel and was cutting costs. I'm sure some of you think I am missing it. So what is wrong with what I am saying? ij

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