Following Peter's post, Viropharma had $240mm cash at 12/31/01, and $180mm in long-term obligations. The current bond-ghoul valuation view that a biotech is worth its salvage value is too severe for the long-term. It allows no value for intellectual property, property-plant-equipment, nor net present value on a discounted cash flow basis.
There are 20mm shares out, so a bond-ghoul might see $3/share in value. If one believes in biotech at all, it is an extreme of pessimism to value a research company at liquidation value.
There are many biotechs going through this kind of valuation. The most absurdly undervalued, to me, seem to be SEPR and ELN. Sepracor has multiple opportunities to turn its cash into new products, and has three approved products now, and sixty more potential products, that we know about. ELN seems to be daily monetizing its JV's, which Mr. Market somehow views as dilutive, rather than accretive, to value.
Absurd! Here's a ref for Viropharma's most recent qtrly announcement:
biz.yahoo.com |
