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Biotech / Medical : Biotech Valuation

CRSP 56.71

+0.4%

Dec 24 12:59 PM EST

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To: Biomaven who started this subject	4/24/2002 2:31:51 PM
From: Czechsinthemail	Read Replies (1) of 52153

Ran across this article by Jim Jubak: "Dogs and darlings of the biotech sector" money.msn.com Besides highlighting the volatile rollercoaster pattern of biotech stocks, it calls attention to a higher risk premium being placed on biotech stocks to reflect higher costs in dollars, time and higher failure rates in getting drugs through their approval process. He divides the group into tier 1 and tier 2 companies based largely on pipeline and how fast and smooth the road to approval appears. His idea of tier 1 biotechs being heavily punished on any disappointment seems on the mark. The question is whether there is likely to be greater investment value in hunting among the wreckage when they disappoint (e.g. SEPR), looking for companies that are on a success track or have a high probability of not disappointing (e.g. SCIO or ITMN) or perhaps sifting through the tier 2 stocks for those sufficiently undervalued and underappreciated to offer much more upside potential relative to their downside risk. Baird

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