Biotech Valuation Message Board

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Biotech / Medical : Biotech Valuation

CRSP 52.20

-5.5%

Nov 12 3:59 PM EST

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To: aknahow who wrote (6506)	6/7/2002 12:24:39 PM
From: Czechsinthemail	Read Replies (2) of 52153

BTW many months if not a year ago, I posted that Cash Is Trash. Still believe this and while it was an unpopular view then, few have insisted that cash is the way to value biotechs at present. It is, was, and always will be the science and product approvals. With an approval of an important drug one can raise cash, by selling shares at higher prices or by borrowing. I would agree that cash is not the primary consideration in valuing biotech, since a company with cash burn but no prospects should trade below cash. Clearly, progress in developing and getting new drugs approved is critical. But cash is an important consideration since the R&D requires it. The key is having enough cash and a sufficiently strong R&D program to get to significant drug approvals. I think the cash factor comes into play as an eye-catching indicator that the prices have dropped to absurd low levels and helps trigger buying by bargain hunters. I think you can see that in play with SEPR, ELN and others today.

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