SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Biotech / Medical : Biotech Valuation
CRSP 56.87-2.3%Dec 5 9:30 AM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Sam Citron who wrote (7511)12/15/2002 9:59:51 PM
From: Biomaven  Read Replies (1) of 52153
 
(1) They are riskier (more volatile) than the market;

But most of this fundamental risk is not related to the general market or economy (unlike virtually any other sector), and a large portion of the risk can be diversified away by holding a basket of biotechs.

(2) Their returns (not their costs) are primarily in the future rather than the present

You have to distinguish between profitable and early-stage biotechs. Profitable biotechs have a license to print money - the margins (90%) are about the same as printing dollar bills. For early-stage biotechs, your point is true, but the low prevailing interest rates reduce the impact of this, and current stock prices already imply a huge discount rate.

(3) They are subject to unpredictable changes in the rules of the game by the FDA.
This was in my view a one-time event, and the prices now reflect the new FDA standards. I view the FDA as now likely to ease up some over the next few years rather than tighten further.

Peter
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News