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Biotech / Medical : Biotech Valuation
CRSP 53.19-1.4%3:59 PM EST
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To: Icebrg who wrote (8795)7/3/2003 7:43:19 PM
From: Icebrg  Read Replies (1) of 52153
 
Relative valuations.

I became so enthusiastic about the NBIX vs SEPR contest, that I
went back to pick up some more companies fighting in the same
weight class. Over the day the relation between the original combatants
has changed btw. NBIX had a strong day, which cannot be said for SEPR.

Anyhow, some of these companies are actually selling products.
Some of them might even be on the verge of profitability.
Like CEPH and CELG. All balance sheet data are from end of March.
A few of these companies have raised debt since then, but that
will not affect the valuation much, as the same amount is added to both
the debit and the credit side.


                CEPH   IMCL   CELG   ICOS   SEPR
Market cap.    2.428  2.432  2.514  2.398  1.534    
Cash etc.        547    229    257    304    481
L-T debt         860    240      -      -    983 
               -----  -----  -----  -----  -----
"Valuation"    2.741  2.443  2.257  2.094  2.036 

                AMLN   NBIX   OSIP   VRTX   HGSI
Market cap.    2.043  1.726  1.269  1.113  1.616
Cash etc.        264    308    354    680  1.452  
L-T debt          66      5    160    337    503 
               -----  -----  -----  -----  -----
"Valuation"    1.845  1.423  1.075    770    667



I might have gone wrong with a couple of 100 millions
on HGSI. They have it as long-term investment. Perhaps
it is not marketable securities, but some investments
in equity.

The question is now. How good a job does the market
do in relative terms? As the market is supposed to always
be right it shouldn't really matter which share one buys.
But I guess that most of you have fairly strong preferences
and opinions with regard to the above selection. What about
Imclone for example?

ICOS and SEPR have always the same valuation. ICOS have
"lost" most of their late-stage candidates. They have
only 50 % of Cialis left. SEPR has product sales, royalties
and a good late-stage pipeline. It is just the matter
of the debt. The more I see this, the more convinced I am
getting, that seen from a relative perspective Sepracor
is severely undervalued in comparison with its peers.
Catastrophes may well happen as a fair number of us have
experienced already. But that applies to most of these companies.

Erik
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