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Biotech / Medical : Biotech Valuation
CRSP 56.98+1.1%Nov 5 3:59 PM EST
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To: Biomaven who wrote (19689)4/9/2006 2:25:09 PM
From: Clarksterh  Read Replies (1) of 52153
 
There are a couple of different dimensions that you have to look at when judging management:

Awesome topic. Aside from the fact that I agree completely that this is one of the the most important parameters in judging an investment, you have some interesting ideas on exactly where to look - e.g. inlicensing.

I have at least one additional major category and one important subcategory:

Major category - ability to hire, keep and effectively use good talent. (One of the best management books of the last decade has this as the most important attribute - albeit talked about in a somewhat different form). A primary metric for this is management turnover.

Significant subcategory - One of the primary failings of small biotechs is to make poor decisions inre partnering. This doesn't fit cleanly into one of your categories since it is a conjoining of 'shareholder value', 'judgement' (do they really understand the difficulties of bringing something to market?) and 'good financial savvy'.

Of course the primary problem with assessing management is that it is so hard to get good metrics. For instance, even in my favorite management team, CYPB, I can only make assessments in 2 or 3 of the categories - they set up excellent partnerships, they have very good judgement and are open (the CEO was very candid about the risks in the trials, and has more recently been totally open about being unable to be open about the details of the recent trial. -ng-) and they do not have excessive turnover of mgt.

It would be interesting to see the favorite biotech management team of each of the regulars on this board.

Clark
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