<< Prithee tell, what was ENMD's close today? >>
Well......... the point I was discussing concerned the simplicity of evaluating biotechs. The example of ENMD was just one example of a biotech stock that soared, without any products on the market, and which was pre-clinical. ENMD is still up 200% from when the news release was re-issued.
I was reacting to the statement, that investing in biotechs is simple, and based on the bottom line. That's not true, even though there is some merit to the statement.
<< First, it's not that development biotechs "never do well, ... " >>
My point exactly.
<< ... it's just that, as a universe of stocks, they have a poor risk-reward profile >>
Well, this year, the "reward" level has really sucked! <g> Yes, the biotech sector is very volatile, and it seems to move to the beat of it's own drummer. But, you can't paint the entire sector with one "poor risk-reward profile" wide brush. You invest in, and research individual stocks and not the market. That diminishes the "risk" part.
<< Second, you can find people to "invest" hundreds of millions of dollars in anything no matter what the history or facts are. >>
Yes, but that is true about any sector of the market. Again, the main point, I was making, was that biotech evaluations aren't as simple as was being said.
<< You have outperformed the vast majority of biotech investors >>
It's difficult for me to believe that. Until this year, I was constantly in and out of biotechs. I was trading almost on a daily basis. Unfortunately, this year, I haven't been an active daily trader, because I thought that this was the year for a substantial biotech rally.
But........ let's look at LGND as an individual investment, without hype. They've got two NDA's that are close to a very probable approval, and three more scheduled for the next year. They've got one of the largest pipelines in the business. Their scientific developments are exciting and could produce large revenues in the future. Their "off label" business model could be very successful.
<< I will still submit -- to this point, without contradiction -- that investing in either Pharma Gigante or post-approval biotech companies provides a superior risk/reward profile to investing in development-stage firms >>
But, do you really mean that in today's market? The large drug companies are very highly valued, while the biotechs are in the cellar. It would seem to me that the beaten down biotechs, with strong partnerships, substantial cash at hand, and good pipelines, would have a better risk/reward profile, at this time.
Thanks for your note, Peter. It's refreshing to have a well-written, negative response with substance.
Good luck, Bob |
