This discussion about XOMA is very interesting, but (plaese be patient with me) I think completely unnecessary. I assume that we all believe that Incyte has not lost anything with the deal (as rocketman described excellent), but has the opportunity to win a lot.
But we are not going to see any price reaction nearterm, whatever might be the outcome of BPI or any other revenue stream from royalties or warrants. Talking as a European investor, most US investors do not look longterm, even in biotech. Especially if a company is already in the black - for example, PER is commonly based on actual earnings, not on earnings expected one and two years in front. And this will limit the price impact of any deal with revenue streams 4-6 years in future.
And this is the reason why Incyte is seen as "cheap" by some investors. If the bulk is looking only till 2000, they will miss a big portion of coming profits. But would it help us if Incyte would be acquired by a big pharma at this price levels, because they think this might be good bargain, too? Even if they are paying a nice premium, wouldn't we loose a lot? Let's assume they pay 45, what could Incyte be traded in 2003? In this case I prefer to stay long in an undervalued stock with an excellent longterm outlook, instead of pocketing a quick premium.
Richard |
