Biotech Valuation Message Board

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Biotech / Medical : Biotech Valuation

CRSP 52.20

-5.5%

Nov 12 3:59 PM EST

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To: LLCF who wrote (160)	4/13/1999 10:06:00 AM
From: Biomaven	Read Replies (1) of 52153

I guess what is going on here is that the street is (consciously or not) using a valuation model that awards a high multiple to earnings but uses a very high discount rate until such time they are sure the sales are for real. This has the effect of flattening out the valuation curve until the very end, where it grows very steeply. This argues that the best returns will come in the aforementioned "sweet spot", although the PGNS debacle has certainly hurt this approach. BTW, the article came from the WSJ online edition (subscription required) - I don't think it ever actually appeared in the paper edition. Peter

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