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Biotech / Medical : Munch-a-Biotech Today -- Ignore unavailable to you. Want to Upgrade?

To: sim1 who wrote (511)	7/29/1999 11:23:00 AM
From: Biomaven	Read Replies (2) \| Respond to of 3158

Stuart, Personally I think that the way R&D is accounted for in biotechland is misleading. I would much prefer to see the method they use for oil and gas exploration - you capitalize expenses, and then write them off if you have a dry hole. (It's actually the approach I roughly use when valuing a biotech.) This solves the existing problem where you have one successful product but heavy R&D expenses on other projects (AGPH was a good example, but there are many others) and companies are tempted to create tracking stocks. A stock like BGEN suddenly has a much more reasonable PE ratio if you capitalize its R&D. Peter