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

To: Harold Engstrom who wrote (514)	7/29/1999 12:59:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 3158

Harold, For small companies like those you cite that don't have any earnings yet, it probably doesn't make any difference. People there should be looking at cash flow (and cash balances), not earnings. There is a real issue though in that a biotech project isn't as simple to judge as an oil well. At what point should AlphaBeta have determined that they had a dry hole? Certainly the probability that the hole was dry increased sharply after their first Phase III produced equivocal (to put it kindly) results. They would have argued that there was still oil in this here hole - you just have to drill a little deeper. (Which of course they proceeded to do, and succeeded in demonstrating only that the hole was indeed dry). This uncertainty might make this method untenable as a formal accounting system. However I think it is still basically the right valuation method. Peter