Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Mike McFarland who wrote (807)	3/14/2000 11:39:00 PM
From: garyx	Read Replies (1) \| Respond to of 52153

Very good to find this place. Seems like a lot of smart folk here. I will look thru all 800 posts when i have a nite free... For now, I must ask if these PPL cloned pigs have anything to do with GERN? I mean, GERN has patents on much of this technology...don't they? does anyone know about pigs and GERN? G

To: Mike McFarland who wrote (807)	3/15/2000 12:33:00 AM
From: jeffbas	Respond to of 52153

Mike, I agree that there "tend to be stocks which are incorrectly valued by the market". I am sure that from today's closing there will be some that go up 10 times in 5 years and others that drop 90%. The problem is that there is no way even a sophisticated investor can tell which is which, without intimate knowledge of the industry.

To: Mike McFarland who wrote (807)	3/16/2000 2:29:00 AM
From: jbe	Respond to of 52153

Mike, you are probably right about GLIA. Just looking at the numbers, without knowing anything about the company, I would guess it has had a struggle becoming a profitable operation. And after reaching that point, it slipped back again into the red this fiscal year. It is probably only a temporary hitch, since analysts are predicting renewed profitability next fiscal year, but in the meantime it makes more sense to value GLIA in terms of its revenues, rather than its profits. Well, going by the two indicators cited by the ?Wired? article you pointed me to -- gross margin and revenue per employee -- GLIA looks very good indeed. Some numbers (from Market Guide's Ratio comparisons ): Gross Margin: GLIA: 85.91 Industry average: 67.97 S&P average: 50.65 Revenue per Employee GLIA: 485,224 Industry average: 308,140 S&P average: 434,287 For the record, Biogen (with a gross margin of 86) does even better on the revenue per employee indicator -- outdistancing Microsoft, equalling Cisco, and only a step behind a successful "upstart," Yahoo. BGEN: 713,137 MSFT: 696,108 CSCO: 712,238 YHOO: 733,011 Biogen has an added attraction: it is a solidly profitable company, and does equally well in another category, net income per employee. How do our two biotech companies stack up against the averages and against our big boys? Here are the numbers, in ascending order: Net Income per Employee GLIA: 52,507 Industry average: 66,190 S&P average: 67,877 YHOO: 76,131 CSCO: 121,857 BGEN: 197,890 MSFT: 278,571 Wow! Not bad! But now for the dose of cold water -- stock performance. (I am using Morningstar data here, which may not factor in Wednesday's numbers.) Year to date, BGEN is down by 9%. For the same period, GLIA is up by 11.9% -- nothing to sneeze at, but still lower than the Nasdaq composite average. Let's take three other biotech stocks, all in the field of gene research/therapy. MLNM is up 40% year to date. CRA: up 90.6%. HGSI: up 61.8%. Does that mean they are better than BGEN & GLIA according to the revenue per employee indicator? Not at all. Revenue per employee MLNM: 197,890 CRA: 65,557 HGSI: 59,669 It almost looks as if there were a reverse correlation between revenue per employee (not to speak of other indicators) and stock appreciation! I am only half serious. But it IS clear that investors who buy these stocks are not doing so based on any of the customary methods of evaluation (p/e, sales & /or ESP growth, ROE, etc. etc.). They are looking at something else: potential? What alternative methods of evaluation are they using? Number and quality of patents? Imminent or actual deals with big pharmaceutical companies? Impending approval of exciting new drugs? "Sexiness" of the line of research? Some kind of big pay-off in the near future? Hmmm? jbe