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

To: enervestor who wrote (824)	3/15/2000 3:06:00 PM
From: jeffbas	Respond to of 52153

Perhaps. I would remind you that one of our esteemed posters quite a while ago posted some statistics, if I recall correctly, that most of the market cap that is added because of a biotech discovery comes at the beginning, with most of the rest when a product is commercialized. I see no reason for that historical pattern to change, nor do I think it is inappropriate. By the way, I disagree with point that Biotech companies are not analogous to Internet companies. I think they are very close in character. Just compare progress with science in biotech to progress with sales in Internet. Therefore, in my opinion, biotech companies making good progress with the science can do fine in the stock market even if earnings are far away. AMZN makes no money yet people give it a $21 B market cap, because they believe it is building a franchise. That is exactly what a biotech company is doing by making progress with its science. (However, I do not pretend to have any idea what the stock market will do now with biotech.)

To: enervestor who wrote (824)	3/15/2000 3:19:00 PM
From: Mike McFarland	Read Replies (1) \| Respond to of 52153

<to retain anything remotely close to the valuations they are now being accorded> Yeah, pretty easy to post that sort of message now with biotech taking it in the shorts, were you saying that a couple weeks ago, when, for example, many genomics-oriented companies were trading 50% higher than where they are now? I got a kick out of this: A fund manager was quoted in the SeattleTimes this morning as saying he was in there selling biotech yesterday, during the rout. Now why wasn't that goofball selling a week ago? It is a good thing that the value DOW stocks are moving up today, when biotech runs up again in a week or two that will mean there is more money out there to pile in. I'll put my 100% biotech portfolio against anybody with a 100% not-biotech portfolio for the next six months. Anybody up for the challenge? Anyone? Buehler?

To: enervestor who wrote (824)	3/15/2000 4:33:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 52153

OK, let's take this biotech v. internet analysis further. 1. Agreed that biotech-time is much slower than internet-time. Four years from now there are plenty of existing biotech stocks where the jury will still be out. I doubt if the same is true of the internets. 2. Internets do give you useful information each quarter. (Revenue and loss figures). Biotechs give you useful info less frequently. It's probably harder for an outsider to decide if a biotech product will make it than to decide if an internet product will make it. 3. Profitability: For biotechs, if their product works, they make lots of money, and that money flow is maintained for tens of years. For internet stocks, nobody really knows yet. I can predict with a fair degree of certainty that Sepracor, currently losing large amounts of money each quarter, will be making even larger amounts of money in 2003 and onward. I have yet to see a similar convincing analysis for a pure internet play. 4. Randomness: Biotechs have an unavoidable degree of randomness built into them. The most promising product can crash and burn with little or no warning. (Of course sometimes the warning signals are really there if you know what to look for). This risk can be handled to a considerable extent by diversification. Thats why I hold a lot of different biotechs. Peter

To: enervestor who wrote (824)	3/15/2000 9:28:00 PM
From: Greg Jung	Read Replies (1) \| Respond to of 52153

Today's discussion re: biotech .vs. internet by the pundits here are characterizing biotech in the traditional mode, the mode that prevailed in the past few years: Get a bunch of compounds, test them for possible use against various diseases, etc. So there are a bunch of public one-drug or two-drug companies that have a slow cash burn rate, once in a while one will stumble across a compound that isn't too toxic and that has a bit of an effect. Still, nobody really likes to invest in that sort of research, lottery tickets unless you can combine the commercialization of a few successful drugs. This lottery model is appropriate for the many $1/$10/$30 type of spike stocks that will come up on the news. This isn't the paradigm at work in this rally. (background music, please) The genomic scientific groundbreaking is coming at internet speed because it is catalysed by the same technologies that catalysed the computer industry. The most spectacular qualcom-like run-ups are precisely in those stocks that are developing the tools to manage the gene infiormation, i.e. Celera, Affimetrix, Incyte, GeneLogic, HGSI, Vical, etc. Although development in these companies has been known for some time, only recently have we gotten the milestone anouncements that seem to mark the beginning of a very productive era. Besides, all those other tech stocks were getting pretty boring and repititious, not to mention the ridiculous alphabet soup the VC software vagabonds have been creating. -g-.