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

To: Biomaven who wrote (1119)	5/18/2000 11:42:00 PM
From: Lighthouse	Read Replies (1) \| Respond to of 52153

Thanks for the response. I believe Wall Street was looking for those contractual values to be the cash I.V. to fund further R&D fields for INCY. Current database operations are doing fine, but the genomics information field is moving very rapidly. If INCY has to change quickly in mid course then that will cost bucks. Also I believe there is a very real sense that the cost of the detection/analysis tools and talent will go up. Until very recently INCY did not have the wherewithal to pull that off. The contractual value cash streams gives INCY "real option" opportunities. No one knows what will be next, but if you have a big honey pot then you can play in whatever looks good. My explanation is not great but how about this analogy. Microsoft uses its windows profits to invade and conquer the browser market. Without that certain cash flow Microsoft has a much harder time wiping out Netscape; however, the market knows MSFT has this capability and is therefore more willing to asign a higher value to its existing stream of earnings. If INCY has a large cash stream coming in then it can afford to chase many promising leads or make sure it wins the fields that will be important. From this prespective I have taken the position (perhaps until now) that INCY is worth more with the ccontractual rights than without them. Way off base? Cheers,

To: Biomaven who wrote (1119)	5/19/2000 3:59:00 AM
From: nigel bates	Respond to of 52153

>>If INCY was split into two parts, one containing just the royalty interests, then I think you would get a more rational valuation of both parts<< A nice analogy might be the Perkin Elmer split. (My biggest regret is having switching out of these into INCY before the split...). The analogy might also serve to point out CRA's lack of 'pipeline'. The CRA valuation seems to be based on hopes for the future, whereas INCY's doesn't even reflect the value of contractually backed royalties on a very large number of drugs already in development. nig (btw my original question was intended to be rhetorical. I was most grateful for your response.)