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

To: Biomaven who wrote (1387)	8/5/2000 9:56:05 AM
From: scott_jiminez	Read Replies (2) \| Respond to of 52153

But does that mean we need to throw up our hands and have recourse only to long-term holds of a biotech index fund? Yeah, I understand that my post left the 'throwing up our hands' position as the only apparent alternative. My stridency was more to make point than to completely rule out alternatives...and I certainly wouldn't suggest those familiar with the field to invest in a sector fund. I am stock picker as well and your experience with SEPR parallels my experience with ARIA. But the divergence in the stories behind SEPR and ARIA is revealing: I owned Ariad for 3-4 years and didn't expect much for quite a while longer since there were simply no viable products even in PII at the beginning of this year. I love Ariad's story and I continue to believe their proprietary products will produce a billion dollar platform. SEPR has found a gold mine in developing either unprotected enantiomers or separating racemic forms of common pharmaceuticals. They have drugs on the market and a dynamic pipeline. No one ever accused SEPR of being a pump and dump stock and it is an SI darling; needless to say, ARIA is viewed on SI as the tiresome weird uncle who is at the mercy of day traders... But it is a fact that my portfolio remains far into the triple digit gains over the past year due to my investment in the Ariad warrants. These returns far exceed what a similar investment in SEPR would have produced. I was extremely lucky in essentially divesting myself of the warrants very near the peak of the frenzy, just as you say. No one predicted the mania of October through March and it was most likely a once-in-a-decade phenomena. But perhaps not. I would like to have faith in the essential 'reality-driven' nature of the market that a company like Sepracor would currently garner a significantly higher relative valuation than Ariad but my recent experience tells a very different story (I'm not complaining, praise Allah). I have no desire to dissuade the very fine discussion on valuation approaches you've conducted on this thread and I hope that, in the end, knowledge and insight prevail over emotion. However, my success with ARIA had nothing to do with intellect and everything to do with emotion. So each time I start researching a BT and begin to get excited about a business plan, I am forced into reality-check mode: IMO, 95%+ of BT investors are completely and profoundly clueless about what they are investing in. Thus the emotional component here is overwhelming and stock movements are bound to defy even the most stringent analysis. The performance of SEPR since the spring certainly lends substantial credence to valuation approaches. A brief glance at my monthly statement takes me right back to valuation-ambivalence land. Not quite a throwing-hands-up approach but not exactly a vote of confidence that the BT sector will behave with any form of logic for the foreseeable future.