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

To: NeuroInvestment who wrote (1700)	9/19/2000 12:55:42 PM
From: Biomaven	Read Replies (1) \| Respond to of 52153

Thanks NeuroInvest and tommysdad for the comments. As alluded to in your respective comments, there are two significant reasons why biotech Phase III's are riskier than Pharma Phase III's. 1. Biotechs (especially smaller ones) tend to skimp on the Phase II's. They don't have the time or the money to run big enough trials or enough different trials to really nail down issues like dosage vs. efficacy and side effects. 2. Pharmas can kill compounds out back in the dead of night; biotechs have to do it in their front yard, naked and with all the analysts watching. This means there is a tendency to go ahead with a drug even though they may know in their hearts they shouldn't. Pharmas are much readier to go to a backup compound and are less willing to overlook possible flaws that might emerge. By the way, there's a new IPO out (Pharsight) that attempts to "scientifically" manage the selection of Phase II parameters to maximize the information you can expect to get from the trials. Seems mostly to have worked with pharmas rather than biotechs so far. Peter

To: NeuroInvestment who wrote (1700)	9/20/2000 12:59:21 AM
From: tommysdad	Respond to of 52153

<<Companies that are strapped will sometimes run a tiny 10-20 pt Phase IIa in order to attract a private investor-->> Certainly true, but this is clearly penny wise and pound foolish. Boosting a PII trial from 15 to 30 patients doesn't double the cost of the trial, and considering the investment made up to that point (research and development, GMP lots of drug substance, the IND,the PI trial), it's chump change. <<It's not a smokescreen, more like a flaregun, looking for attention and financial rescue. >> Smokescreens and flareguns are used in different situations, but both signal trouble. Your point is well taken, however. The bottom line to me (and would you agree?) is that small PII trials can not and should not be valued the same as fully-powered PII clinical trials. They need to be placed in perspective.