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

To: scaram(o)uche who wrote (2422)	12/29/2000 8:17:51 PM
From: Scott H. Davis	Read Replies (2) \| Respond to of 52153

Good point, so obviously cash is only one of many factors to consider. Admittedly a lot easier to focus on than research, technology platforms, mamagement effectiveness, competing clinical programs, the presuppositional thinking of the FDA pannels... One way we could look at if this is a valid variable to consider, perhaps only because a lot of money adheres to this element of conventonal wisdom would be to track 10 companies with good science & programs with lots of cash vs 10 cash pressed & track for 2 years. The cash poor with good science may turn out fine as an investment vehicle over an intermediate term if they are bought out Would a pool of 10 each be sufficient? Thoughts? Scott FYI Rick, I picked some NBIX today after all. While the thoughts on the SEPR thread will probably still be a good idea, my objective was to buy at the end of tax seling season & did not think I had time for a realistic dialogue there during a high vacation week. Have an open order for REGN at 32 that may not fill (margin). Will look into your issues tho before adding. Need to set up an IRA for my wife. One of these days this airhead will actually remember. I've covered by a 401k so I can't get an IRA deduction.

To: scaram(o)uche who wrote (2422)	1/2/2001 2:52:55 AM
From: Londo	Read Replies (1) \| Respond to of 52153

(re: cash and biotech stocks/future potential) Richard, Excellent argument. However, leverage is also a double edged sword.. just a little later on the thread, somebody mentioned TRGA being bought out for a bit over a dollar a share (52-week high around 14 bucks).. I'm confident somebody could easily point out many companies that had the potential for marketable technology, but went belly up due to cash considerations.. unfortunately, because most of them are out of business, I can't do an easy screen for any ticker symbols.. Obviously the higher returns can be made on companies that don't have any cash left that truly have viable technologies to get to market.. but the problem here is one of information dissemination - just by looking at SEC filings and websites, is it possible to pick these companies out of the air? However, I believe your claim that cash-rich biotech companies have some market value based on the fact that they are not going belly up soon is true - just that I believe that such companies have greater room to negotiate with, and more time to do their research. Obviously any company with garbage science/management will get pounded in the ground over due time.. but can we agree that the best of both worlds: cash-rich biotech with science/products that will get FDA approval are the safest opportunity for the biggest return? (e.g. if CEGE's GVAX cancer vacciene ever gets approved, their 800 million market cap is certainly going to double at least..) If a company with 2 million left in the bank and a market cap of 30 mil discovers the cure for AIDS, if their market cap goes to 3 billion, you get a 100x return.. but if that company had 200 million left in the bank, and a 230 million cap, you get a 13x return.. I guess the matter is philosophical on how much of that 'cash cushion' you really need in order to feel that the company can get a marketable product.. I guess this is a matter of optimization - you want the company to issue just as many shares needed to spend the last penny towards product approval, and then reap in the cash flow from then on.. so does that make the stock market an estimation device for the margin of error? BTW, side question: How do you find very-old SEC filings? The earliest I could find for IDPH was their 10-K filing for 1996 on freedgar.com... I couldn't look to see exactly what their cash status was on 01/95.. thanks.