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

To: cyberman who wrote (8)	1/9/2001 11:27:58 PM
From: seminole	Read Replies (1) \| Respond to of 897

Congrats on making the Hot Subjects List (with nine post too?) Must have been a slow day. Biotech shorts will win big in 2001? Maybe but not for these reasons, IMO. 1) H&Q conference; I think investment ideas are presented at this conference but nobody is on the phone during the presentations. Wait a month or two before thinking H&Q conference is a bust. Also there are many other research conferences where research and drug results are presented. 2) The sector ran up to much. Yes, but now it has run down. This reason is a little late. 3) The economy is not in great shape. Yes, but bad economies hurt earnings not clinical trials. Biotechs have preformed better than most other sectors during economic downturns. 4) Momentum money is leaving the sector. It may have already gone. Don't you want to short when people who don't understand the science are bidding up prices. They are gone. IMO, the pe is the last thing I consider with biotechs. Cash and burn rates are where to look for shorts. I would like to find a short to hedge other biotech positions. Good Luck

To: cyberman who wrote (8)	1/9/2001 11:45:51 PM
From: John Metcalf	Respond to of 897

RD Bagwell is right on. It's cash and burn rates, not multiples, and certainly not earnings. In particular, I would look for companies that don't have the cash that their burn will create during the time that will elapse before NDA. Sure, they'll find partners, but at extreme disadvantage. As to HGSI, the patent estate is huge and may justify the market cap, if it holds up. However, it is not clear that their patents describe enough function to justify the patent claims they have made. In much of the world, India, for example, HGSI-type claims are under extreme attack. As much as I dislike the HGSI horn-blowing management style, I have to admit they may be successful in defending all they have claimed. Or not. This is not a recommendation in either direction.