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

To: Jacob Snyder who wrote (513)	3/27/2001 6:22:00 PM
From: Biomaven	Respond to of 656

R&D spending has zero value, as soon as it is spent. It does, however, have a (highly uncertain) potential future value. You don't detect any contradiction in those two statements? The value of any spending is the NPV of the expected returns from it. Granted, in biotech those are very hard to determine. But if they don't have an expected value substantially greater than the expenditure, you need to find new managers. On average biotech R&D spending has been productive, not destructive. At this point, IMNX is very much going to be trading based on what the revenue flow from their existing product for the existing use is. How quickly they can ramp up production is going to be the key issue driving the stock over the next year, IMO. How Enbrel does in psoriasis will be the other big factor. I've never owned IMNX before because I always thought it was too expensive. (For a couple of years I was quite wrong in this judgement; only more recently have I turned out to be correct.) But when it traded around $10 I couldn't resist. I think JNJ paid a fair price for AZA, but then I own AZA <g>. (AZA is not a generic drug company at all, BTW). Peter

To: Jacob Snyder who wrote (513)	3/27/2001 11:13:15 PM
From: seminole	Read Replies (1) \| Respond to of 656

Wow, where do I start? <<< R&D spending has zero value, as soon as it is spent. It does, however, have a (highly uncertain) potential future value. >>> I think this violates the time value of money principle of finance. If a company and research has future value, it has present value. The more uncertain it's future value the higher the require rate of return demanded by investors and the lower the present value, but the present value is not zero. (see discount cash model) <<< You spend the money, and your ability to predict whether it leads to a profitable product, is nil >>> I would like to see the statistical calculation that yields NIL. A large portion of R&D spend occurs during clinical trials not in the lab. Of 5000 compound evaluated in preclinicals (labs), on average 5 will enter costly clinical trials. Of the 5 drugs that enter clinical trials, 1 will on average be approved. I believe 70+% of drugs that enter Phase III clinical trials are approved. I would suggest that investment in the costly R&D of clinical trials, statistically, allows you the ability to predict a value above NIL. I often read the literature at the medical library to help with my predictions. There is never a line to get the journals. I guess the doctors are all out getting lottery tickets.