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

To: Doc Bones who wrote (3264)	4/1/2001 11:09:44 AM
From: Michael Young	Read Replies (1) \| Respond to of 52153

A lot of hype in biotech, so I like reading bearish viewpoints. After all, we all want to avoid crap like CLPA. MIKE

To: Doc Bones who wrote (3264)	4/1/2001 11:40:08 AM
From: John Metcalf	Read Replies (1) \| Respond to of 52153

Doc and Peter, thanks for the discussion of Ravi Suria's interview, and the McDonald and Feuerstein articles. In an attempt to acknowledge these points of view and reconcile some differences, here are a few considerations: Suria's main points about the telcos were 1) that their "end-game" was to sell out. That is true for only a minority of biotechs. And 2) that any business ceases when it can't make debt payments. Since many telcos planned to be owned by someone else when the debt came due, they are failing in the absence of buyers. When McDonald reports average results for funds or indices, he is including the poorly financed biotechs with the cash heavy. To cite a painful example, Gliatech has received a "going concern" note from its auditor, and has already had an interrupted end-game with Guilford. While GLIA may be following the path of Northpoint, most of the components of the funds and indices are not. E.g. MLNM, SEPR, VRTX, HGSI and many more have the money in cash to meet debt obligations for the foreseeable future. These companies are not candles in the wind, blowing their IPO proceeds on a couple Super Bowl ads in the hope of getting lucky. Even the hapless GLIA has marketable and developing products that could create cash flow for a buyer. It is not likely that GLIA will be taken out for 26% of equipment value, as Northpoint has been. A second distinction between the two industries lies in the nature of how they compete. Two biotechs may be working on the same receptor, or indication, or with the same protein. Even so, their knowledge can be additive, rather than duplicative. They can merge and increase their aggregate value, rather than follow the 90's model of firing redundant employees and mothballing redundant equipment. If they choose to discontinue a program, they can often sell it to another company. All-in-all, a biotech shutdown produces more value than the pink-slip-and-auction model of consolidation. Suria's point is certainly valid: if there is no plan for self-sufficiency, the outcomes are reduced to bankruptcy or sugar-daddy. There are many biotechs that have adequately addressed their survival. At some point, investors will take a fresh look, and the funded biotechs will decouple from the NASD belly-ups.

To: Doc Bones who wrote (3264)	4/1/2001 1:12:36 PM
From: smh	Respond to of 52153

<No need to fear a biotech-friendly TSCM yet, though I hope we'll see more balance. A couple of recent articles show that they're still trying to prick the "biotech bubble."> At least we haven't heard (TSC or elsewhere),for a couple of weeks anyway, that the biotech bubble is BEGINNING to deflate. That was BEGINNING to irritate me. More Balance? Six months worth of friendly articles would nicely "balance" the last 6 months of negative spin. <g> <Though ostensibly completely independent, both articles were released within a few minutes of 10:30 am on March 27, when the days's opening news has been digested, trading is winding down, a good time to try to get the market's attention.> Its my impression that TSC contributors are essentially independent - from each other. While it pains me to acknowledge it, the calls on the direction of biotech, particularly by TSC's fearless leader, have been correct. Of course, in my mind, all they did was to recognize that the piling-on had begun and joined in. The negative bias is not permanent. Just prior to Cramer's call that the sector was "going down", there was this; <Question: Hi, biotech, bubble or not? Is it only a matter of time before it crashes down to reality like all the other sectors, save storage? TSCNYjjc: I don't know if that is true. Frankly I think biotech is not a monolith and that some of these biotechs, notably Millennium and Vertex are here to stay. I also like MedImmune and Human Genome. I was bidding for MLNM all day but didn't get hit. > thestreet.com and this; <Wrong! Rear Echelon Revelations Pusha-Pusha-Push Makes the Biotech Go 'Round 11/30/00 02:34 PM ET By James J. Cramer Fundamentals? Who cares when the fund managers' marketing machines are spinning like a politician. > thestreet.com and of course there is Lissa's commentary; find.thestreet.com I think a biotech friendly TSC is inevitable. In fact, thats why I earlier posted the following TSC sponsored; INVESTING IN THE SECOND BIOTECHNOLOGY REVOLUTION CONFERENCE twst.com BTW, I always thought Cramer's seeming total lack of interest in biotech, prior to last years run-up, rather curious. I decided it was simply due to ignorance about the sector. Who knows, perhaps he will join the Fools as a true believer. Regards SMH