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

To: scaram(o)uche who wrote (3287)	4/2/2001 11:26:47 AM
From: nigel bates	Read Replies (4) \| Respond to of 52153

Random thoughts.... CRGN/(and eg)ABGX would be a pretty nice fit. Arguing the relative valuation could be an issue. Depending on the structure of the deal, it could run into problems with shorts (cf Shire). Then there's the question of who'd run the show... and the less than auspicious example of CRXA/CLTR. The right merger would make enormous sense, but I don't expect too many to happen anytime soon. I can't see to many ceos wanting to sell out at current valuations if they're not in cash trouble. (I certainly wouldn't be very happy if eg TELK put itself up for sale now...). Do hostile takeovers happen much in biotech ? Might be a good time for the bigger fish to snap up some minnows - how much value is left if the employees walk though ? nig

To: scaram(o)uche who wrote (3287)	4/2/2001 3:24:20 PM
From: Mark Bong	Read Replies (1) \| Respond to of 52153

At this stage of the game, the larger cap biotechs need to beef up their pipelines. AMGN has done this recently by doing a two-drug deal with PRCS, a cancer deal with IMMU, and other deals including NPSP, but they are going to need a lot of stuff to keep growing that $70B market cap. BGEN needs to do this in a big way. Beefing up weak pipelines with late stage products reduces future risk, and thereby merits a higher PE multiple for current late stage pipeline products combined with current and projected cash flow. This has multiple benefits for current management. The advantage for smaller biotech firms is that the stock exchanges with bigger biotechnology firms have good appreciation potential as well as cultural similarities as compared to big pharma. One thing is for sure. A lot of biotechs that have good products in development have spent years and a lot of money developing them. And now, their stock is less than the cost of developing their products without factoring in the time considerations. Why spend good money and many years developing new products when you can buy almost ready to go products at a 60% off sale. The key is to have some assurance that the candidates are going to be successful and that other benefits also provide significant value added in case they don’t. Good biotech firms should have the experience to do this kind of feasibility work. GILA could be had for a very low price now, but probably no one will want it because of its negative publicity. TELK, BTRN, NPSP, INCY, ABGX, LEXG are all firms that could have interesting opportunities to consider. Remember, CISCO was pretty dead in the water when Chambers was brought in, and he grew the firm in part by making cheap acquisitions of great technology. Whoever sees the light and does this well in biotech will make a fortune. And I believe that it will happen. HGSI also looks good. They are combining their patents with drug development acquisitions and alliances. INCY has a heck of a business, but they would do much better if they were aligned with a drug development firm that had products in the market and good steady cash flows. TELK MLNM sounds like a great deal to me!

To: scaram(o)uche who wrote (3287)	4/2/2001 9:55:43 PM
From: Spekulatius	Respond to of 52153

<< OK, let's pick some business plans that would/could be in trouble, given these worries/scenarios/whatever.>> <<TELK...... poorly-timed IPO didn't raise the funds anticipated or necessary to support plans.>> How far can one take TRAP small molecule design with reasonable resources. The 40 people at TELK for chemistry and clinical development won't do. MLNM would be a nice partner, target rich but how good is their own chemistry? TRAP coould help them to become world class. CRGN..... leverage...... a target discovery machine, trying to transition to a biologicals powerhouse. No pipeline to complement the massive stash of cash. The massive stash of cash won't be that massive when product development costs kick in. CRGN is well positioned at this point, but how can they position themselves better? Antibodies? Small molecule chemistry. Buy LEXG and become even stronger and more target rich? <<NPSP...... is the significant pile of cash sufficient? >> NPSP partners early and often. The burn rate is fairly low, good science in some fields. But, how make it even better, NBIX, NRGN, VRTX? Most of these biotechs will survive, even without merger but this does not mean that they shouldn't merger. Good science can be made better with synergy, gaps can be filled and risks can be spread. This would increase shareholder values industrywide (the ego's of the scientists and CEO's permitting)...Enough said!