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

To: jayhawk969 who wrote (5312)	1/3/2002 6:22:42 PM
From: Biomaven	Respond to of 52153

J.D., It's not quite as much of a slam-dunk as it sounds. Options are (not surprisingly) very expensive right now. Further, some degree of award is already in the stock. Next, even if they get a substantial award I wouldn't expect the stock to reflect the full award because of the certainty of an appeal (which the litigator-types seem to think would take around a year in all). Finally, whether they get the right to cancel the license is key. Clearly the optimal result for both sides in such event is for Roche to buy back the license for some amount, but it's very unclear what that amount would be. There's some amount of "chicken" involved, because IGEN also loses if Roche were to actually lose the license permanently. The market is likely to be very confused as to what the right to cancel the license is worth. (I'd say north of $500m). That all said, this is currently my second-largest position, mostly purchased around the mid-teens. I actually decided to exercise some December options I had rather than roll them over, because the premiums were so high. Peter