Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Biomaven who wrote (6861)	8/5/2002 6:11:10 PM
From: Biomaven	Respond to of 52153

And here's a fun analysis in the Washington Post of the FDA: washingtonpost.com What Moves Bureaucrats Sunday, August 4, 2002; Page B05 Everybody complains that the federal bureaucracy moves at a glacial pace. But it doesn't always -- and in at least one key federal agency, you may be surprised by what prods bureaucrats into quick action. Harvard political scientist Daniel P. Carpenter studied the U.S. Food and Drug Administration to answer these questions: Do some drugs get approved with lightning speed, while many others linger for years in the FDA review process? And if so, why? When Carpenter studied the histories of 450 new drugs reviewed by the FDA between 1977 and 2000, he found "immense" differences in the review time. The average drug took 25 months to win endorsement. But one out of four drugs was given the green light in less than a year, while one in four took more than 33 months. There's reason to question those differences, Carpenter noted. Drugs already have undergone three stages of clinical trials before the FDA accepts them for formal review, so much of what's important to know about the medicine is already known by the time the drug makes it to the FDA. Moreover, he found that some things that shouldn't make a difference in review time seem to matter quite a bit: the number of times a specific disease is mentioned in the pages of The Washington Post (the bureaucrats' hometown newspaper), for example. Carpenter first counted how many Post stories mentioned a specific disease in any given year and then computed how quickly new drugs for that disease won FDA approval. He found that merely mentioning a disease in the paper an average of 12 more times in a year "translated into a one-month reduction in approval time" -- regardless of the seriousness of the ailment, its incidence in the population, the cost of treating it, the availability of other medicines targeting the disease and other variables that measured the potential value of the drug. Curiously, Carpenter found that television news didn't seem to make a difference. He said he's not quite sure why. Perhaps bureaucrats don't take TV news as seriously as what they read in print. Or perhaps the comparatively infrequent and brief mentions of diseases on TV aren't enough to spur bureaucrats to action. Carpenter also found that money matters. He totaled the budgets of national and regional organizations, such as the American Cancer Society or the Alzheimer's Association, that are devoted to a specific disease. Then he calculated the time it took the FDA to bless new drugs designed to treat that specific ailment. Medications for diseases represented by the best-financed organizations took nine months less on average to be approved than those supported by the least affluent groups -- again taking into account more than a dozen other relevant factors. To study what influences the FDA drug-approval process, Carpenter examined 450 "new chemical entities" reviewed by the FDA over the 23-year study period. For each drug, he gathered detailed information about the incidence and severity of the disease that the medication was intended to treat and tallied the number of existing approved drugs for that condition. He supplemented these data with information about the support and lobbying groups that worked on behalf of disease suffers. And he assembled information on other factors that might be associated with drug approval, from the political makeup of Congress to how often the disease was mentioned in the media. Carpenter's study was reported in the latest issue of the American Journal of Political Science. Already it has generated big buzz outside the small circle of academics who study the federal bureaucracy. "Yes, I worry about the fairness of this dynamic," he said. "Diseases whose sufferers are either better organized, wealthier or more newsworthy will get quicker FDA approval for their drugs, and that leads to questions of fundamental equity." But the FDA likely is doing the best job it can, he adds. "The FDA has extremely limited resources," said Carpenter, and has to rely on whatever information is available at the moment to decide whether to fast-track a new drug or steer it into the slow lane. "It's not bribery, it's signaling," Carpenter said. "As long as we entrust this process to a national health care institution with limited resources, it's going to inevitably face these trade-offs. Maybe explains why J&J's long-acting Risperdal got such short-shrift from the FDA, even though it is now approved in Europe. Those homeless psychotics just haven't got themselves together sufficiently to organise a strong enough pressure group... Peter

To: Biomaven who wrote (6861)	8/5/2002 11:57:12 PM
From: Jibacoa	Read Replies (2) \| Respond to of 52153

Let's focus on tier one biotech stocks, because those are the easiest to value. Sorry Peter,but for me it is difficult to determine the "value" of any stock, even if they are ranked on "tier one" or among the "bluest of the blue ship group". (Take for instance the 30 most active stocks on the N.Y. Stock Exchange today.) Only MO was up $2.29. The other 29 including GE,C, JPM, JNJ, AXP. PEP among others, were all on the red. I believe "value" depends on what people are willing to pay at any particular time and that depends on many variables. Even things like gold,diamonds, real estate,stamps, rare coins,famous paints.etc..etc. fluctuate on price or "value" over time. They all have their own "trend". The real estate market was hot in Japan and California a few years ago and for a while even down here in Florida you could buy a house and sell it at a profit the following month. Coming back to stocks,we still are on a bear market.<g> I remember for instance the "valuation" appraisal on this thread of SEPR by I.J.Frankel a few months ago. (I have nothing against his approach and he may be quite right on his conclusions.) If I remember well, the stock at the time was in the forties and the appraised value was in the sixties.(I bought a few shares but was forced to sell it within a few days as it triggered my stop loss point.)I bought some SEPR again in early May at 11.50 but was forced to sell by the end of the month with almost no gain. I know that you as well as most people on this thread do not follow T.A.and I don't want to try to change your mind about it.<g>But for me it has saved a few dollars over the years and I have to stick with it. I am always interested in hearing experts opinions and appraisals of the "value" of a particular stock, but I would not buy without doing some D.D. of my own, trying to get what I would consider a good entry point and deciding how much I would be willing to risk if I am wrong.<g> (And I am not going to refer to any charts to try to make a point.<g>) RAGL Bernard