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Biotech / Medical : Zonagen (zona) - good buy? -- Ignore unavailable to you. Want to Upgrade?

To: Rick Slemmer who wrote (1236)	12/22/1997 11:24:00 AM
From: Dauntless	Read Replies (2) \| Respond to of 7041

Thank you for your recent comments - also for the vectorvest url. I tried zona in their model & got (not surprisingly) a pretty poor analysis. However, note the following criteria used in the model "Value is based upon earnings, earnings growth rate, dividend payments, dividend growth rate, and financial performance." That is the problem with using TA for start-up companies that have not reached commercialization - and with biotech & pharmaceutical stocks it is even less applicable. They are not like other high tech companies because of the unusually long period of time before the final verdict comes in on their technologies. If you develop a faster chip, or a new material for semiconductors, or whatever, the science can be fairly quickly tested & evaluated. With drugs, there is compound design, development, systhesis & manufacture, in-vitro testing, animal testing, Phase I, II & III human clinical testing, nda preparation & filing, and , finally, FDA review & approval - approval alone can easily take 2-3 years. This entire process can stretch over a 10 year period - thats why the current average cost of bringing a new compound to market is in the $200 - $300 million dollar range. The chance of final success goes up as each of these hurdles is crossed. By the time a drug reaches the NDA phase the approval rate probably reaches 85% - 90%. Probably 25%-50% go through the FDA smoothly, the remaining 40% experience varying degrees of difficulty (requestes for additional info, testing, etc.) but eventually get approved. Big pharma seem to have a smoother time because they understand what the agency is looking for in a submission. This is one of the reasons (besides cash) why it is so important for a small company to have the assistance of a big pharma firms. So - back to the beginning - the swings you typically see in these firms are almost all related to psychology - IMHO. You seem to be able to comprehend this. Hope this somehow helps.