To: Q. who wrote (1703 ) 8/26/1998 10:54:00 AM From: Anaxagoras Read Replies (2) | Respond to
Hi John,impression is that this is the case. A breakthrough or positive research announcement can provide an uncomfortable blip, to say the least. For example, I follow Biotime more or less, and have played it short and long at various points. I personally wouldn't probably be shorting it right now because in the next several months their blood plasma volume expander Hextend is very likely going to be approved by the FDA, which might cause a significant price rise (although perhaps not, for issue-specific reasons not relevant here). Anyhooooooo, it would be nice perhaps to sort these kinds of situations out, and I presume the ability to do this would depend on the screening tool one uses. One option is to screen away companies whose R&D spending exceeds 7% of revenues (or up the percentage to whatever seems appropriate). Hey, it would really be cool if you could screen away those companies whose revenue is primarily made up of milestone payments and the like, but that I'm sure is beyond the ability of most tools. On the other hand, although I haven't checked this out, such a screen might get rid of excellent stinkers like RACE which I presume had high R&D with looser technology. But it still should catch crappy companies that are genuinely broken because of a poor business model, management, fading product line, etc.
