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Hi gang, Ok there are some pretty knowledgeable posters here at SI with differing perspectives on valuation. In fact I'm sure the consensus is that the sector is undervalued for the most part. So how can one invest and derive profits in such a volitile sector. Sure one could have purchased options in Pfizer ( VIAGRA ) or Immunex ( ENBREL ) months in advance of FDA approval. One could also have invested in several of the genomics research companies which were hyped mid-year on the fascination with Anti-Angiogenesis ( BLSI etc ) & Telomeres ( GERN ). At times one may have even found the right companies which would partner their R&D or products in advanced clinical trials thus gaining credibility and enhanced shareholder value. Intermixed in this dance we have all sorts of financings from IPO's ( which performed poorly in 1998 ) through private placements and ultimately the dreaded Death Spiral Convertables. The state of the economy wrecked havoc in July through Sept. Yet one could argue that a cash position at the right time could have multiplied one's relative positions. The hopes of this thread is to filter out the noise. One should give a brief description of the company they percieve as undervalued. The purpose here is to force a poster to commit to one or two most followed, in their opinion most undervalued stocks. Furthermore, to focus on that company until a certain stage has played out. Not that there cannot be several stages. Include the pro's & con's on the following. General { HISTORICAL }: 1. The Managment. { a. prior Successes & Failures b. mission statements c. key goals } Other Dynamics... 2. The companies Product Pipeline. { Describe why the companies key product is promising. For instance highly successful clinical trials, proven pathways, known market size ( proven markets )} 3. A brief Sketch of the Financial picture including. a. Insider Holdings { Buying & Selling ( relative cost basis )} ( This is an important concept. If insiders obtain their shares at pennies relative to the current entry price it is less significant than if they pay market value. Be specific if possible. ) b. Number of Shares Outstanding. c. Cash position & Financing needs ( current & future burn rate etc ). ( Often this is a key feature in determining where to invest. While many biotec's run low on cash this does not suggest an unwise investment. Quite the contrary. It is the anticipation of key collaborations with big pharma which most often results in the best returns to investors in this sector. ) d. Key Collaborations. ( near-term milestones ) Other Dynamics... e. The ever notorious Convertable Financings. Specific { SPECULATIVE }: 1. What Key near term events ( 6 month time frame } are anticipated that would most arguably result in a higer valuation. Expected target valuation upon closure of said key event. 2. What Technical Indicators suggest a relatively low entry point { rounding bottoms ( CBMI )}. A potential technical breakout { GLGC }. clearstation.com etc... On The Whole 1999 looks to be a promising year. With some shared experiances it could prove to be even more rewarding. While the individual threads prove to be invaluable sources on each company. Key picks and timing remain harder concepts to grasp with limited time and resources at ones disposal. Ideally we should try to enrich this understanding with a broad comprehension of the overall biotec market. Hence, I would like to welcome in the new year with some key perspectives offered by Burrill & Company. * a general improvement in the equity markets for biotechs: * with the Asian economic crisis lessening and a general improvement in the world's equity markets, the markets for biotechs will similarly improve; * increased interest by the investment community in Europe in equities (in general) and biotechnology specifically will add dramatically to biotech company's abilities to assess its capital needs; * large capitalization biotech stocks have led the recovery to date, smaller capitalization stocks (which have been hurt more) should now recover as more investors return to small capitalization stocks where values are disproportionately low * product approvals and product market success will drive earnings and company success and the markets will react favorably; * venture capital interest will return as values become more apparent and liquidity re-emerges; * selected acquisitions of biotechs will provide evidence of the company's inherent values. * improved regulatory success from changes made during the last several years increasing both the predictability and rapidity of approval. * an increased number of product approvals is expected for 1999; * products expected to be approved include Coulter's Bexxar for non-Hodgkin's lymphoma, Centocor's Remicade for rheumatoid arthritis, Biota/Glaxo Wellcome's new agent for influenza, Relenza, and Genentech/Alkermes' depot formulation of human growth hormone, Nutropin Depot. * Industry consolidation will continue, with increases in the biotech to biotech merger arena, but reduced big pharma/biotech consolidation because partnering will play a more important role. * Partnering between big and small companies increasing in both number and size as large pharma/agricultural companies will increasingly access innovation from the smaller companies. * Internationalization of biotech will continue, with more cross border deals, more cross border financing and more broad based developments worldwide. * Genomics will continue to drive industry restructuring as the breadth of genomic knowledge, understanding of disease pathways, bioinformatics, and more sophisticated tools revolutionizes agriculture and human health. * Agbio, animal health and nutraceuticals will increase in importance as the industry again transforms itself (no longer a biotech industry just focused on human healthcare therapeutics and diagnostics). * Genetics in the food chain and bioethics will become a bigger issue in 1999 as consumer awareness increases and human cloning experiments continue to "push the envelope." Improving the inputs/outputs of agriculture should have less emotion than the "human engineering" dialogue, but both will become bigger issues. THE TRUTH IS OUT THERE EVENT HORIZON III | ||||||||||||
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