Biotech Values

[ghmm]

I like Pharmion (a lot actually) I just have given up hope of getting it under 20 any time soon (and if that were to happen now it would likely be because of something so unfavorable I would lower my target). I actually think Thalidomide (European sales) will at least remain solid (if not grow for some time), I buy Mahaffys arguments on it anyway. I also like the potential for the Methylgene compound they licensed a while back. What is waying against my liking them more is:
1-The nearly double in price since I was close to purchasing (granted they have had good news since so I should pay more)
2-Their two main revenue sources have pretty significant competion (Revlmid-2 fronts, Velcade, etc.)
3-While I think Vidaza and Thalidomide could hold up I think the market will get nervous pretty easily on either dropping (I thought that might give me a buying Opportunity).

I am not a big Mahaffy fan but will admit he (sounds) a lot better then Dr. Raj anyway. I think he paid a lot for both the Methylgene compound and Satraplatin but he may look good in the end.

My reasoning for SPPI (at current levels) over PHRM (at current levels) is:
10% royalty could possibly generate $50 million in a couple years (I think easily and wouldn't be suprised to see a lot more uses for an Oral Platinum drug pushing sales much higher). With their current burn that could give them .50 - .75 EPS.
In the meantime you get the milestones from GPC and should they get lucky in a settlement with GPC that could be very significant for SPPI.
Then longer term they have a couple of shots on goal with their Bladder cancer compound and the drug for prostate cancer/benign prostatic hypertrophy. The fact that Dr. Raj does small deals makes me less nervous too (but I don't like all the Options/Warrants sitting out there).

I think Pharmion will be putting a lot of money into R&D for the next couple years anyway so people may go through a period where they don't know whether to value it on revenue or pipeline potential. But I still keep watching it for an opportunity.

I appreciate your insights poorgradstudent and would be interested in any of your thoughts on Pharmion/Satraplatin