Biotech Values

[bladerunner1717]

“We’ve yet to see the seller change their mind-set on what the value of their company is,” Litchfield said. “I think the world lives in hope right? …And if you’re sitting in the biotech, you’re waiting to understand, is this permanent, or is it temporary? And that’s where I think they are.”

In his Friday note, Yee wrote that if and when large biopharma firms start buying small and mid-cap biotechs, it will signal that “sellers have adjusted their expectations and have accepted the new valuation.”

I'm not sure I buy this explanation. This makes it sound like sellers are being unrealistic. At these current valuations, I don't believe that sellers are being unrealisitc. I'm not sure it is in the Big Pharma mindset to just go in and buy up cheap biotechs, whether it makes good economic sense or not. I think there are other factors (a sort of "gentlemen's agreement" between Big Pharma and small-cap bios?) involved.

Bladerunner