Biotech Values

[jbog]

Blade,

Can any recommend what they believe is a good analysis of the crash in small-cap biotech? Anyone here want to present their own theory? Dew? Dewophile? jbog?

While I read your previous post on the reasons I really can't say I agree with it.

If you pull up a 5 year chart comparing the XBI and the Naz you'll see the two indices were in step lock until they hit the 150% mark in March 21'. Since that time they both dropped and while the NAZ still sits in the 100% range the XBI has gone 5 year Negative. Wow.

What caused this probably is a combination of many things.

1) In the Feb/Mar 21 range the FTC claimed they were going to put any drug company acquisition under the microscope.

2) In the same time period the administration declared that they had every intention to control drug prices.

3) In June of 21' the FDA made the historic mistake of approving Biogen's AD drug which tainted the Organization and the Industry.

I'll agree there are too many new Biotech's entering the market. When I researched the NASH drug development a couple of years ago I think there were 80 Companies with a potential prospect in the pipeline. That's crazy. Too much Money was available to the industry.

As of today, I believe the S&P is trading around 18X future earning down from 21.5% a couple of months ago. Historically speaking the number should be around 15-16 times FE.

I think it'll eventually be ok but we'll have a recession to get though first.

Good Luck