Biotech Values

[DewDiligence]

“Leverage” is a bona fide economics term, but I agree that it’s overused by biotech executives (and executives from other industries).

A company can generate financial leverage by taking on (more) debt, which magnifies (leverages) the effect of changes in the enterprise value on changes in the share price.

A company can have high operating leverage if its fixed costs of doing business are a high proportion of total costs, and hence changes (positive or negative) in revenue result in a magnified (leveraged) effect on profit.

The problem you’re complaining about occurs when people use “leverage” to mean just general execution of a business plan without any connection to the definitions described above.

Apologies for being pedantic :- )