Panacos Pharmaceuticals (PANC)

[krenjp]

If the low price of biotech is due to the subprime crisis and not to firm-specific troubles, then it might be better to hold on to get the right partnership. For Panacos there is no doubt that the partnership could be significant to pay for the upcoming trial, but it doesnt mean it should be done at all cost.
If you put the subprime in perspective, the worse estimate put the impact at about 6-8% of the US GDP, with the understanding that the impact is not affecting only US banks but various foreign ones--how much is held by the latter is not known apparently... So while this is significant it should clear fairly rapidly, the more international spread and the faster it would clear.
The potential delisting impacting small biotech is too bad, but given that a number of them are already priced at cash value--some even with a negative on the value of their R&D, then a reverse split shouldnt be too bad. I.e. they should remain priced at cash value even after the split if the R&D is already discounted. If they are priced below cash, then you get green for free by buying shares if management is not too bad. That is the case with PANC, GNVC recently and GTCB I believe. So possibly the reverse split would be perceived negatively but that shouldnt last. However, if they burned their cash in a year and could not get a loan, then yes they could go AWOL :) Most biotech should take the slow road for some time rather than spend their money to create news imo.

Of course if economists are as bad as usual in their predictions and this turned into a larger problem, then smaller firms might not make it at all, but we are far from that situation. Personally I have balanced my biotech with Oil/Gas and I wouldnt stay in biotech if I needed cash rapidly.