Biotech Values

[mcbio]

RE Vrtx

"Only one thing: the relatively high valuation. The enterprise value (market cap less net cash) is about $3.5B fully-diluted.

On a probability-weighted basis, Telaprevir is probably the most valuable pre-approval drug today from any company. If VRTX’s enterprise value were, say, $2.5B instead of $3.5B, the decision to buy would be easy."

This is what I assumed and I feel the same. Also, even though the odds do look good for Telaprevir approval and commercial success at this point, the fact that so much of the valuation of VRTX is tied to Telaprevir coupled with the fact that crazy things can and do happen sometimes in Phase III, makes me cautious.