Biotech Values

[microcapfun]

>>CEGE has made a nice gain in the last 2 days
Any thoughts here on it<<

The gain before and after the message to which I am replying was obviously Dendreon related - but it's totally nuts. GVAX failed. GVAX prostate is 100% dead, and the other forms of GVAX are almost definitely dead. Plus GVAX involves a very different strategy than Provenge so the Provenge provides a further indication that Cell Genesys took the wrong road.

If you accept that GVAX is dead, and if you read CEGE's SEC filings indicating that essentially all their other 'assets' are gone (they even had to make a significant payment to get out of the lease on their manufacturing facility - which they spend over $100M on!), you can't value higher than cash minus what they have to pay to buy back the debt. (See the most recent PR about plans regarding the latter.)

At this point the maximum valuation becomes an exercise in elementary school arithmetic ... and you find the present stock price is too high by more than a factor of 2. Add in the fact that management is apparently not planning on liquidating (otherwise they wouldn't choose to hold onto debt not coming due until 2013), but instead apparently want to start over again and fritter away the remaining cash ... and it becomes clear that whoever is holding shares at the present price failed elementary school arithmetic and can't recognize a long lost cause when they see one.

micro