Biotech Values

[mcbio]

Re: ARRY valuation

ARRY hit $2.90 this morning. What are your thoughts? $153 million market cap with $129 million in cash as of the end of 2nd quarter. Is the debt overhang the problem? (It's not due until 2014, right?) Nine drugs in clinical trials with partnerships with NVS, AZN, DNA and Amgen. Are the drugs simply too early-stage for the Street to be interested?

I continue to like the risk-reward and plan to continue to hold. Don't see any reason to abandon ship here. A relatively small market cap combined with an extensive pipeline and several big pharma partners works for me. The debt is not due until 2014 (interest is due and paid quarterly) and can be paid back in cash or shares. The pipeline is fairly early-stage (both partnered and unpartnered drugs), so that could be a part of the issue. But, I have to believe at some point (certainly as some of these candidates progress into the clinic and of course if they are successful), that the market will start to award ARRY with a market cap that would appear to be more in-line with its prospects. I will say that I think the numerous partnerships probably makes ARRY less likely to be a takeover candidate, but I nonetheless like the fact that they're able to attract the big name partners and think this adds some validation to the type of work they do.