Biotech Values

[wallstarb]

@ $2 it was crazy cheap - not to say that the data next week will be good. But if you figure out the downside vs upside the risk/reward ration was good.

Today's news is a total game changer for THLD - yesterday I would NOT want to have owned/bought THLD @ $1.40 because teh risk/reward imo was not very good. It has totally changed and while its not a cheap cash rich bio where its tradign at a discount to cash, I do believe that even with a 70% gap it was cheaper then where it was trading last few weeks.

$1 cash per share today means teat on bad news maybe $1.20 was your downside. Essentially trade at a slight premium to cash. If the data is favorable (I think it will be) then they get another $20m cash and will have around $75m ($1.50 a share) then you have to assign a VALUE for TH-302. Maybe $150m - $250m is reasonable?

If so then you have a range of $225m - $325m conservatively - without being IDIX or ACHN over valued.

That gives a stock price of $4.50 - $6.50 a share. So when it was $2.20 I figured you risk $1 for $2.50 - $4.50 upside, and even if the data is bad - Merck is on the hook to pay for 70% of all the R&D anyway so they have plenty of cash for a few years to get something to work.