Biotech Values

[turtlepower]

Adam F seems to be contradicting himself somewhat. He writes

Many investors ridiculed our theory last fall because they mistakenly thought we were simply predicting the outcome of phase III cancer drug trials based on market cap. That's not true.

And then follows up by writing

Market cap, therefore, becomes a reliable and accurate proxy for predicting cancer drug trial outcomes.

I think he's being too simplistic by only looking at the marketcap. CORT was slightly less that 300M a few months before it announced +ve P3 results. TSRX is < 200M after a successful P3 and was < 300M before the results were announced. The marketcap depends on the potential market of the drug so his theory doesn't apply to companies like CORT and other companies which the market assumes don't have a potential blockbuster. I think the percentage held by institutions and short interest are much better indicators of companies that have been vetted by the market.

KERX had ~ 28% inst investors and ~19% SI. AEZS had 6% inst investors ~5% SI.