Replies to post #192055 on Biotech Values

[DewDiligence]

It’s a matter of degree. For instance, OCRX and CNAT have had mediocre clinical data to date, but the enterprise values of both companies are close to nil, so the risk/reward tradeoff looks compelling, IMO.

[GrthzGd]

The key trial quality/valuation concern from the risk reward standpoint IMO, is the relationship that the drug being tried bears to the company's overall valuation. This is most useful when comparing companies with just a few pipeline drugs.

That was why buying Genfit when its valuation was $300M a year and a half ago seemed like a no brainer when ICPT's valuation had just shot up to $4B even though ICPT had just had its phase 2 trial stopped for having reached its endpoint early, while Genfit's Phase 2 trial was still ongoing.

At this point, what was a 13:1 valuation ratio has halved to 6:1. That might still seem compelling, but both companies seem to have run into problems with trial design, so I've sold all my Genfit shares for the time being.