Here's an article I was just reading that pretty much lays out what is really going on,at least in my eyes ... No mention of CARA but then CARA is tracking a different area and is a fairly small market cap vs. companies like Amgen or Gilead ,Brystol-Meyers ,etc.,,,some that were mentioned in the article from Jan.16,2016.To be fair there are probably multitudes of articles chanting the same mantra as this one.Its a waiting game but you have to be waiting on the right Pharma company ... I think CARA is okay but it's just my opinion and it seems I have been wrong more than right on a lot of things for at least the last 6 months.Probably comes from my ever-present overly-positive attitude!!!! :-)
A few quotes from the article >>>>
The sector has been hammered, down to valuations not seen in years, but for reasons that don’t add up.
Meanwhile, this rout is different from the classic blowups of years ago, in that many biotech companies now are financially sound. They took advantage of higher prices in the past few years to raise capital.
“There are lots of good deals, especially in the small-cap space,”
Whenever investors go into near-panic mode, they sell risk. Biotech fits the bill. So stocks in this sector get sold down hard. “There’s panic in the market overall, and everyone has left everything that is risky. This has nothing to do with the fundamentals,” says Garren.
But fears about China and Federal Reserve interest-rate hikes are probably overblown. And the appetite for risk will swing the other way, at some point.
One problem is that biotech earnings are typically in the distant future. But lots of funds are needed in the meantime for research. “When investors pull back from capital markets, that is concerning because it makes you think biotech companies will have trouble raising money,” says Loncar.
But biotech companies are actually pretty financially sound, for a change, so they can ride this out. They took advantage of higher stock prices in the past few years to raise funds via stock issues only, as opposed to riskier convertible debt. That’s one thing that makes this selloff a lot different from the big one in 2001-2002, says Yook. And even during the current mayhem, the financing window is still open. About a dozen companies raised capital recently.
“The balance sheets across the industry are exceptionally well-funded,” says Yook. His ETF, BioShares Biotechnology Clinical Trials, tracks 89 companies. They have over $20 billion in cash, and there’s virtually no debt.
“It’s a staggering sum,” he says.
The bottom line: Abusive price increases, like those from Martin Shkreli while he was at Turing Pharmaceuticals, are happening with a narrow group of older drugs. That makes it easy to isolate the practice from what goes on at biotech companies developing new therapies for unmet medical needs. Those will probably continue to command premium prices.
“I don’t think Congress is going to kill innovation by controlling prices on new breakthrough medicines,” says Garren.
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