Replies to post #84156 on Biotech Values

[mcbio]

Re: RIGL entry point

What are your thoughts on current valuation though? Cash was about 80 million in june and the recent raise is about 95 million giving it about 150 million as of 9/09 assuming about 20-30 million was burned for the current Q. The current marketcap is about 415 M.

After the recent offering of 13 million shares, it does look like the market cap is just north of $400 million. Of course, I liked it a lot better close to $300 million, but I don't see $400 million as unreasonable at all given the market opportunity for R788 in RA alone coupled with the fact that they've already established PoC in Phase 2. You also get some added comfort in the additional funds they just raised, the additional indications for R788 beyond RA, and the rest of the pipeline.

At what price would you get in?

If the market cap is still around $400 million after they've had the end-of-Phase 2b meeting with the FDA at the end of next month and assuming the FDA hasn't imposed any material restrictions on the Phase 3 trial for R788 in RA, I will most likely be back in the stock for a third time. (I was fortunate enough to get almost a triple my first time and just under a double my second time.) My initial thoughts on a price target for the third go around would be about a double to a market cap of around $800 million. I don't think that's unreasonable given the market opportunity and the likelihood of signing a very lucrative partnership, assuming of course that the end-of-Phase 2b meeting with the FDA goes well. I should add too that I would base my price target on what I think is possible for the stock before any announcement of Phase 3 results for R788. Obviously, the stock could be boom or bust after the release of those results but I will be long gone from the stock at that time as I don't do Phase 3 binary events (way too much risk for me). I still think an $800 million market cap is a possibility before Phase 3 results are released if RIGL signs a lucrative partnership for R788.