Replies to post #120553 on Biotech Values

[ghmm]

In last years biotech charity I had picked a tiny company called Synthetech (NZYM.OB). I didn't own the stock in real life but saw it as a potential protease / polymerase play as they made some API that went into them. At the time I picked them I thought perhaps Vertex/Merck would be clients but it appears Codexis supplies Vertex at least. I did come to suspect Roche was one of their clients anyway the company was acquired. So my long winded way of saying similar to your hedged way of playing it I wonder if there is another round-about way of doing it.

Off hand can't think of much though I don't know maybe if someone knows what type of anointment Vertex is suggesting to docs as palliative care :-).

[DewDiligence]

Ten names are too many but I’ll give you an HCV hedge with six. Short: VRTX, IDIX, INHX; long: Medivir, ACHN, Debiopharm. (Debiopharm is private, so you’ll have to do some heavy-duty negotiating on that one :- ))

[oc631]

I guess I need not mention my take on VRUS. A distant second IMO would be BMY.

VRTX is a short on valuation and balance sheet.
ANDS has failed science and they are in business for the wrong reasons. Another short candidate.

I'm not going to pass judgment on the rest of the small names in the group but they offer no value IMO. INHX could be taken over to put a nuke in the pipeline of big pharma.


Just one point worth mentioning. Those companies pursuing non-nukes took a wrong turn and the class should eventually be written off.

[mcbio]

So here's a challenge for you and the Board - come up with a hedged HCV portfolio. Something along the lines of 5 stocks long and 5 stocks short.

I agree pretty much entirely with Dew's picks (#msg-63571059) though I haven't followed Debiopharm closely enough to have an informed opinion on them. Also, while I don't exactly have a glowing opinion of INHX, they are pretty much the only HCV nuke game left in town aside from VRUS after IDIX's serious problems. If a big pharma that needs an HCV nuke isn't willing to pay the steep price that VRUS is asking (and they can afford to be very stingy given their cash hoard and great data to date), they could come calling on INHX at some point should their HCV nuke continue to progress in the clinic. You could also look at it as only a few companies at most will be involved with the VRUS nukes so any others could look squarely at INHX if they need an HCV nuke. So, I probably wouldn't have the courage to short INHX, though I'm certainly not ready to consider a long position at this point either.