Replies to post #151055 on Biotech Values

[DewDiligence]

After the Bardoxolone debacle, ABT needed to ink some drug deals prior to the ABBV spinoff on 12/31/12 to trumpet to investors that ABBV is more than Humira and the HCV pipeline.

I expect even more ABT dealmaking on the drug side of the company before the ABBV spinoff takes effect.

[mcbio]

Abbott doubles down on ADC cancer drugs in $245M-plus Seattle Genetics pact

I am very much impressed by the depth of SGEN's pipeline. If you only looked at their internal pipeline (http://www.seagen.com/product_pipeline.php ), you would probably come away quite impressed. But, there is a very deep pipeline of drugs where other companies are using SGEN's ADC technology to develop their own drugs, for which SGEN will ultimately be due royalties (http://www.seagen.com/collaborations_ADC.shtml ).

All told, strictly speaking in quantity terms, SGEN probably has one of the most impressive pipelines in all of small to mid-cap biotech IMHO. I have to imagine there is likely some quality in there as well. The only other small to mid-cap biotech that I've ever seen with such a deep pipeline is Morphosys but I'm nowhere near as impressed with Morphosys simply because they tend to ink small single-digit royalties for the bulk of their drugs. I imagine SGEN may only be entitled to single-digit royalties where they have simply licensed out their ADC technology, such as the ABT deal today, but even in this deal today they may ultimately earn high single-digit royalties.

As with anything, my only question is one of valuation with market cap being $3B. Given the massive pipeline, though, I'm not one to necessarily believe the stock isn't cheap here. Will keep an eye on them even though I usually don't play anything north of $1B.