Seeking Alpha
Editor's notes: With no earnings likely to be available to shareholders before 2017 and the net present value of risk-adjusted future earnings below the current market capitalization, this biotech's run may be over.

Flush with $85 million in cash from its May 2013 IPO, armed with an outstanding scientific hypothesis, staffed by a world expert on leukemia, and nearly through with phase 2 clinical trials, Ambit Biosciences (AMBI) seems to be on the fast track to success. At the end of May, the esteemed private equity firm Orbimed purchased almost 1.5 million shares. The stock has nearly doubled to $13.52 since the beginning of July. Citigroup has given the company a rating of Outperform. Yet despite these excellent optics, careful review of the science and the economics indicates that common shareholders will almost certainly lose money, and probably all of it.

Ambit currently has four drugs...

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