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Theravance Is A Classic Ben Graham Bargain

Within a few weeks, Theravance (THRX) will split into two distinct companies: Royalty Management will retain the net operating loss carryforwards, the three programs partnered with GSK and 15% of all other programs the current Theravance is developing. Biopharma will retain the remaining 85% of these programs, $300 million of cash and the entire R&D activities. (Further details have been provided by fellow SA contributor KL Investment Partners in this article.)

As always, biotech companies are very hard to understand and evaluate, and value investors typically avoid the enormous uncertainties surrounding drug pipelines, regulatory approvals, etc. However, there are cases where even value investors have good reasons to invest in this sector, for example, if the price...

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