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By Lynn Saylor

I've compiled a list of the five biotechs that currently have the highest price-to-book ratios in the industry. The price-to-book ratio, or P/B ratio, is a financial ratio used to compare a company's book value to its current market price. The P/B ratios may also give some insight as to what would remain, were the company to declare bankruptcy tomorrow (not to say that any of the below listed stocks are in any danger of having to file for bankruptcy protection any time soon).

The higher this ratio is, the greater possibility that the stock is overvalued and may be in store for a pull-back or a potential candidate for shorting. It should be noted that the book value doesn't include intangible assets such as intellectual property.

Some may argue that P/B ratios are wholly irrelevant to the biotech industry, given the many intangibles and unknowns such as upcoming clinical trial results, pending FDA decisions, and future sales of new products among other items. I believe that the P/B should at least be considered and reviewed when making a determination to buy or short any equity, regardless of industry.

1. Medivation, Inc. (MDVN)

Tuesday's close: $72.03

Price/Book: 1,926.83

1-Week Price Change: (.19)%

4-Week Price Change: 10.3%

12-Week Price Change: 59.62%

Average Daily Volume: 818k

From the company:

Medivation, Inc. is a biopharmaceutical company focused on the rapid development of novel small molecule drugs to treat critically ill patients with serious diseases for which there are limited treatment options. Medivation aims to transform the treatment of these diseases and offer hope to critically ill patients and their caregivers.

(Click to enlarge images)

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With 19.68M shares out, Medivation currently has a market cap of $355.28M. Institutional ownership stands at 66%, with the short interest as of 02/29/12 being 2.5M shares. The average analyst price target is $82.73.

2. Halozyme Therapeutics, Inc. (HALO)

Tuesday's close: $11.99

Price/Book: 117.3

1-Week Price Change: 8.35%

4-Week Price Change: 5.12%

12-Week Price Change: 28.71%

Average Daily Volume: 920k

From the company:

Halozyme Therapeutics is a biopharmaceutical company developing and commercializing products targeting the extracellular matrix for the diabetes, oncology, dermatology, and drug delivery markets. The company's product portfolio is primarily based on intellectual property covering the family of human enzymes known as hyaluronidases and additional enzymes that affect the extracellular matrix.

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With 112.09M shares out, Halozyme currently has a market cap of $1.34B. Institutional ownership stands at 62% with the short interest as of 02/29/12 being 4.62M shares. The average analyst price target is $13.71.

3. Threshold Pharmaceuticals, Inc. (THLD)

Tuesday's close: $7.19

Price/Book: 77.64

1-Week Price Change: 7.93%

4-Week Price Change: 100.57%

12-Week Price Change: 444.61%

Average Daily Volume: 5.31M

From the company:

Threshold is a biotechnology company focused on the discovery and development of therapeutics based on Tumor Hypoxia, a powerful scientific platform that offers broad potential to treat most solid tumors. By selectively targeting tumor cells, we are building a pipeline of drugs that hold promise to be more effective and less toxic to healthy tissues than conventional drugs.

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With 49.13M shares out, Threshold currently has a market cap of $353.23M. Institutional ownership stands at 62% with the short interest as of 02/29/12 being 1.8M shares. The average analyst price target is $11.17.

4. Ligand Pharmaceuticals Inc. (LGND)

Tuesday's close: $18.05

Price/Book: 40.87

1-Week Price Change: 12.47%

4-Week Price Change: 17.94%

12-Week Price Change: 52.25%

Average Daily Volume: 116k

From the company:

Founded in 1987 as a cutting-edge drug discovery biotech in La Jolla, California, Ligand Pharmaceuticals has built a rich 24-year heritage of drug discovery and development innovation. Ligand has used its drug development expertise to produce over 40 clinical candidates, 22 INDs, and 5 approved drugs. That's a level of productivity that ranks near the top of the biotech industry.

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With 19.68M shares out, Ligand currently has a market cap of $355.28M. Institutional ownership stands at 66% with the short interest as of 02/29/12 being 947k shares. The average analyst price target is $23.33.

5. Arena Pharmaceuticals, Inc. (ARNA)

Tuesday's close: $1.92

Price/Book: 25.03

1-Week Price Change: 1.69%

4-Week Price Change: (1.09)%

12-Week Price Change: (9.5)%

Average Daily Volume: 5.23M

From the company:

We are a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing oral drugs that target G protein-coupled receptors, or GPCRs, an important class of validated drug targets, in four major therapeutic areas: cardiovascular, central nervous system, inflammatory and metabolic diseases.

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With 180.42M shares out, Arena currently has a market cap of $346.41M. Institutional ownership stands at 28%, with the short interest as of 02/29/12 being 25.33M shares. The average analyst price target is $1.38.


Source: 5 Biotechs With The Highest Price-To-Book Ratios