BioBlogger_

Tysabri Comes Out On Top At FDA Panel Meeting (BIIB, ELN)

I agree completely. With BIIB you have the diversified business plus you are not exposed to the lofty valuation of ELN.

FDA Has Egg On Its Face…Again (NFLD)

I agree with many of the comments to my post. There are certainly two sides to this story. A very interesting fact pointed out by Northfield was that Polyheme patients had, "...60 percent of their blood volume withdrawn versus 30 percent of the control group. In keeping with the protocol, the PolyHeme group also received substantially more fluids than did the controls resulting in complex issues with fluid management in those patients." However, I am still concerned about the safety issues brought up in the article especially in light of the fact the trauma trial does not require patient consent, but in hindsight I do think the WSJ embelished the issues.

Research Report Highlights Reality of Tysabri’s Prospects (ELN, BIIB)

If your going to criticize my analysis, then support your viewpoint. Justify why the market value of Tysabri is worth $8 billion. Here is a quick and dirty illustration of how I get to that figure. Assume 4x peak sales of $6b in 7 years. That's $24b of value in 2013. Discount for time using a rate of 15% per year gets you to $9b of current value. Obviously, one can debate the multiple I used and the discount rate, but the conclusion is the same: One has to assume this Tysabri becomes one of the biggest selling biotech drugs in history to justify a value of $8b. The numbers I used in my post are based on a discounted cashflow model that would take too much time to explain, but this simple example illustrates my point.

BioCryst Receives Fast-Track Status for Peramivir, But Does It Justify The Stock's Appreciation? (BCRX)

The market does have the potential to be significant; however, I argue that the current valuation not only reflects that potential but implies that that potential will be realized with certainty.

The Future of Tysabri: A Reader’s Perspective (ELN, BIIB, SRA)

Boswells,

One more thing. Thank you very much for your comment.

The Future of Tysabri: A Reader’s Perspective (ELN, BIIB, SRA)

Your point is well taken. I would not be surprised if Tysabri comes back on the market, but only as a salvage treatment. However, I believe you are wrong when you say that, "What it all boils down to is how much of a personal risk one is willing to once all the other options you've tried...fail." If you are an MS patient and develop PML and die or are disabled, your loved one are more than likely to sue the doctor and the company; therefore, it is not simply the patients decision. Moreover, the FDA is concerned about the potential fallout of allowing a drug with potentially fatal side effects without defining the risks. At this point, there are a lot of questions that need to be answered: Does monontherapy increase risk or is it only combo therapy? If only combo, how long does a washout period need be before giving Tysabri? What will be the monitoring procedure? There is no effective diagnostic test. Rather than trying to make a prediction about Tysabri's fate, what I am really trying to say is that the risk/reward in playing this from an investment perspective is not there. ELN is trading as though Tysabri has a 100% probably of getting back on the market with blockbuster revenue potential.

BioCryst and Avian Flu: Underappreciated Call Option or Just Overhyped? (BCRX)

Hey, skepticjr, thanks for the post. No Stuart MacKenzie quotes? Oh well, I will address your question anyway. In my opinion, the hype over avian flu has reached a fever pitch and the upside left in these stocks is merely speculative. In other words, these stocks could see more appreciation as the flu season ramps up and as more cases of avian flu emerge; however, the valuations of these stocks already price in unreasonable expectations. This holds true for QDEL. For example, QDEL trades at 135x EV/TTM EBIT whereas its comps are trading around 30x.

Although overvalued, QDEL could, however, experience further appreciation. I went back and looked at how the stock performed from 1999 through 2004 (1999-00 was the first flu season for QDEL's QuickVue influenza test). The median stock price movement from the end of March as the flu season wound down to the peak during the next season was 87% (average was 158%). I looked at how the stock historically performed from around Oct. 24th to the peak to assess how much gas this stock has left in it. I found that the stock's median appreciation was 54% (average 75%). The median days to peak from Oct. 24th was 66 days (average 70 days), impying a peak around Dec. 29th. The same date was derived by looking at the median days from Mar. 31st to peak.

In other words, I believe the stock is expensive, but could appreciate further. This flu season in reminiscent of the hype surrounding the 2003-04 season. Ahead of this season, QDEL appreciated 305% on Feb. 13, 2004, from Mar. 31, 2003, and appreciated 55% from Oct. 24, 2003.

BioCryst and Avian Flu: Underappreciated Call Option or Just Overhyped? (BCRX)

Good point! He did not mention that on Mad Money.