The struggling biotech which had filed for bankruptcy has signed off on the court’s transaction for $4 M. In addition to buying substantially all of Biopure’s assets, OPK also agreed to acquire Biopure’s 50% stake in a partnership that owns its headquarters and some laboratory space. That transaction will cost OPK $850,000. Read more…
Investors are now asking more questions about the short, near and long term viability of healthcare stocks. In a slowly rebounding market, despite today’s volatility; there is a silver lining; smaller, leaner healthcare companies are emerging stronger from the past crisis.
There is no quick fix … Read more…
Scientists, managements and investors get excited by a candidate compound’s potential; but small-cap companies can’t afford to singularly bring drugs through the FDA as development costs are about $800M. Thus, the definite need for partner initiatives; but deals needs to be better – benchmarked – to reward clinical utility rather than receipt of lengthy go/no-go options. A compound “if” it makes it through clinical trials to approved drug has about 5 years of good market penetration therefore deals need to be better compensated to create ROI and market value on an ongoing basis.
Cash is king … in this environment. But, can too much cash be a “perceived” as a “liability” in light of mounting losses? Many have small-cap healthcare companies have hung on too long to their early development-stage programs. Biotechnology companies with cash are not failing but seem to be “floundering” with compounds that are not in demand for partner initiatives. Many trade at a very small premium or a deep discount to their cash – liabilities with little or negative value implied to their current compound or pipeline.
Every time the markets rebound, investors deliberate whether this marks the bottom for share pricing and if so, might it be time to get in. However, for those of us who remain skeptical; we have seen too many spikes in momentum, resistance, confidence and resilience as second quarter earnings were good but will it last? Valuations provide indicators when compared to the rapid decline and slow moves to present market levels.
What does it mean? A newly resurrected term from Warren Buffett refers to executives using their own money to personally purchase and hold large stakes stock in the company they run. Executive staff members can talk all they want about confidence in their future prospects and platforms, but the best vote of leadership is putting their a percentage of their net worth on the line just like their investors!
Founder and Director of Research, Henry McCusker enters his eighth (8) year at Scimitar Equity with past experience in sell-side analysis, buy-side management, corporate management and due diligence.