doing some research, and ran accross stuff that I may not have parked before.......
Message 12946498
To:
From: scott_jiminez Wednesday, Feb 23, 2000 5:16 AM
View Replies (2) | Respond to of 5737
Not to press the point too far - which, of course I'll now proceed to do - but a perspective on the 'inevitable biotech crash' mindset was just presented to me in another context. The following refers to my statement about the semiconductor cycle in post 680.
On the Kulicke and Soffa thread, Gottfried just posted an update to his graphs showing, in effect, the strength of the semiconductor industry. Here is one of those graphs geocities.com Hmmmm. Let's see, cycle peaked in ~Oct.-Jan, 1995-96, ~Oct.-Dec., 1997, .....Oct.-Jan., 2000???? Guess what, ain't gonna happen - unless people stop using cell phones, stop using the internet, stop using chips in every conceivable place. Ain't gonna happen. There is a high probability the premise of the frequency of the cycle is flawed and -despite the strongly compelling 'evidence' of the two year cycle - it is much more likely to be 3-5 years.
Thus, when asked this past September, 'Why should this cycle be any different?', the correct answer would have addressed the premise of the frequency of the cyclicity and not to attempt to conjure reasons for a 'difference'.
Biotech may very well crash and burn. But there is no inevitability. Just as the demand for chips has exceeded all expectations, perceptions of the biotech sector may be undergoing a huge and positive shift (witness the spate of secondary offerings - unthinkable just six months ago) that may sustain significantly higher valuations for an extended period.
And, of course, I could be *WRONG* as well.
Message 13030939
To:
From: scott_jiminez Thursday, Mar 2, 2000 10:04 PM
Respond to of 1330
<<ARIAD...at $200 appears correct...>>
Superficially that appears to be an absurd statement.
But then you look at the years of no institutional interest, zero venture capital inflow, zip valuation given to platforms and/or bench science...and you come to the unmistakable conclusion that ARIA probably should have been trading in the $10 - 20 range at the beginning of the biotech rally if all of these negatives weren't pummeling the stock until last fall.
But with the additional factors of the god awful convertible, and the diffuse research direction, etc., the stock price was just pounded to nothing.
Thus this huge run is distorted by the fact that last fall the stock had valued the company as essentially worthless. While we may or may not see $200, do not be surprised if ARIA goes substantially higher. Remember (as noted by Berger) Ariad's valuation is JUST BEGINNING to reach the LOWER REALM of its similarly positioned peers. |
