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Biotech / Medical : Biotech Valuation
BTK 5,254-0.1%Apr 29 4:00 PM EDT

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To: A.J. Mullen who wrote (49672)2/28/2018 2:43:39 PM
From: Art Bechhoefer  Read Replies (1) of 51532
It's true that they "lost less last quarter than a year before," but I believe you are looking at loss in earnings per share. Last July they issued about 10% more shares, so of course, the loss per share can go down on that account alone.

One doesn't worry about earnings in developmental drug stocks where the key drugs have not yet been approved. One only need worry about two issues:

1. The drug in clinical trials looks like it can be very successful, based on preliminary data.

2. The company has enough cash to continue testing the drug at least to the point where it is ready to submit the data for regulatory approval.

The first issue is a no brainer. Both roxadustat and pamrevlumab look like potential blockbusters. The second issue is explained by the fact that the company has $800 million, mostly in cash and marketable securities – more than enough to see both drugs through to approval.

Many investors, and in particular the writers of short comments by investment firms and/or automated evaluations, such as those issued routinely by the Associated Press, don't bother reading the details and making a critical analysis of the data. FGEN to me looks like a solid investment – more than just another "story stock" because of its very solid cash position.

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