Stockwatch: Wacc a biotech
This article was originally published in Scrip
Sometimes, biotechnology companies are unfortunate to suffer a catalogue of disasters – a complete response letter (CRL), a late-stage drug failure, the return of a product by their pharmaceutical partner, an inability to raise money to run another trial and a call from shareholders for an orderly wind-up. With Chelsea Therapeutics suffering the equivalent of the first and last of these in the last week (scripintelligence.com, 4 July 2012), and after seeing two such separate failures in the same year, it would be useful for Chelsea investors to reflect on what the historical outcomes are for stocks that fit this profile.
You may also be interested in...
The impact of the coronavirus pandemic on investors’ portfolios was immediately apparent at the end of the first quarter of 2020. Equity market sell-offs are reflections of investors’ concern for future financial performance which, if material, may have to be announced early.
AbbVie’s latest, largest acquisition may be cast in a new light as the pandemic throws stock markets into turmoil and commercial prospects up in the air.
The prices of biotechnology and pharmaceutical sector indices continue to be comparatively robust in the face of big falls in global markets as investors expect new drugs and vaccines to be generated by the sector. While it is largely accepted that the life science sector will eventually ride to the rescue, bumper profits are far from guaranteed.