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Stockwatch: Wacc a biotech

This article was originally published in Scrip

Executive Summary

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.

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