Brett Hutley's Blog » Stock Analysis http://bretthutley.com Home on the Digital Range Mon, 23 Jan 2012 21:21:43 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Evaluating Bio-Techs http://bretthutley.com/2009/11/13/evaluating-bio-techs/ http://bretthutley.com/2009/11/13/evaluating-bio-techs/#comments Fri, 13 Nov 2009 11:15:49 +0000 brett http://www.bretthutley.com/?p=226
  • Financial models need more complexity?
    • ]]>     Clinton Chee has posted a list of factors he thinks is important when analyzing Bio-Tech stocks. This list is summarized below:

    • P : Price of stock
    • NTA : Net Tangible Assets (Total Assets minus Intellectual property and other intangibles)
    • P/NTA : Ratio of Price to NTA - a value of 3 or below is considered underpriced and worth buying. A value of 9 or above is definitely not worth buying
    • TEAM : Rating system based on the qualifications of the directors
      1. Professor = 1.5
      2. PhD = 1.0
      3. Master = 0.8
      4. Hons = 0.7
      5. MBA = 0.6
      6. Biotech Exp (10year) = 0.5
    • BurnPeriod (Runway) : the number of quarters left before cash runs out, based on the previous quarters cash burn rate. Over 4 quarters is fair. Over 8 quarters is worth investing.
    • ProductPipe : the stage of the product development ranging from pre-clinical tests to commercialization. Over a value of 5.0 is a good sign.
      1. Phase 1 = 1
      2. Phase 2 = 2
      3. Phase 3 = 3
      4. Market Approved = 4
      5. In Market =5
    • ForeignMarket : Companies with products that sell internationally are more highly rated. (see key below). Over a value of 3 is a good sign.
      1. Plan to Enter = 0.5
      2. Just Entered = 0.9
      3. 1-3 years = 1.5
      4. Over 3 years = 2.0
    • Cash/Debt : the ratio of cash to debt of the company.

      • Related posts:

      1. Financial models need more complexity?

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