RE:RE:RE:RE:RE:RE:RE:RE:Not LikingThe company had hi-ups because the debt-fueled biotech bubble was at its peak. So did everybody else. Valeant and Concordia are probably just the beginning of a reckoning of balance sheets - they just happened to be first because they took things way too far - but Merus (and most of the rest of corporate America), have been borrowing so hard for so long at ridiculously low rates they thought the party would go on forever. And maybe the party will go on for a couple more years yet and you will make a nice profit, but like any other bubble - think subprimte mortgages as an example - once borrowing is refinanced, its game over for these highly leveraged companies - especially Merus.
The only reason CXR and Valeant haven't been blown back into Chapter 11 is because of artificially low borrowing costs, and that might start to change next month. Merus doubled its debt in the last 2 quarters, and if you're a long term investor you have to look at that debt and figure out:
a) where interest rates are going
b) what will be the effect of refinancing on the balance sheet
c) will revenues increase enough to offset that effect
d) what happens to Merus' financiers if/when the bond bubble finally bursts.
My only position right now is in Aralez which I may or may liquidate after the Sept 14th PDUFA annoucement by the FDA, but once that is passed, I think I'm going to listen to the Druckenmillers and Icahn's of the world right now and head to the sidelines. If I do stay in the game and want to continue in biotech, the action right now is in the drug pipelines, not the debt fueled resellers. I
Holding Merus since 2009 would have seen you lose 25% of your money vs the dow going from 7200 to 18300. And you're going to sit there and tell me *I'm* a bad investor? Hey maybe, but at least I know when to throw some cold water on my face and wake the eff up.