RE:RE:RE:RE:RE:Pump and dumpI should provide the positives, which are two in our case.
1. These high duration assets usually incorporate (or even OVER incorporate) the expected move up in rates all at once --that's where we are now. So it's incorporating these forecasted higher inflation rates and base rates to go along with it based on forward curves. If inflation starts to ease and you never actually get to where the forward rates are hinting now (since many investors just extrapolate trends), you see the benefit to the discount rate dropping quicker than seeing it actually happen in the markets.
2. In the case of THTX, from my valuation outlook there really is very limited embedded "new" future cash flows from their investment in the pipeline. We know NASH is on hold and there's literally nothing in the current valuation. For oncology, despite them talking about 4 tumors and capturing part of the $12bil 4L treatment market, I see extremely little in the share at these levels now. So the upside is that the valuation still has to incorporate the potential for large future cash flows around cancer. AND, those cash flows wouldn't be 5-10 years off to the future but more likely something the market could see this or next year as far as forecasting them. The build up of the higher probability of cash flow would massively dwarf the incorporation of a higher interest rate into a THTX NPV type model.
So a technical way of saying THTX's price today doesn't have much in the way of future rewards for the investing in it, so not yet seen as a high duration biotech stock. We would be super happy to see it be one where investors do actually value high future cash flows.
Wino115 wrote: No, that's old news. Biotech, where you often are promising large benefits in the future, is considered a "high duration asset", meaning invest now for a big future payout later. As such, a valuation along the lines of an NPV or something similar where you are discounting those cash flows that are way out in the future is super sensitive to interest rates. As rate expectations rise, it really lowers the present value of those way-off future positive cash flows and also makes all the future negative cash flow needed to invest have a higher "opportunity" cost; hence, the more amplified decline based around interest rates. It would be the same for any high duration asset versus something that would be considered short duration (limited upfront cash needed, steady returns now).
qwerty22 wrote: All biotech is still taking a pounding. XBI is down 10% in a month and THTX is mirroring that. It's hard to know why all biotech is out of favour. It can't be Theranos has shaken all faith in the sector, can it?
palinc2000 wrote: I dont believe in manipulation but I do believe in leaks....Dont know if there have been leaks so far but I would be surprised if there were no leaks ,,,,,Leaks dont come from top management but leaks become inevitabole as more and ore people are involved whether financial ,clinical etc