German Stock Party
Germany has gone equity mad, and biotech stocks are among those enjoying boom times that have seen stock prices sky-rocket in recent months. Some industry observers caution that the party is getting out of hand and that such volatility is dangerous for an industry with long product development cycles. That's why recent moves by MWG-Biotech AG are attracting attention. The firms IPO price was 27 Euros; by mid-February the firm an investment bank helped the company carry out a capital increase, raising over $117 million. MWG's CFO quit suddenly within weeks of the IPO and before the company announced its 1999 numbers. All this may be explainable, but even the perception of impropriety might start a stock slide, according to one analyst.
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Germany's GPC Biotech has taken a frugal and tortuous journey from platform to product company. As the customer base for its new-target discovery platform grew less receptive, it attempted to move its business towards products, but was prevented by its lack of management and its illiquid Neuer Markt shares. Thus it leveraged its Bristol-Myers connections to build an oncology team and create a pipeline, at the same time largely refocusing the company on in-licensing. In the meantime, rather than disbanding its discovery work, GPC is trying to reorient its entire platform towards applied uses in order to attract corporate funding and to feed its own pipeline. The result: a business model increasingly relevant to a financially troubled and largely directionless biotech industry.
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