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Ark Therapeutics: Spreading, or Hiding Risk?

Executive Summary

Since its IPO in March 2004, Ark Therapeutics has been watched closely, as the first European biotech to float in nearly three years. Critics point to a lack of strategic focus, claiming the broad collection of products in the firm's portfolio, including a device, drugs and even a diagnostic, will be difficult to exploit in a small company with limited resources. Yet diversity apparently proved an attractive feature-particularly to generalist investors who see the company as a spread risk bet on biotech. It has also allowed Ark to hide the far higher risk associated with individual follow-up programs, where most of the firm's value lies, behind a sure-bet marketed product.

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