By MICHAEL BRUSH, COLUMNIST
They’re trading at less than net cash, making them bargains — and also risky, so buyer beware
Everyone likes free offers. With the biotechnology stock sector so badly pummeled, that’s exactly what you find there now.
The shares of many biotech companies have fallen so far, their market values are below their net cash. Buy the stock, and the price you paid is more than offset by company cash. In that way, you get the business for “free.”
Amazingly, 50 to 70 biotech companies now trade for less than net cash, depending on how you measure “net cash.” In technical terms, they have a negative enterprise value (EV), which is market value minus cash plus debt.