CHRIS HUGHES: Biotech investors should temper optimism over cash-strapped targets

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CHRIS HUGHES: Biotech investors should temper optimism over cash-strapped targets
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When markets fall, a takeover target’s one-year share price high is a stubborn benchmark for pricing a deal 🔒

The biotech sector is more than 40% down from its high in February 2021, while the major pharmaceutical firms are flush with cash. That sounds like the ideal condition for deal-making. But what if biotech boards and shareholders want takeover bids at yesterday’s sky-high prices?

It was found in a 2020 study by JPMorgan Chase & Co analysts that when markets fall, a takeover target’s one-year share price high is a stubborn benchmark for pricing a deal. So it can take more than a year from a market correction until buyers and sellers align. Those dynamics may now be at work...

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