Monday, November 8, 1993
The central task for every CEO is proving to investors, whether they be Wall Street types or corporate partners, that the company has present and future value.
In BioCentury argot, this is called showing investors A Clear Route to ROI. Some CEOs do a better job at this than others.
Arguably one of the most successful has been Laurence Korn of Protein Design Labs Inc., whose recently announced blockbuster corporate partnership with Corange Ltd. is a capstone event in creating shareholder value. The graphic above is not a mirage.
Last week BioCentury talked with Korn about how he has gone about building PDLI's market valuation and the differences between proving corporate value to stock market investors versus strategic partners.
His comments frame the task of establishing value in simple terms: Value rises as uncertainty about the science is pulled away.
PDLI is developing human and humanized antibodies for viral infections, autoimmune and inflammatory diseases and cancer. Until the Corange deal, PDLI had raised a total of $59 million: $4 million in two venture rounds; $5.2 million from a 1989 equity investment by Hoffmann-La Roche; and $50 million in a January 1992 initial public offering.
The Corange transaction, which could result in $206 million plus royalties, doubled the implicit valuation of PDLI overnight through the premium Corange is paying on the stock.
The magnitude of disparity between PDLI's pre-deal market cap and the valuation accorded by Corange rides on the market's lesser ability to value technology - not because the market doesn't try, but because it doesn't have the same access