Living up to expectations

Toolkit companies that went public this year enjoy a robust premium on their valuations compared to more mature toolkit plays as well as profitable product companies. Indeed, comparing market cap to projected 2001 revenues, a sampling of 15 of the toolkit companies that went public this year is trading at nearly triple the multiple of six profitable biotech product companies. Thus, the question is how fast - or whether - these fledgling toolkit developers can ramp up their revenues to justify their valuations.

"Toolkits have had a lot of momentum investors and thus have been afforded a lot of leeway this year," said fund manager Dennis Purcell of Perseus-Soros. ...