Ebb & Flow

Even though Scios and Johnson & Johnson were mum Friday over JNJ's rumored move to acquire SCIO, investors won't have to wait long for the biotech company to end its silence, as SCIO's fourth quarter earnings webcast is scheduled for this Thursday. In the interim, investors treated the rumor like a done deal: SCIO popped $7.51 (22%) to $42.20 last week, valuing it at $1.97 billion, $30 million below the rumored $2 billion acquisition price.

At $2 billion, SCIO would be valued at 18 times net 2002 sales of its Natrecor nesiritide for congestive heart failure, which are expected to be $92-$95 million. Using projected 2003 sales of about $165 million, the purchase price would be 12 times sales. At peak sales, which are expected to be $360-$400 million in 2007, the company would be selling for over five times Natrecor sales...