The Ultimate Exit Strategy

Dissatisfied with the returns of stocks in health care? Try death care! The announcement that Procept Inc.will merge with a company that sells funeral services on the Internet was another nail in the coffin for small-cap biotech stocks. Procept's new service business is not designed to synergize with its existing pharmaceutical development program; it is simply a good investment that can provide a decent return to existing shareholders, explains Procept CFO Michael Fitzgerald. The plan is for Procept to merge with funeral service amalgamator Heaven's Door Corp. Explains Fitzgerald, the funeral services industry is a $30 billion industry in the US, and it is ripe for consolidation. Comprised mainly of "mom and pop" shops, it has few big players. Fitzgerald predicts that it can benefit from economies of scale and computerization. Procept will not seek to be like Hillenbrand Industries Inc. which is fond of saying that it offers products "from the cradle to the grave" in operating separate health care and funeral services businesses under the same aegis.

Like many a biotech company facing a difficult financing environment, Procept is simply giving up on biotech. Its initial public...