Mirati Therapeutics (Mirati Therapeutics) Predictability Rank

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What is Mirati Therapeutics Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Mirati Therapeutics Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Mirati Therapeutics (Mirati Therapeutics) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Mirati Therapeutics Inc (NAS:MRTX) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

26M:Germany

Address

3545 Cray Court, San Diego, CA, USA, 92121

Website

https://www.mirati.com

Mirati Therapeutics Inc is a clinical-stage oncology company developing novel therapeutics to address the genetic and immunological promoters of cancer. It operates in a single geographical segment being the United States.

Executives

Jamie Christensen	officer: Sr. Vice President, Chief Scie	C/O MIRATI THERAPEUTICS, INC., 9393 TOWNE CENTRE DRIVE, SUITE 200, SAN DIEGO CA 92121
Benjamin Hickey	officer: EVP, Chief Commercial Officer	C/O MIRATI THERAPEUTICS, 9393 TOWNE CENTRE DRIVE SUITE 200, SAN DIEGO CA 92121
Aaron Ondrey	officer: Interim CFO	3545 CRAY COURT, SAN DIEGO CA 92121
Boxer Capital, Llc	other: See remarks	12860 EL CAMINO REAL, SUITE 300, SAN DIEGO CA 92130
Christopher Fuglesang	other: See remarks	11682 EL CAMINO REAL, SUITE 320, SAN DIEGO CA 92130
Shehan Bharatha Dissanayake	other: See remarks	11682 EL CAMINO REAL, SUITE 320, SAN DIEGO CA 92130
Aaron I. Davis	other: See remarks	12860 EL CAMINO REAL, SUITE 300, SAN DIEGO CA 92130
Mva Investors, Llc	other: See remarks	12860 EL CAMINO REAL, SUITE 300, SAN DIEGO CA 92130
Boxer Asset Management Inc.	other: See remarks	CAY HOUSE, EP TAYLOR DRIVE N7776, LYFORD CAY, NEW PROVIDENCE C5 00000
Joseph Lewis	other: See remarks	PO BOX N7776, LYFORD BAHAMAS
Faheem Hasnain	director	14 CAMBRIDGE CENTER, CAMBRIDGE MA 02142
John B Moriarty	officer: Chief Legal Officer	ALEXION PHARMACEUTICALS, 352 KNOTTER DRIVE, CHESHIRE CT 06410
Carol Giltner Gallagher	director	C/O ATARA BIOTHERAPEUTICS, INC., 3260 BAYSHORE BOULEVARD, BRISBANE CA 94005
Laurie Stelzer	officer: CFO	6154 NANCY RIDGE DRIVE, SAN DIEGO CA 92121
Julie M Cherrington	director	9393 TOWNE CENTRE DRIVE, STE 200, SAN DIEGO CA 92121