EVLO (Evelo Biosciences) Predictability Rank

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What is Evelo Biosciences Predictability Rank?

Not Rated

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.

Evelo Biosciences 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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Evelo Biosciences Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Evelo Biosciences Inc (OTCPK:EVLO) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

620 Memorial Drive, 5th Floor, Cambridge, MA, USA, 02139

Website

https://www.evelobio.com

Evelo Biosciences Inc is a United States-based biotechnology company. It is engaged in discovering and developing a new class of orally delivered investigational medicines that are intended to act on cells in the small intestine to produce therapeutic effects throughout the body. Its lead product candidate under development is EDP1815, which is for the treatment of inflammatory diseases and the hyperinflammatory response associated with COVID-19. Other products in the pipeline include EDP1867 and EDP2939 for the treatment of inflammatory disease and EDP1908 for the treatment of cancer.

Executives

Simba Gill	director, officer: President & CEO	515 GALVESTON DR, REDWOOD CITY CA 94063
Mark Bodmer	officer: See Remarks	C/O EVELO BIOSCIENCES, INC., 620 MEMORIAL DRIVE, SUITE 200, CAMBRIDGE MA 02139
Marella Thorell	officer: Chief Financial Officer	1226 CHARTER LANE, AMBLER PA 19002
Duncan Mchale	officer: Chief Medical Officer	C/O EVELO BIOSCIENCES, INC., 620 MEMORIAL DRIVE, SUITE 200, CAMBRIDGE MA 02139
Alexander C Reynolds	director	C/O EVELO BIOSCIENCES, INC., 620 MEMORIAL DRIVE, SUITE 200, CAMBRIDGE MA 02139
Horizon Technology Finance Corp	10 percent owner	312 FARMINGTON AVENUE, FARMINGTON CT 06032
Jeffrey R. Moore	director	C/O EVELO BIOSCIENCES, INC., 620 MEMORIAL DRIVE, SUITE 200, CAMBRIDGE MA 02139
Flagship Ventures Fund Iv, L.p.	10 percent owner	55 CAMBRIDGE PARKWAY, 8TH FLOOR, CAMBRIDGE MA 02142
Robert L. Rosiello	director	400 SOMERSET CORPORATE BOULEVARD, BRIDGEWATER NJ 08807
Stephen J Carriere	officer: Principal Accounting Officer
David R Epstein	director	INTERNATIONAL FLAVORS & FRAGRANCES INC., 521 W. 57TH STREET, NEW YORK NY 10019
Lord Ara Darzi	director	C/O EVELO BIOSCIENCES, INC., 620 MEMORIAL DRIVE, SUITE 200, CAMBRIDGE MA 02139
Flagship Pioneering Fund Vii, L.p.	10 percent owner	55 CAMBRIDGE PARKWAY, 8TH FLOOR, CAMBRIDGE MA 02142
Flagship Pioneering Fund Vii General Partner Llc	10 percent owner	55 CAMBRIDGE PARKWAY, 8TH FLOOR, CAMBRIDGE MA 02142
Tonya Williams	director	C/O EVELO BIOSCIENCES, INC., 620 MEMORIAL DRIVE, SUITE 200, CAMBRIDGE MA 02139