Antigenics: Why So Many Shorts?

From a reader's comment on Antigenics (AGEN):

VFC,

Why do you think there are 16.5 Million shares short on AGEN? Worries me.

Jfh

VFC's Take: In my opinion, shorts are always a factor in the biotech market because there are always those that will bet against the success of a particular product or bet against the chances of an FDA approval - both stock moving events to the downside. In fact, one could conceivably do very well shorting biotech stocks since the majority of new drugs don't make it to market - that makes for a lot of stock drops when the bad news comes out.

That being said, the shorts are not always right - as DNDN showed us in March of 2007 - and if I've done my DD on a particular company and I feel confident in their products, then I actually enjoy having quite a few shorts on board for two reasons:

1. the shorts suppress the price long enough and allows me to accumulate shares 'on the cheap' and
2. those guys will have to cover at some point which could lead to quicker rise in price.

Only recently has the market become somewhat favorable to cancer vaccine stocks and I think that a lot of investors are playing 'catch up'; meaning they've spent the better part of the last few years betting against cancer immunotherapy, but now that the clinical data is starting to reveal that vaccines work, those investors (the big boys) are attempting to manipulate the stocks to their favor so that they can go from short to long on their investment. That's just my opinion and my take, but shorting is a great way to manipulate a stock and the guys with the big money can manipulate all day long.

It's up to the little guys to do their due diligence and play the manipulation the best they can.

In short (pardon the pun), if you believe in the success of Antigenics and it's products then the short interest should not concern you. If the company is a winner, as I believe it is, then the big boys are going to want your shares. Some investors will sell (or just not buy) based solely on the short interest numbers and that's exactly what the big boys want.

If you have any doubts that AGEN is a manipulated stock right now, take a look at my take on Feuerstein's AGEN comments; talk about misidentifying facts and leaving out huge chunks of a story.

Don't be afraid of the short interest; use it to your advantage.

Disclosure: VFC is long AGEN.

Comments

[logicalthought]

>>It's up to the little guys to do their due diligence and play the manipulation the best they can.<<

First of all, let me first state that I have no position (nor opinion on) AGEN, nor do I *ever* short small-cap biotech stocks, as doing so is far too dangerous. However, I've noticed a regular series of posts from you here on SA pumping these little companies, and thus I'm driven to speak out...

How are YOU (or the "little guy") going to do proper diligence on a biotechnology company vs. the hundreds of M.D. Ph.Ds out there analyzing these companies on behalf of large institutional investors and-- despite their in-depth pharmacological knowledge-- are STILL wrong most of the time! If a guy like you wants to trade these stocks off a chart or a news-driven short-squeeze of some sort, fine, but don't pretend that you really understand how these drugs work (or are supposed to work), because half the time, the smartest guys in the world don't.

2009 Sep 15 10:20 AM

[fredbear]

What specific facts were misidentified and which specific chunks of the story were left out. It would help the small investor tremendously if more detail was disclosed so an intelligent investment decision could be made.

Thanks,

Fredbear

2009 Sep 15 10:21 AM

[Robert0713]

Eventually, all stocks go down. Some never go up. So, for those with enough cash to meet margin, shorting for a living is an effortless way to make some money.

In the case of AGEN, much of the animus lies with the fact that not only is oncophage a vaccine, but a patient specific one. That and the fact that AGEN management hasn't been able to get any money out of it in Russia.

Is this a case of Ph.D's and MD's passing judgment on the science? Not likely. Just gamblers reading the tea leaves one way. They read them wrong with HGSI, big time. Yet, the information needed to understand why the drug would pass was out in the open. No Ph.D or MD needed to see the way the tea leaves fell.

2009 Sep 15 03:32 PM

[Penn Bioinvestor]

You speak out the truth.
On Sep 15 10:20 AM logicalthought wrote:
>However, I've noticed a regular series of
> posts from you here on SA pumping these little companies, and thus
> I'm driven to speak out...
>
> How are YOU (or the "little guy") going to do proper diligence on
> a biotechnology company vs. the hundreds of M.D. Ph.Ds out there
> analyzing these companies on behalf of large institutional investors
> and-- despite their in-depth pharmacological knowledge-- are STILL
> wrong most of the time! If a guy like you wants to trade these stocks
> off a chart or a news-driven short-squeeze of some sort, fine, but
> don't pretend that you really understand how these drugs work (or
> are supposed to work), because half the time, the smartest guys in
> the world don't.

2009 Sep 15 06:11 PM

[Robert0713]

In the few short months I've been looking into BioTech, the answer is plainly simple: neither the MDs, Ph.Ds, CEOs, and Little Guys know diddly squat about how to design an experiment. That's why they get in over their heads in the first place. Then they get to the FDA, who has real math stats on staff and on consultancy, and get blown out of the water. VION is just the most recent example. A BA in stat would have blown holes in them.

So, if the BioTechs did proper testing, and early on, they would throw out the losers. But, of course, they're invested (intellectually and emotionally, too) in this fancy new widget they're JUST SURE is a magic bullet. So, yes, a Little Guy, armed with a deep understanding of stats can make an intelligent decision. Sometimes that decision comes down to: "they don't have proper data". But that's OK.


On Sep 15 10:20 AM logicalthought wrote:

> How are YOU (or the "little guy") going to do proper diligence on
> a biotechnology company vs. the hundreds of M.D. Ph.Ds out there
> analyzing these companies on behalf of large institutional investors
> and-- despite their in-depth pharmacological knowledge-- are STILL
> wrong most of the time!

2009 Sep 16 11:39 PM

[logicalthought]

Robert,

The issue is a lot more complicated (or maybe a lot simpler) than the design of the trial, because even with a perfectly designed pivotal trial, it's often impossible for ANYONE (much less, "the little guy") to predict efficacy, despite whatever "promising" results were seen in earlier-stage, lower powered trials. Sure, maybe you can use a poorly-designed trial as a basis for taking a short position, but you need a detailed knowledge of pharmacology (or hugely-powered P2 data) to have any prayer of forecasting the results of even a well-designed P3 trial.


On Sep 16 11:39 PM Robert0713 wrote:

> In the few short months I've been looking into BioTech, the answer
> is plainly simple: neither the MDs, Ph.Ds, CEOs, and Little Guys
> know diddly squat about how to design an experiment. That's why
> they get in over their heads in the first place. Then they get to
> the FDA, who has real math stats on staff and on consultancy, and
> get blown out of the water. VION is just the most recent example.
> A BA in stat would have blown holes in them.
>
> So, if the BioTechs did proper testing, and early on, they would
> throw out the losers. But, of course, they're invested (intellectually
> and emotionally, too) in this fancy new widget they're JUST SURE
> is a magic bullet. So, yes, a Little Guy, armed with a deep understanding
> of stats can make an intelligent decision. Sometimes that decision
> comes down to: "they don't have proper data". But that's OK.<br/>

2009 Sep 17 07:44 AM