Cel-Sci: Why I'm Buying if the Price Dips

Oct.14.09 | About: Cel-Sci Corporation (CVM)

In "Readers Respond" I do my best to answer readers' questions, but keep in mind that these questions are my opinions and personal speculation that I have based on my own research and due diligence (DD). I don't invent the facts that are based in publicly available information, I just comment on them.

Also, I will try to respond to a number of requests that I've received via email or comments asking for 'VFC's Take' on numerous stocks that readers have found, I'll do my best to address as many as I can, as long as everyone takes a few things into account while reading:

- I have not thoroughly researched all of the stocks that I'm about to comment on. I've done the initial DD but my opinions are mostly based on my first impressions of the stock. I'm merely providing VFC's Take, as requested. Use that as a starting point to do your own DD.

- Don't get testy if I don't like your stock. Remember, this is just my initial impression and I take into consideration some variables that other people don't, that's why VFC's Take is not always the mainstream impression.

- I appreciate all the recent feedback, and keep the stock tips coming; this is a great forum for all investors of all levels to share tips and insights. There's a whole lot of stocks out there, but there's only a few gems. Let's keep trying to find those gems.

CVM: A comment from Lenny regarding Cel Sci Corp.:

Hi Vinny,

Some interesting chatter on the MB's that CVM may hit some 'volatility' over the next week or so, in order to shake out some 'weak hands' and take out the sell stops - what do you think?

Lenny

VFC's Take: Quite simply, if the stock drops, I'll be buying on the dips. It's my opinion that the best chance for the small investor to bank the most significant gains is to buy stocks when others are selling; this way, when the stock rebounds, then the small investor is realizing the same big percentage gains that are being had by the big boys. Remember, we're just trying to pick up the crumbs while the big boys eat the cake.

You have to very confident in your DD to stomach buying a stock while it is dropping because you have to be pretty confident that the stock will eventually rebound. Another option is to sell and try to buy back in lower. However, I am hesitant to play that game with a stock when big news could be pending because just as easily as the stock dropped, big news could send the stock quickly to the upside once again. Two examples of that scenario were AGEN in May and OTC:CSUH in just the past week; both of those stocks dropped fairly significantly before quickly changing course and ticking up.

With CVM - I'm confident enough in the company's potential to hold through the storm and continue adding shares on any dips - as has been my strategy for the better part of the last few years. I first invested in the company based on the potential of Multikine, but the recent swine flu hype - that turned out to be more than just hype - and the progression of the LEAPS platform added additional potential valueto the stock.

So, if the stock price dips, then VFC is buying. I actually enjoy a good 'tree shake', if for no other reason than that I enjoy buying opportunities. They are also good for getting rid of the investors with no stomach for volatility; that's a good thing because those investors that can't handle the volatility end up making a stock more volatile because they'll sell at the first sign of trouble.

That being said, I don't like it when the small investor gets 'shaken from the tree' on the basis of misleading, inaccurate or false information. I love opinions, as I'm an opinionated guy, but there's no reason to try and scare the small investor out of their shares by spreading BS, propaganda and rumor because, quite frankly, in VFC's House, I consider that to be unethical and classless.

If someone has an opposing opinion, then that's fine - but an opposing argument should be based on one's view and speculation of the facts, not on propaganda or an altered reality of the truth.

I'll also say this regarding Cel Sci's LEAPS treatment for the swine flu: I don't make it a habit of questioning official Press Releases that are released by a company; if Cel Sci issues an official release that says that they are working with the FDA on a swine flu trial, then I am not going to question the validity of that PR.

For a publicly traded company to intentionally issue a false statement to the public is very illegal, if there is such a thing as VERY illegal. Most company executives don't like going to jail and if a company were to issue a false press release, especially one involving the FDA, then it wouldn't be too hard to prosecute that case - in my opinion, because the evidence is right there for the entire public - let alone the government regulatory agencies - to see.

Maybe LEAPS won't end up being as effective in treating the swine flu as is hoped, but I'm not going to question the validity of an official press release that says that LEAPS is being looked at by the FDA as a treatment for the swine flu.

'Nuff said on that.

In my opinion, CVM will survive the turmoil and eventually come out on top. The stock is a big winner already this year and I think that the next few quarters will show that the party is just getting started; and maybe I'm being too conservative with that time frame.

Hopefully this helps. Everyone should do their own DD and I don't blame anyone who sold into the spike to two dollars recently, but there's too much news pending for me to end up on the sidelines if it hits. Therefore, I'll add to my position if there are any significant dips moving forward.

Disclosure: VFC is long CVM.




SPPI: A comment from Noah regarding Spectrum Pharmaceuticals, Inc.:

Hey VFC,
What's your opinion on SPPI?

Thanks,
Noah


VFC's Take: I apologize to many readers who have both emailed and commented on the board asking for my opinion on SPPI, I'm a little late getting to this one, but I'm doing my best to keep up as much as I can with the comments.

Here's the latest with Spectrum, as many already know:

In early September, when the stock was trading for nearly nine dollars, the FDA approved an expanded label use for the company's non-Hodgkins Lymphoma treatment, Zevalin. The stock price declined (in much the same way as BDSI did after receiving positive news this summer).

After raising nearly fifty million dollars in cash the stock price continued to decline until the FDA rejected Fusilev, Spectrum's colorectal cancer drug, at which point the stock took a nosedive to it's current levels in the mid $4 range.

I understand that many investors are looking at this stock as a possible rebound play - one that has been beaten down by recent bad news, but with the potential to pay off for those that may just be getting in now. Here's my opinion: while I do see the potential for a possible rebound, I'm not quite sure that right now is the time to buy.

Sales of Zevalin, which have been on the decline, and Fusilev, which is already approved for the treatment of bone cancer patients, do not necessarily justify the current market cap of two hundred million - in my opinion - especially when considering that Fusilev may need to undergo another trial in order to sway the FDA to possibly change course and approve the drug.

That being said, the company has Apaziquone in Phase III trials and various product candidates in early stages of development that add additional value to the company.

The recent turmoil with the FDA and the fact that Zevalin is not a blockbuster - even with the recent label expansion that now has the product considered a first line treatment - has me hesitant to buy in just yet.

Because of the fact that I think that there are some pretty good value buys out there right now with a more immediate potential for upside, I would like to see SPPI trade for under four dollars before I would consider it. Even if the stock starts to rebound from the current levels, I don't see a double in the works anytime soon.

Keep in mind that this is purely my own opinion and each investor should do their own DD.

Disclosure: No position.