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Brian Nichols
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Brian Nichols covers technology and consumer goods as a columnist/analyst for Motley Fool Like Brian Nichols on Facebook @ https://www.facebook.com/bnichols9883?ref=bookmarks Brian Nichols is the author of the critically acclaimed book "Taking Charge With Value Investing (McGraw-Hill,... More
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  • Singh Secures Lion For 2 Years & Prepares For Uplisting

    I believe it was November of 2011 when I first bought shares of ImmunoCellular Therapeutics (NYSEMKT:IMUC). Clearly, the data was good, and the investment has performed well, but there are always questions regarding the legitimacy of a small biotechnology company. I performed research, assessed the risk to reward, and over a period of time had several conversations with Dr. Manish Singh.

    Singh took IMUC from a small $5 million company to a $200 million company. Since his departure from IMUC, its stock has lost value. Hence, I have always admired his willingness to create shareholder value, so I bought shares in his new company Lion Biotechnologies (OTCQB:LBIO) at $5 a share.

    First off, I have already published an article looking at the technology of the company. Like IMUC, Lion has data that is far superior to anything in the market today, for the treatment of melanoma. The difference is that Lion has conducted studies on more than 100 patients at four different sites. IMUC has only 16 patients with data conducted at one site, thus creating more risk.

    With that said, I am writing this instablog in response to what I believe is a game changer. My initial concern with Lion was that the company had no cash. Singh essentially had to start from scratch, and my belief was that he'd be lucky to raise $5-$10 million in his first financing attempt. But today (October 31) the company announced that it has entered into definitive agreements with institutional and other accredited investors to raise approximately $23 million in a private financing.

    So, why am I posting an instablog and making a big deal about this agreement. Honestly, it is not really worthy of a published article but I am impressed because of its size. With this deal, Singh shows that investors are willing to follow him into an investment.

    This financing completely transforms the company. It is being backed by strong life science funds and gives the company two years of cash, which is significant because previously they didn't have any cash. As a result, this strengthens the investment outlook, and gives investors a reason to be optimistic.

    Lastly, I am impressed that Singh is following his previous pattern at IMUC. Lion is an OTC stock, but with this financing and its market cap near $100 million we can expect an uplisting to the NASDAQ just like with IMUC under Singh's leadership.

    With all things considered, I think this financing could be an interesting discussion point. Personally, part of my value investing strategy revolves around management (ie XPO Logistics (NYSE:XPO) has been my largest position since Bradley Jacobs took over three years ago). Therefore, I believe that Singh can make this company special with his operational strategy, and that this financing is the first step in creating long-term shareholder value.

    Disclosure: I am long OTCQB:LBIO, XPO, IMUC.

    Oct 31 10:20 AM | Link | 2 Comments
  • NeoStem's Dr. Losordo Responds To Negative Seeking Alpha Piece

    Greetings!

    If you are reading this, chances are you're familiar with NeoStem's double digit losses on Monday.

    The losses were in response to a negative Seeking Alpha article that questioned the ability of autologous stem cells to improve functional outcomes. Thus, the conclusion was that AMR-001's outlook was bleak, and a small speculative penny stock, that has been heavily hyped as of late, was the beneficiary of NeoStem's "future failure".

    As a result of this article, and the performance, I reached out to Dr. Douglas Losordo, who is NeoStem's Chief Medical Officer. Now, before you say that his opinion is not neutral, or that his words aren't reliable, you should understand that he was just recently hired for this position. Previously, he held management roles at Baxter, and founded their Phase 3 CD34+ cell therapy product, which is now one of Baxter's most promising products. As a result, Losordo is widely considered to be one of the most knowledgeable regarding CD34 cell development.

    Several hours after my request, I received an email with Losordo's statement, which was very telling. Now, he is a prominent cardiologist who is much wiser than myself, speaking a language that may be difficult to understand. Therefore, I am including his reply along with a few notes (in bold) along the way for readability.

    Losordo's response to bearish claims

    Hard to claim the Capricor (CADUCEUS) cells didn't work (Losordo is referring to the noted study in the article, which was key to the author's negative outlook)….there was actually a positive signal for efficacy, but the study was very small and subject to type 2 error - plainly said it was too small of a trial to document benefits in clinical outcomes, so the fact that it didn't do so is expected (Losordo explains that no data conclusions could be drawn from such a study - it was too small to have a sufficient . statistical power.

    If the control group had such high event rates that a clinical benefit was shown, that would be a problem (maybe the trial was done incorrectly?)! But just for the sake of discussion let's say that the Caduceus cells don't work -- why should AMR-001? Of course, to address this question one needs to ignore the fact that this entertains a notion that one cell's failure or success predicts the fate of others - no one would posit this about small molecules or biologics. (Here you have a very wise man in this field essentially poking fun at the analysis and conclusions drawn from this "study". He is looking at hypotheticals to rip apart the conclusion. As an investor, you have to love this level of confidence)

    The CD34 cell, the therapeutic being testing in the phase 2 study, is one of the principal cells that is naturally called upon during any ischemic insult to help protect/repair the vasculature (due to its regenerative abilities). That story is very well documented and it has been reiterated by multiple labs in pre-clinical and clinical models. At least 4 randomized double-blinded, controlled human clinical trials have shown a positive signal for efficacy and safety of CD34 cell therapy for ischemic tissue repair (Losordo should know, his work has been instrumental in advancing this therapy). Is there any other CV cell therapy that has that track record?

    Even those not intentionally studying CD34 cells have shown the relationship between CD34 cell content and clinical outcome in their studies (Zeiher, Perin) (Essentially saying that the benefit of CD34 cells is so clear that it is shown even when not studied) By comparison the cardiosphere is a melange of cells not defined in nature by a response to injury as far as we know - the cardiosphere itself was created as a result of the development of manufacturing methods to derive a cell product containing potential progenitors and repair cells.

    One of the best characterized and perhaps most potent of the cells contained within cardiospheres, ckit+ cells, are likely a minority of those delivered. An autologous prep of cardiospheres showed a positive signal of bioactivity in the clinical trial and could work for cardiac repair even though there may be variable potency due to the manufacturing method (Remember, manufacturing is an important piece of any product's success).

    Notably Capricor has shifted to an allogeneic approach for which there is no human data at this time (the noted study wasn't even using the same nor was it using a proven approach, yet the author chose to draw conclusions based on this study). In essence comparing CD34 cells to the cells of Caduceus is not rational and using what amounts to a positive study to claim negativity of the field belies some other purpose than scientific discourse (enough said, I couldn't agree more….. could it be to pump Sunshine?).

    The End

    There you have it, one of the wisest men in this field with a personal response to the criticism.

    Therefore, if you sold on Monday, then that's fine, you have that right. But if it was because of the bearish article, then I think you'll live to regret it, as it holds little meaning in this particular conversation of AMR-001 and NeoStem.

    Disclosure: I am long NBS.

    Sep 17 11:44 AM | Link | 7 Comments
  • Brian Nichols' Portfolio Positions As Of 6/15/2012

    Last time I reported my holdings was on 4/25/2012. I honestly didn't realize that it had been so long. Therefore, I determined it was time to update, as I have been very busy this last month. I also thought I would try something new, and show the performance of my holdings from the time I last reported. First, here are the stocks I sold, and my total return:

    (NYSE:HOG) 41% overall return. It was my 8th largest position on 4/25

    Current holdings from largest to smallest along with performance since 4/25

    (NYSE:XPO) 8% = limit order $40 $90

    (NASDAQ:SPPI) 22% = limit order = $25, $50

    (NYSE:S) 26% = limit order $6, $10

    (NYSE:F) (9%) = limit $13, $18

    (NYSE:ALU) (13%) I continue to hold the large position because I first bought the stock so cheap. I am now about even, but have set a limit order to exit the position at $2.50

    (NYSE:MA) (1%) Have limit order at $500.

    (NYSEMKT:IMUC) 20% uplisted to NYSE tons of upside

    (NASDAQ:ZAGG) (6%) limit $20

    (NASDAQ:GALE) EVEN -- Have more than doubled return since I bought. Will not sell for at least three years. I am waiting this one out

    (NASDAQ:JVA) (33%) -- Common sense suggests that I should sell. But I only invested $2,000 into the company. It is my smallest position therefore I will hold

    New Positions Since 4/25

    (NASDAQ:ONTY) @$3.80 3% gain

    (NASDAQ:QCOR) @$40 = 20% return with limit order at $60

    (NASDAQ:NBS) @$0.3473 = 35% gain = limit order at $0.95

    Notes:

    On 4/25 I had a cash balance of $52,217 that was not invested in stocks or bonds. Today I have a cash balance of $44,217 after $9,968 returned from HOG and investments of $10,000 in QCOR, $5,000 in ONTY, and $3,000 in NBS. Any questions or comments please feel free to use the section below for discussions.

    Disclosure: I am long XPO.

    Additional disclosure: I am long all stocks that I have disclosed within the blog. This material is for informational purposes only and should not determine any investment decisions. The limit orders are subject to change without notice, but are current as of 6/15/2012

    Tags: HOG, XPO, SPPI, S, F, ALU, MA, IMUC, ZAGG, GALE, JVA, ONTY, QCOR, NBS
    Jun 15 2:16 PM | Link | 6 Comments
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