Regenerative Medicine: Some Realism Please [View article]
Stan: I'm not sure why you wrote your first sentence, but I will respond to your second. A valid catalyst is a fundamental positive change in a company's operations and/or market potential. An exchange listing doesn't mean diddly squat. Just because it avails itself to potentially more buyers doesn't mean that more buyers will take action. So, yes, closing a deal with big pharma would be the catalyst that I would look for since it would validate the advantages of a 3D cellular matrix in drug discovery. If no deal materializes in the near or medium term, well, let's just say that it "don't look too good".
Regenerative Medicine: Some Realism Please [View article]
No question that ALS is one of the most pernicious diseases known to man. I'm pulling for CUR (or any company for that matter) that can give sufferers hope.
Regenerative Medicine: Some Realism Please [View article]
Noreika: ACTC is trading @ .07/share. Nothing else needs to be said. I don't look at anything <$1/share. My position in CUR is unusual for me. I only took it because of the ALS data. In 12+ years of trading, I've only gone long on 2 other stocks priced this low. Usually too much of a boneyard.
I do plan on writing another piece on TROV after its 10-K comes out. Be careful with this one. The recent run up was orchestrated so it could float the secondary offering. It didn't take much buying pressure. It is perfect candidate for this kind of maneuver. TROV needs to demonstrate that it is building its business in a meaningful way. The NPM1 licenses are all tiny deals. The KRAS testing service has been delayed twice. It was originally going live in Q4, '12, then Q1, '13 and now Q2, '13. This doesn't bode well because the testing protocol was finalized months ago. Maybe the concept of Tr-DNA testing is not as much of a slam dunk as bulls profess.
The War Over Amarin: Feuerstein Battles Heisenberg And How I'd Invest It [View article]
Tinco:
I took a closer look at the F-R rule. The market cap criterion is based entirely on the efficient market hypothesis. A tiny market cap contradicts the assumption that the market will value a potential blockbuster appropriately. If it does not, then there is something wrong (e.g., there is significant risk in the approval process, concern over the company’s ability to overcome entrenched competition, the firm lacks sufficient capital to support robust product commercialization, etc.). I agree with this position up to a point. The market is rarely so inefficient that it ignores a true opportunity like a novel cancer drug, especially if the potential market is $1B+. There are too many global investors scouring the biomedical landscape for bargains to let this happen. A tiny market cap is a red flag to be sure.
It remains, however, descriptive. It is an observation. The 1/18 Motley Fool article mentions the failure of Keryx/Aeterna Zentaris’ perifosine, for example. The red flag was the poor PII trial design based on data from only 38 patients. This is a ludicrously low number of trial subjects. In the linked JNCI article there two more failures mentioned, Cell Genesys and Point Therapeutics, with poor PII trials as well. Some patient deaths were linked to the former’s drug in its PII. I would regard this as somewhat alarming, wouldn’t you?
It appears to me that the market cap criterion in cancer drug firms would useful as an initial screening tool. Researching the investment candidate a bit further should reveal the risk areas (this assumes that the investor has a working knowledge of the drug approval process and trial design). At some point, one or more of these tiny companies will prove to be big winners. It’s like everything else in investing, though. It takes a lot of work to uncover the occasional gold nugget.
On a final note, if the investor does not have the requisite knowledge of the biotech/drug space, then he should stay away, period. No one should ever deploy money in any investment that he does not fully understand. The market cap criterion, while imperfect, would be a useful warning to naive/lazy/casino mentality investors. Saying it another way, a contrarian position only makes sense if the investor possesses superior information. So if the market is ignoring a drug firm in PIII that you believe will be a winner, what is the basis for your contrarian position? Hint: if you have to think about this for more than a nanosecond, you “ain’t got none”. Therefore, you’re gambling, not investing or trading.
The War Over Amarin: Feuerstein Battles Heisenberg And How I'd Invest It [View article]
You're right to question the validity of the F-R "Rule". It is not a rule at all. It's an observation. The 22 failures are independent events. In order to establish a valid "rule", much more research would be required to isolate the commonalities (e.g., prospective claims, robustness of the PIII in establishing credibility for the desired claims, appropriateness of their regulatory strategy, etc.). The market cap criterion is, while successful in the 22 cases, too blunt of a predictor in my opinion. In other words, the tiny market cap characteristic is merely descriptive, not predictive. I'd like to see someone dig into this issue, though. Good chance some gold can be found.
I question your statement about writing calls going forward. You give up the potential upside for only a few percent gain. It makes more sense to write puts since the bad news is already priced in. Even with a tepid product launch there does not seem to be much downside risk. If the uptake is more robust, then a rally should happen. Why give the potential upside away when the bias is ultimately in this direction?
Eric: I don't think hedging at the last minute is the best approach, do you? Also, a straddle isn't necessarily the best way. You want downside protection so just buy plain vanilla puts. If the event is positive, then your long position is good to go. That's a long's bias anyway. It's not a day trade. Put holders would have booked a nice gain from the drop and been able to exit with minimal pain.
Retail investors can and do make consistent money in biotechs. What's important is to always be realistic about what you know and what you don't know. Any time a binary event approaches, longs need to have a hedge in place if the potential downside risk is significant. Micro cap biotechs epitomize the binary nature of this risk. It's either a rocket into space or an elephant falling off a cliff. You can't just sit there and hope to hit the jackpot. A casino mentality will eventually take its pound of flesh. I will agree, though, that if you have a long position in a tiny biotech that has no tradeable options, stay away. Yes, you could short against the box, but most times shortable shares aren't available. The institutional traders are way ahead of you.
The other tool available to retail investors is the ability to read a chart. For example, Jan. 16's trading activity was a red flag because of the wide trading range and abnormally high volume. If you see this type of unusual price action before some type of corporate announcement (the low of the day was $6.17) then you are on HIGH ALERT. A temporary price plunge is a serious signal.
The other valid flag was the canceled conference presentation. The only reason a fledging company would do this is in response to some adverse event. Presentations to potential shareholders are a staple of emerging biotechs so the cancellation implies that someone perceived that a negative event was imminent.
The editing time on my first comment timed out, but I wanted to make one additional point about the "wise" use of resources. Dr. Schuh gets a $3.47M payout if TROV's share price closes =>$7.50 for 90 consecutive trading days. He can elect to take the payout in all cash, all stock or a combination thereof. If he takes all cash, then this would take a big bite out of the mid-2012 $10M capital raise. "Wise", therefore, won't be the word that investors think of. If he elects to take all stock, which he should, then things look a lot better. The share price has closed above $7.50 for 6 consecutive trading days so far so the term, if uninterrupted, should end in early May. Investors probably won't be able to find out any details, though, until the Q2 10-Q comes out in mid-August. Just something to keep an eye on.....
Mr. Plotke, I must take exception to your statement: "With management's proven track record of wisely using resources they should have no problem with their balance sheet going forward." I suggest that you research TROV's MultiGen and Etherogen acquisitions. There is a track record to be sure, but another adverb will come to mind.
will: reflexivity, as I understand it, refers to the self-reinforcing nature of market sentiment, whereby ever-higher prices attract ever-more buyers until it crashes and the process goes into reverse whereby ever-lower prices attract ever-more sellers. Soros' Alchemy of Finance is a good read, if you're interested. I don't see where arbitrage fits into this definition, though.
Sarfaraz: Not too early. 18 of DDD's acquisitions must be accretive in order to be the main drivers of its extraordinary growth so an ROI vs WACC metric is appropriate. Unfortunately, we don't know anything about these 18 companies. Their performance #'s are a total mystery. Remember, DDD discloses performance #'s for only 3 acquisitions (ZCorp/Vidar, Quickparts and Provel). One has flat growth (ZCorp/Vidar) and the other two have declining growth. These contradict its reported organic growth rate.
GCVRZ: A Potential 16 Bagger Worth The Risk [View article]
Chris: My comments about the binary nature of FDA approval was in response to Chris' statement that there is a 62% probability of said event. There is no valid way to come up with such a specific number for it. It's either 0% or 100% because of the inability to identify and calculate a probability of all the variables. It's a spurious number.
Regenerative Medicine: Some Realism Please [View article]
I haven't looked at ONVO in any detail, but I suggest that you research the fine print of the deals. You should find the info you need.
Regenerative Medicine: Some Realism Please [View article]
Regenerative Medicine: Some Realism Please [View article]
Regenerative Medicine: Some Realism Please [View article]
Regenerative Medicine: Some Realism Please [View article]
I do plan on writing another piece on TROV after its 10-K comes out. Be careful with this one. The recent run up was orchestrated so it could float the secondary offering. It didn't take much buying pressure. It is perfect candidate for this kind of maneuver. TROV needs to demonstrate that it is building its business in a meaningful way. The NPM1 licenses are all tiny deals. The KRAS testing service has been delayed twice. It was originally going live in Q4, '12, then Q1, '13 and now Q2, '13. This doesn't bode well because the testing protocol was finalized months ago. Maybe the concept of Tr-DNA testing is not as much of a slam dunk as bulls profess.
The War Over Amarin: Feuerstein Battles Heisenberg And How I'd Invest It [View article]
I took a closer look at the F-R rule. The market cap criterion is based entirely on the efficient market hypothesis. A tiny market cap contradicts the assumption that the market will value a potential blockbuster appropriately. If it does not, then there is something wrong (e.g., there is significant risk in the approval process, concern over the company’s ability to overcome entrenched competition, the firm lacks sufficient capital to support robust product commercialization, etc.). I agree with this position up to a point. The market is rarely so inefficient that it ignores a true opportunity like a novel cancer drug, especially if the potential market is $1B+. There are too many global investors scouring the biomedical landscape for bargains to let this happen. A tiny market cap is a red flag to be sure.
It remains, however, descriptive. It is an observation. The 1/18 Motley Fool article mentions the failure of Keryx/Aeterna Zentaris’ perifosine, for example. The red flag was the poor PII trial design based on data from only 38 patients. This is a ludicrously low number of trial subjects. In the linked JNCI article there two more failures mentioned, Cell Genesys and Point Therapeutics, with poor PII trials as well. Some patient deaths were linked to the former’s drug in its PII. I would regard this as somewhat alarming, wouldn’t you?
It appears to me that the market cap criterion in cancer drug firms would useful as an initial screening tool. Researching the investment candidate a bit further should reveal the risk areas (this assumes that the investor has a working knowledge of the drug approval process and trial design). At some point, one or more of these tiny companies will prove to be big winners. It’s like everything else in investing, though. It takes a lot of work to uncover the occasional gold nugget.
On a final note, if the investor does not have the requisite knowledge of the biotech/drug space, then he should stay away, period. No one should ever deploy money in any investment that he does not fully understand. The market cap criterion, while imperfect, would be a useful warning to naive/lazy/casino mentality investors. Saying it another way, a contrarian position only makes sense if the investor possesses superior information. So if the market is ignoring a drug firm in PIII that you believe will be a winner, what is the basis for your contrarian position? Hint: if you have to think about this for more than a nanosecond, you “ain’t got none”. Therefore, you’re gambling, not investing or trading.
The War Over Amarin: Feuerstein Battles Heisenberg And How I'd Invest It [View article]
I question your statement about writing calls going forward. You give up the potential upside for only a few percent gain. It makes more sense to write puts since the bad news is already priced in. Even with a tepid product launch there does not seem to be much downside risk. If the uptake is more robust, then a rally should happen. Why give the potential upside away when the bias is ultimately in this direction?
Celsion's 'Bad Beat' : 4 'Tells' That Longs Missed [View article]
Celsion's 'Bad Beat' : 4 'Tells' That Longs Missed [View article]
The other tool available to retail investors is the ability to read a chart. For example, Jan. 16's trading activity was a red flag because of the wide trading range and abnormally high volume. If you see this type of unusual price action before some type of corporate announcement (the low of the day was $6.17) then you are on HIGH ALERT. A temporary price plunge is a serious signal.
The other valid flag was the canceled conference presentation. The only reason a fledging company would do this is in response to some adverse event. Presentations to potential shareholders are a staple of emerging biotechs so the cancellation implies that someone perceived that a negative event was imminent.
Trovagene: For, Against Or Abstain? [View article]
Trovagene Keeps The Pace In 2013 [View article]
Trovagene Keeps The Pace In 2013 [View article]
3D Systems: A Sobering Reality [View article]
3D Systems: A Sobering Reality [View article]
GCVRZ: A Potential 16 Bagger Worth The Risk [View article]