Louis Dematteis

Portfolio strategy, biotech, restaurants, contrarian
Louis Dematteis
Portfolio strategy, biotech, restaurants, contrarian
Contributor since: 2012
Welcome to SA.
Bobmag and Mr. Investor -
I am not shorting it, as my investment conclusion is a straddle or spread. There are pluses and minuses as the title suggests. Shorting would be as much guessing as going long without a hedge.
Secondly, you should both see my previous article http://seekingalpha.co...
Notice the 150 plus commenters, some ridiculing me as bobmag just has and that's fine, and some giving me a biology lecture as Mr. Investor has which is fine too, and they all turned out wrong.
I am not bashing OHRP or Squalamine. I am suggesting playing it safe here. Luckily for you both who I assume are both long, there is not the deluge of defenders here that ATHX had, which is a good sign for you. It means sentiment is not dangerously positive.
Good luck to you both,
I concede that Glaxo's phase 2 for pazopanib failed, and the correction has been submitted. OHRP's site had different, incorrect information. This doesn't change the conclusion materially however. The risk, instead of competing with Glaxo's pazopanib, is actually inherent in the fact that pazopanib, a drug very similar to squalamine, failed. It could be that eye drops are an insufficient delivery mechanism even though the active ingredients in Squalamine may actually work.
In that case, the conclusion remains the same. There is the definite potential for large gains should the phase 2 succeed for Squalamine, but the risks are equally compelling. Therefore, a straddle or spread is the most prudent course of action in anticipation of the phase 2 data release.
My example is Athersys.
Titan -
My basic point is this, and I will reiterate it. Athersys, fundamentally, rises or falls based on Multistem. Other revenue streams are insignificant and will not be able to stem the company's losses.
In the mean time, trial stage biotech "traders" can create near to mid term bullish cases as much as they want, based on Japanese laws, research claims, insider buying, what doctors claim etc. I gave very little weight to the Japanese development because first, it was not much of a surprise, and second, because it is meaningless without MultiStem success.
My central point is this. A stock like ATHX has its fan base. If they are all long, there are few others to sell it to at current valuation. It seems that the fan base is saturated, and they all have their reasons for being long.
If MultiStem succeeds, their reasoning will be correct in retrospect. If it fails, it will be incorrect. But that is long term, not mid or short term.
So fundamentally, ATHX is the same company as it was in December, and I see no reason for the recent doubling other than speculative fever.
Anyone else can site whatever evidence you think proves your own convictions. But when it comes down to it, the pool of buyers for Athersys is thin.
Titan -
I apologize for the late reply. I will respond to your points, just let me take a look at your sources and consider your arguments. I haven't been able to read each of the hundred plus comments here and respond to them individually. I hope you understand.
Nice Try -
Welcome to seekingalpha. What is damaging for one investor is beneficial to another. There is no objective damage an article can do to "innocent investors" as a class.
I continue to be amazed by the comments that keep flowing in. Bullish sentiment remains extreme, and until Athersys' fundamentals change, the stock is still in trouble.
I am quite aware it is a biotech, and obviously if its flagship succeeds the stock will gain many times over. The point of this article is not to assess the probability of the success of Multistem. It is to assess if whether recent developments justify a doubling of valuation at present. I continue to maintain that they do not.
And the incredible amount of defenders that obviously bought in to this recent rise has only made my conviction stronger. Sentiment is still wildly bullish. Such extremes are dangerous for any stock. Fundamentally, until concrete developments arise about Multistem, Athersys is overbought.
For now. If the price continues to slide as it has last week, I may change my assessment, but not yet.
For those who are in for the long haul, of course it doesn't matter, as you'll be long until Multistem either succeeds or fails.
I have addressed a few comments specifically, particularly about the confusion between MPC's and MAPC's, which was a typo that is being corrected.
I will just say that I am also quite surprised by the all but unanimous show of bullish force by all the commenters here. I would venture to guess that a majority of those who take the time to comment on an obscure biotech stock like Athersys are long the stock.
Now, if any of you are subscribers to Sentimentrader as I am, you should know that when sentiment is so wildly bullish, this is precisely when holding a stock is so dangerous.
I for one am honored that I seem to be the only one on this side of the boat. I can hear Jim Rogers whispering in my ear.
Many traders pride themselves on being a "contrarian". But the real sign of being a contrarian is when everyone is actually against you, and that seems to be the case here, and being one is not that easy. You have to endure torrents of detractors.
This amazing show of bullishness by commenters here only proves my point even more strongly. Buyers are saturated and worse, very emotionally attached it seems. A truly dangerous position for any stock, any market, any time.
You misunderstood me. I was not making any claim about sales potential. Obviously a widespread disease has more sales potential than a rare one. My point was that the mere fact of completing enrollment should not be a great catalyst for an upside revaluation for a common disease, as enrollment is much easier than for a rare one.
A rare disease trial that completes enrollment is a big milestone and can serve as a catalyst, because the very fact that enrollment is complete for a rare disease is a big accomplishment. Not so for a disease like colitis.
Sales potential is only relevant once there is an approval, not before.
Karl -
The sentence in question was a simple typographical error. I have submitted the correction to SA. My point was that while some claim that MAPC's used by Athersys are superior to MPC's used by Mesoblast, some studies show that the reverse is true.
Checkers -
Who's doing what is less important than looking at the actual numbers. I suspect Hidalgo was pressured to change course and then forced out. Just follow the finances and the evidence is there.
Jay -
Correct, my mistake. Annual dividends of 85 cents a share. All the more reason to buy it.
Correct yonas. Next month is the estimated primary completion date, not top line results, which won't be ready until the second half of this year. The article has been corrected.