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SA Editor Douglas W. House  

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  • Arrowhead up on rumor of Gilead interest [View news story]
    bad: GILD buying ONVO is a stretch. All ONVO has is a liver tissue model which, by the way, has competition. Intuitively, Arrowhead looks like a more promising candidate for a takeout.
    Dec 30, 2014. 12:44 PM | 6 Likes Like |Link to Comment
  • Express Scripts/AbbVie HCV deal should not be surprising [View news story]
    An exclusive contract is most certainly legal. There would be no basis for a challenge by GILD unless Viekira Pak was substantially inferior, which it is not. The details of the ABBV deal are undisclosed, but I would surmise that if GILD offered an attractive price for Sovaldi and Harvoni, they would be added back to ESRX's formulary. Just a hunch...
    Dec 22, 2014. 09:42 AM | 6 Likes Like |Link to Comment
  • BlackBerry to launch genome browser [View news story]
    No Zack, that's not what I'm saying. Very few clinicians are geneticists. The genetic basis for oncology therapies, e.g., EGFR-receptors, KRAS mutations, BRAF V600E mutations, is the driver for "customized" therapies. This approach will continue to dominate the development of cancer therapies. By the time the therapies reach the clinic, though, the genetic work has already been done (research, product development, preclinicals, clinical trials). Clinicians prescribe therapies & drugs according to the products' labeling (package insert) that have already been through the FDA review process (unless they are involved in a clinical trial).

    The human genome is an enormous data set. What precisely is a clinician going to check at the bedside?
    Dec 8, 2014. 09:25 AM | 6 Likes Like |Link to Comment
  • Organovo: Modest Expectations For The Liver Tox Assay [View article]
    bad: What I thought I did was address the competitive nature of 3D liver assays and liver tox testing in general. It will take a well-executed sales and marketing effort for ONVO to elbow its way into the mix. The other objective I had was to illustrate the complexity surrounding drug discovery and liver tox testing. If relatively simple tissue models involve this degree of complexity, what does this say about implantable tissues and fully-functional organs? The degree of complexity is off the charts. These amazing innovations will be available some day, but we'll have to be very patient (no pun intended).
    Jan 7, 2014. 02:33 PM | 6 Likes Like |Link to Comment
  • A Deep Look At The 3D Revolution - Where Printing Money Is A Reality [View article]
    Han: Please tell me that you are not buying into the "Methuselah" hyperbole. C'mon dude. The life span of humans will remain ~120 yrs. Futurists make their $ by playing into one of the oldest foibles of humankind: a belief in someone's ability to predict the future. They are in the same boat as tarot card and palm readers. They just don't wear the costumes.
    Dec 19, 2013. 07:06 PM | 6 Likes Like |Link to Comment
  • Are Seeking Alpha Authors Biased When It Comes To Apple? [View article]
    Victor: Your extensive analysis of the biases of SA contributors proves the point that most of us have long understood: rah-rah articles outnumber the bearish ones ~10:1 for almost any stock. Part of the reason is that bearish authors know they will have to endure criticism from bulls and so avoid writing said articles in order to avoid the headaches that come with it. Instead of receiving kudos for their work and diligence, they receive insults and questions about their ancestry.

    For example, I recently published an article on the bulletin board-listed MusclePharm. I will be diplomatic and say that it falls a bit shy of investment caliber. When I began my research, I reviewed the history of the SA articles on the company. Of the 24 MSLP articles published, 24 are rah-rah, 0 bearish, despite glaring evidence of bad management and questionable associations.

    If, for some reason, you had expectations that a review of SA articles on any stock would reveal a balanced perspective, well, I'm sure that you are better informed now. A bit unfortunate, but it is reality.
    Dec 13, 2013. 02:56 PM | 6 Likes Like |Link to Comment
  • A Very Detailed Look At Organovo [View article]
    Steve: We'll literally be on the edge of our seats waiting for your insightful report. My understanding is that Organovo is an Italian company selling pipe organs to churches. If, for some reason, I am mistaken, should I sell?
    Nov 21, 2013. 03:33 PM | 6 Likes Like |Link to Comment
  • The Tile Shop: Poisoned Tile, Bad Actors, Unsustainable Margins, And A Stock Ready To Crack [View article]
    Your allegations of fraud re Mr. Rucker are overstated because it's civil fraud, not criminal fraud. This is a very common occurrence in divorce proceedings. Any misrepresentation, concealment, etc. of any material information (almost always a financial asset) is considered fraud in a civil case. Any time there is a "War of the Roses" there will be disputes over the ownership and value of assets. A messy divorce, while potentially embarrassing when certain details are disclosed, does not necessarily reflect poorly on a person's business leadership skills or ethics. You provide no evidence that Mr. Rucker's business integrity is in question, merely that he and his former wife parted ways in an acrimonious fashion. This happens all the time all over world.
    Oct 22, 2013. 10:34 AM | 6 Likes Like |Link to Comment
  • Harvard Bioscience Spin-Off Likely To Drive 50% Near-Term And 100%+ Long-Term Upside [View article]
    I enjoyed reading your article. I think you are spot-on right about HBIO management's self-serving reputation. Top execs have been generously compensated despite consistently failing to deliver the growth they have projected. Their track record speaks for itself. This less-than-stellar track record, though, seems to contradict your thesis about the firm pursuing a shareholder-friendly strategy concurrent with or subsequent to the HART spin-off. Why will they suddenly change their behavior after almost 13 years of self-enrichment?

    You do not offer a justification for your acquisition thesis other than HBIO’s current undervaluation and the exit of three executives. The company has been undervalued for years so there is no new news here. The exit of the CEO and CFO to run HART appears to me to be the Mt. Olympus of self-serving behavior. If the initial investor enthusiasm for ONVO is any indication, both men stand to reap enormous riches considering their potential ownership of 7.5% of HART (something tells me that they will be selling heavily on the first day post lock-up).

    The fulcrum of your buyout thesis rests on the expectation that the new CEO will be an investor-friendly white knight who will pursue this strategic option. This could happen, of course, but you provide no basis to believe this. Have you interviewed Mr. Graziano or Mr. Green or Mr. McNaughton? Has there been a disclosure about HBIO’s intent to pursue strategic alternatives? Without some corroborating evidence, then your thesis is merely conjecture.

    In my opinion, the transfer of the CEO and CFO to HART does not bode well for buy-and-hold investors. They have failed to demonstrate that they can deliver long-term value to HBIO shareholders. Why will their performance at HART be different?

    The only valid thesis for longs in this case is to hitch a ride on bullish investor sentiment for regenerative medicine. Considering ONVO’s debut, I think it is reasonable to expect HART’s to be similar. It is possible that regenerative medicine’s ride on Gartner’s Hype Cycle has begun. Longs need to remember, though, that the regulatory cycle will be long and arduous. It will be many years before an engineered trachea is FDA-approved. HART’s valuation will undoubtedly get far ahead of reality.

    I guess what I’m saying is that HART will offer multiple trading opportunities for experienced traders. It’s going to be a wild ride. Traders should possess the expertise to know when to buy, exit and reverse their positions. Buy-and-hold types should look elsewhere to make money.
    Jul 19, 2013. 06:58 PM | 6 Likes Like |Link to Comment
  • 3D Systems: Ending The Bear Raid [View article]
    I recommend that everyone reread my updated article. I was finally able to locate the 2 data points I needed to complete my analysis. DDD's core business, since 2008, is growing @ 13.5%, about 1/2 of what it reports. You should remember, though, that this is not the end of the world. It merely shows the rate that DDD's base business is growing. The trend is up. The news is not all bad. It merely shows the synergistic effects of its acquisitions (and accounting treatment). This is curious, though, because the significant acquisitions' annual growth numbers are either declining (Provel, Quickparts) or flat (ZCorp/Vidar). The undisclosed acquisitions must be special, indeed.

    After another 2 or 3 years, this "back out" analysis won't be as valid because many of the acquired businesses will have evolved too much. Today, though, the acquisitions can, indeed, be backed out. This does not mean that DDD's acquisitions won't bear fruit. It does not mean that DDD will not continue its uptrend in sales and income. It means that its base business is growing more modestly than reported via its "organic" designation. The organic growth numbers suffer from the same problem as the overall revenue line item in the first 12 months of an acquisition. It merely pushes the number out 12 months. This does not mean that it is wrong. It merely means that it overstates its core growth rate.

    For those of you who are so inclined, I recommend that you read about the conglomerate boom in the 1960's. It's the same thing DDD is doing but, of course, on macro scale. Remember the "nifty fifty"? Only a handful survive today, I think.

    Today's conference call was heavily scripted. Executives had prepared presentations and only analysts were allowed to query them. I pressed *1 a hundred times to no avail. This has been my experience in every conference call that I have ever listened to. It is a show. If my article was so damaging and so baseless, why was I not afforded some time to either make a short statement or ask a question? Management could have easily discredited me could they not? Instead, they danced around most of my issues with its disclosures. This issue is about transparency and full disclosure, not regulatory compliance.

    I will now provide you with an example of DDD's obfuscation. Read the following sentence and ask yourself if it is clear what Renshape's 2011 revenue figure was.

    "Sales of integrated materials represented 52% of total print materials revenue in 2011, compared to 34% in 2010. Excluding the acquired Renshape® print materials revenue, integrated materials were 53% of total print materials revenue."

    It's impossible to tell, isn't it? An answer can calculated, though, using algebra. Here's the math:

    .52 x $70.6M = $36.7M
    $36.7M = .53x
    $69.2M = x
    $70.6M - 69.2M = $1.4M

    Can anyone tell me why DDD could not just disclose the revenue number? Why must the reader use math skills to get the answer? Multiply this example by 1000 and you get the degree of obfuscation I encountered in my work with its SEC docs. This my point. This has been my point from the beginning. It takes an extraordinary effort to find out what DDD is doing. I'm not there yet.

    Folks, I caution you not to get married to a stock. Maintain a skeptical eye when reviewing financials. Look under the hood and kick the tires. All might not be well in Wonderland.
    Nov 19, 2012. 03:07 PM | 6 Likes Like |Link to Comment
  • Organovo: Like Buying Apple In 1997, Or Like Buying Webvan In 1999? [View article]
    I never envisioned seeing a better hype candidate than Trovagene
    (http://bit.ly/U6Ni2a), but I was wrong. Organovo is literally and figuratively the crème de la crème of castles residing in air. It is superb. One commenter on another article on the company, for example, states that he believes that it will be worth TRILLIONS! Pink sheet stocks are nothing if not good theatre, but this story is truly extraordinary. How could all of the thousands of investors around the world who are constantly vigilant for opportunities have missed a company that has the potential to dwarf Apple, Google, Walmart and Exxon Mobil combined? Before I mortgage the house and dive in, though, maybe some due diligence is in order.

    The first red (pink) flag is where it is listed. The OTC pink sheet is clearly bone yard territory. With few exceptions (e.g., Roche), these are nano cap stocks that fail to meet even the modest listing requirements of the AMEX. The toxicity of this arena is overwhelming. It’s detritus. No sane or rational investor spends time perusing the pink sheet listings. Only fools, wannabes, and never will be’s play in this sandbox.

    Here are a few more red flags to consider:

    1. In ONVO’s most recent 10-Q (http://1.usa.gov/QAPCI0), there are only two short sentences in the entire document (p. 19) that describe its business. All the remaining information pertains to accounting and financial maneuvers. I do not recall ever reading any quarterly report that did not address the company’s value proposition in (at least) some detail.

    2. ONVO is and will remain a voracious cash consumer. In the previous six months, it gobbled up $5.5M with only modest investments in R&D and a tremendous favorable cash contribution from warrants. This technology requires a colossal investment in R&D. I would wager that it will cost at least $200 - $300M just to get to the clinical trial stage. Today, the company’s cash balance is only $8.5M. Massive share dilution is a certainty.

    3. The company’s genesis is of the reverse merger variety. Here’s how it came into being per its S-1 (http://1.usa.gov/U6MSJi):

    It began its corporate life as “Real Estate Restoration and Rental, Inc. (RERR) in 2007. It transformed itself into Organovo Holdings, Inc. (Merger Sub) via a reverse merger on 12/28/11. Merger Sub then ceased to exist and RERR became Organovo Holdings (“Holdings-Nevada”). This maneuver was done to change the corporate name.

    On 1/30/12, Holdings-Nevada did a reverse merger with Organovo Holdings, Inc. whereby Holdings-Nevada became Holdings-Delaware (“Pubco”). This maneuver was done to change the corporate domicile from Nevada to Delaware.

    On 2/8/12, Organovo Acquisition Corp. (“Acquisition Corp.”), a subsidiary of Pubco created out of thin air, did a reverse merger with Organovo, Inc.

    What more needs to be said? Reverse mergers are sleazy deals. Organovo’s genesis is a real gem. This one has sleaze oozing from all pores.

    4. The company only has 18 employees and a microscopic market cap of ~$88M. The market is rarely this inefficient. This is a crystal clear message that there ain’t nothin’ there.

    I could continue with many more crimson flags, but then I would have to write a full article. This one’s a hype stock, nothing more. But like most hype stocks, it is entertaining.

    Good luck, gamblers!!
    Oct 2, 2012. 10:52 AM | 6 Likes Like |Link to Comment
  • Achillion completes equity offering [View news story]
    I won't venture to guess how it will allocate the funds, but its wallet is pretty fat right now so it has sufficient resources to finance all the Phase 3s it needs, imo.
    Feb 18, 2015. 05:58 PM | 5 Likes Like |Link to Comment
  • BlackBerry to launch genome browser [View news story]
    Zack: There are very few clinicians who are qualified to interpret genetic data. Even if they could, this wouldn't impact their clinical recommendations to their patients because their mutation status, for example, will have already been determined since this is a criterion for certain cancer therapies. The molecular diagnostics are performed before therapies are initiated. Clinicians must prescribe the drugs according to the package insert. The package insert informs clinicians as to the appropriate genetic tests to order. Beyond this, there's nothing to "check" in regard to a patient's genetic profile, unless there is a research project underway.

    The BBRY bulls in this thread are allowing their strong opinions to misinterpret my comments. The question is not one of browser effectiveness or convenience or data quality or company bearishness. It's what a clinician will supposedly do with the information in a clinic setting. Researchers may find the feature quite interesting, especially considering the global nature of genetic research. It will be interesting to observe the uptake by the medical community next year. This, of course, will be the ultimate metric.
    Dec 8, 2014. 10:01 AM | 5 Likes Like |Link to Comment
  • BlackBerry to launch genome browser [View news story]
    NBohr: No pushback, just scant demand from the clinical side. Researchers will be more interested. Whoever wrote the press release should have included the research side.
    Dec 8, 2014. 08:52 AM | 5 Likes Like |Link to Comment
  • Organovo: Why Market Leaders Make Good Bets [View article]
    Jane: What we mean is that the article is merely a summary of ONVO's business, no analysis is presented. It just regurgitates what numerous previously-published articles have already stated. SA supposedly rejects "me too" articles, but appears to have lacked attention with this one. Also, the ludicrous $15.7B revenue figure for 3/15 obliterates any credibility this author aspires to possess.
    Jan 23, 2014. 02:59 PM | 5 Likes Like |Link to Comment
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