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Welcome to the wonderful and dangerous world of biotechnology investing. My name is, Michael Webb and I'm here to help guide you safely through it as best I can. I've been investing exclusively in the sector since late 2012 and expressing my opinions here on Seeking Alpha in biotech alone since... More
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  • 2013 Retrospective: My Inaugural Year Of Biotech Blogging

    I'm a novice in personal investment. I've always been an amateur at most everything I've done that's brought me pleasure in life. The word amateur is derived from the Italian "amator" meaning "lover", and "amare" meaning "to love." When one gets paid to do something they love it's both gratifying and a curse.

    Gratifying because there's public recognition and a small quarterly check. A curse because it's difficult enough for me to live up to my own expectations let alone yours. It's important however, for you to remember that I'm a blogger and not a financial advisor. I absolutely insist that you make this differentiation because you will be less inclined to express irrational disappointment as a result.

    My articles this past year were a joy to write. Some of the best, didn't make the publishing criteria of the editors or deadlines of relevance. That said, those that did make the grade scored equally well in the eyes of investors as the graphic below clearly indicates.

    (click to enlarge)

    These stocks on a buy and hold basis from the date of publication have returned investors a good bit of money. And it's important to note that none of my articles led investors down a blind alley to significant loss.

    In point of fact, I warned investors against binary disasters facing those holding long positions in Delcath (DCTH), Aveo (AVEO), GTX (GTXI), Cytokinetics (CYTK) and Amarin (AMRN) weeks and sometimes days before the stocks plummeted 65 to 70%. There is however, no joy in doing this as investors always question your motives never thinking you might have their best interests at heart.

    I've put together a short video primer covering investment in the biotechnology sector. It deemphasizes catalysts because that's the first thing that every biotech investor acquaints themselves with and latches onto.

    This year begins with my largest personal holding in Cyclacel (CYCC) and a growing but smaller position in Nektar (NKTR). I plan to provide more video companions to each article that I author this year. You'll find them on YouTube at ScryingBiotech.

    It's my hope that together, we can expand our knowledge and consequently, our profits by learning from each other along the way.

    I thank you for your investment in my words and for your encouragements and criticisms over the past year. Hopefully, they'll serve to make me better in this year ahead.

    Michael Webb

    Disclosure: I am long CYCC, NKTR, .

    Tags: CYCC, NKTR
    Jan 09 8:48 PM | Link | 3 Comments
  • In The World Series Of Adcomms Amarin's Joe Z Had Better Be Mr. October

    The excitement of Major League Baseball's Championship Series is upon us. The sweet smell of freshly cut grass still wafts through crisp fall air. Beer vendors are less likely to call out than be called upon and the importance of every pitch is elevated to almost unbearable significance.

    The biotechnology sector of the stock market has its own fall classic. Last year's winners were the Amarin (AMRN) Bulls who rode pure swinging EPA fish oil to a decisive victory in the Marine Stakes.

    While this year's challenger is considerably more aggressive, the Amarin Bulls nonetheless jumped out to an early lead in the Anchor Cup with newly minted cleanup hitting Vascepa blasting patent pitch after patent pitch into the upper deck. And anyone who dared to think the outcome was in doubt, no longer had the heart to say so.

    The Feuerstein Bears however, didn't get the message. And before the first pitch was thrown, they loudly proclaimed Bull managers had weakened fan enthusiasm by dumping loads of their shares on the open market late last season.

    This psychological ploy was followed up by the acquisition of several key players. First, came the deadly but silent NCE. [It should be noted that most players in biotech baseball are known by their three initials only and not by their names. I haven't figured out why but perhaps this makes them sound more intimidating.] And NCE was certainly that. No more than a rumor, this sinker ball pitching heart breaker had a debilitating effect on Amarin hitters.

    Still, the Bulls early lead remained in tact when patented, pure swinging EPA's somewhat dirty brother DHA joined the Bear team. In study after study, DHA was found to have a less than desirable effect on the outcome of most games and the Bears played him to perfection. Scratching and clawing away at the sensibilities of his younger more talented brother, DHA scored the go ahead run in the top of the ninth leaving Bull fans scratching their heads in befuddlement. But the worst was yet to come.

    Power pitching FDA was known to be interested in playing in this game and last Friday was seen warming up in the Bear bullpen with a larger than expected briefing document. Another in a series of Bull budget cuts, this free agent pitcher with an epic reputation for wreaking havoc was out of a job until last Friday [and once Thursday rolls around, might be off the payroll once again].

    But at this moment, the moment that counts, FDA's presence means there will be no uncontested sweep to victory, no four pitch walk to mineral oil placebo and no nod to the traditional understanding of championship SPA agreements.

    Amarin Bulls however, remain hopeful. They still have pure swinging EPA in their lineup and added a highly paid roster of professional advisers, at least according to team President John Thero who said as much at Canaccord Genuity on August 15th.

    So we've been going through multiple mock advisory board meetings. This has been done with our internal staff. This has been done with the help of a professional firm that does specialize in doing these things. And also we have lots of advisors and we've been pulling in other doctors who have a lot of experience at advisory board participation to try to challenge ourselves on questions that could be asked and haven't yet found a question that we don't believe we have very good answers to.

    But as Yankee fans have learned of late, the size of your player payroll guarantees only higher expectations and when those aren't met, fans get crazy in despair. And Amarin fans went nuts on Friday.

    We didn't even get a chance to wipe the dirt off home plate before the FDA threw a high hard one right underneath Amarin's chin. You see, one long held belief of Amarin Bulls drawn right from the SPA agreement was that the only requirement regarding (REDUCE-IT) was that it be underway when Anchor approval was considered.

    Better take a step back off that plate. Under the title, Draft Points to Consider, we have this labeled item number 2.

    Taking into account the described efficacy and safety data for Vascepa, do you believe that its effects on the described lipid/lipoprotein parameters are sufficient to grant approval for co-administration with statin therapy for the treatment of patients with mixed dyslipidemia and CHD or CHD risk equivalent prior to the completion of (REDUCE-IT)? Please provide the rationale underlying your recommendation.

    In baseball we call this the brush back pitch. The distilled version goes like this: Do you believe the effects of Vascepa "are sufficient to grant (ANCHOR) approval prior to the completion of (REDUCE-IT)?"

    [Bold emphasis is mine]

    And no matter how an Amarin Bull spins it, batter number one is down on strikes.

    But this document didn't merely contain heat. There were a number of nasty breaking balls but none more wicked than this slider on page 7.

    Notably, despite a lead-in period that is quite typical for trials with lipid parameter endpoints, within-group changes in lipid parameters and biomarkers of inflammation from baseline to 12 weeks were highly statistically significant in the mineral oil placebo group. Although it is recognized that the effect of an intervention (e.g., mineral oil capsules) cannot be isolated when one only considers within-group changes over time, these results at least suggest the possibility that mineral oil may not be biologically inert. If true, this complicates the interpretation of between-group differences.

    In other words, all of the presumed statistical benefits of Vascepa are now in a shadow of doubt caused by this complicating circumstance. The paragraph ending substantiates this.

    For example, LDL-C increased a median 9% in the placebo group, despite statin therapy, and only increased a median of 1.5% in the AMR101 4g group, but does this reflect an LDL-lowering effect of AMR101, an LDL-raising effect of mineral oil in statin-treated individuals, or some combination?

    By the time we get to page 57, the second batter is clearly is out on a lame infield grounder. That single paragraph page places the complicating effects of the now questionable placebo into startling relief.

    If true, the treatment effects observed with AMR101 may be overestimated.

    [Bold emphasis is mine]

    And that's precisely what's happened here. Amarin Bulls have overestimated their chances from the beginning and are now paying the price.

    How large a price? Take a look at the stock chart from Friday.

    (click to enlarge)

    Then on Monday, after the horrific damage FDA had wrought, wizened Bulls cheered their team from the sidelines. A feathery one cried foul. A wily one wrote a book on a banner. And an ever optimistic one shouted "blowout" as usual.

    This cacophony of craze resulted in a confused umpire shaking his head in disbelief which was interpreted as ball four and the tying run moved to first base.

    So now, in Amarin's darkest hour, we still have one last batter to come to the plate. Tomorrow, pure swinging EPA and home run smashing Vascepa are left to watch from the bench as this last hope for victory rises from the dugout.

    CEO and President Joe Zakrzewski, grab the pine tar and rub up your bat. Put your planned remarks away and step up to meet your destiny. Swing strong and true from the spontaneous center of your heart for your product, your company and most especially, your fans.

    For on October 16th mighty Joe Z will stand in the box with FDA breathing heat from on high. The crowd will fall silent in rapt attention. And Amarin Bulls who have held on for so long and through so much will cling to every pitch and breath taking word.

    Will this end with a two run homer reminiscent of Yankee great Reggie Jackson known forever as Mr. October or like this last paragraph of the great American ballad; Casey at the Bat?

    Oh, somewhere in this favored land the sun is shining bright;

    The band is playing somewhere, and somewhere hearts are light,

    And somewhere men are laughing, and somewhere children shout;

    But there is no joy in Mudville - mighty Casey has struck out.

    Always be well,

    Michael Webb

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: Any information or opinion expressed herein may not be true, accurate or correct and it does not constitute any suggestion to buy, sell, hold or adopt any investment strategy for this stock or any stock that may be mentioned. Reliance upon information in this article is at the sole discretion of the reader. The sole purpose of my article is to entertain by providing information the accuracy of which is as good as the public sources it was derived from. Do not act on anything I have written. Rather, do your own due diligence and consult an investment professional before making any investment decision. Acting on what any one writer, including me has imparted to you is foolish at best. I have no better access to resources or gift of opinion formulation than you do. I sometimes make mistakes. There are a myriad of things which can happen in lieu of any forward looking statement I have made. Any stock featured or mentioned in an article I compose is subject to all manner of influences which can change its value in dramatic fashion upwards or downwards. These events can be of a wide variety not limited to news related occurances, managerial decisions, trial failures, stock manipulations and so on. I make every effort to declare positions I have in stocks I cover or mention in an article but reserve the right to move in and out of said investments at my own discretion based upon the wisdom of doing so. I implore you to do your own due diligence, invest at your own considerable risk attaining the just reward your efforts have wrought. And always be well.

    Tags: AMRN, short-ideas
    Oct 15 8:51 AM | Link | 4 Comments
  • Novavax Inc: How To Play Analyst Day

    Novavax (NVAX) Analyst Day scheduled for September 24th may have indeed become the "Explosive Biotech Calendar Catalyst Play" I referred to in my first article on the subject published on August 13th at 6:42 PM PST. A quick look at the chart below will show you that the stock closed at $2.37 that day and has risen 60 cents in five trading days or 25.3%. A small amount of profit taking occurred within the last trading session.

    (click to enlarge)Novavax 10-Day Chart

    President and CEO Stanley Erck first mentioned this unique and to be annualized event on August 8th. It came within a 2nd quarter conference call and by the mere fact that Mr. Erck repeatedly referenced it and analysts on hand seemed to carefully dance around it, long suffering Novavax shareholders have since glommed onto it as a profound day of unbridled possibility.

    What Could It Be

    When I first wrote about this day, I mentioned three distinct possibilities regarding its meaning, all of which I believe hold equal merit today.

    1. It's a magic trick - nothing more than a distraction from a very bad financial report.
    2. It's a formality - a day for bringing together drivers in the financial community to focus on corporate accomplishments and a vision for the future.
    3. It's a launch pad - a stage designed to showcase something special. Why gather together top analysts from major financial firms just to rehash already known accomplishments and issues?

    If it's nothing more than a magic trick then Mr. Erck has already accomplished his task and should take his place amongst the best prestidigitators in the magician's hall of fame. A stock that was wobbling badly and heading for its usual retrenchment to malaise has since shot up briskly breaching its 52-week high at $3.09 a share.

    Equally possible is that it's business as usual with a black tie flare. Talking about all the good things swirling around Novavax in the past year is better done away from the glaring, dual spot lights of doubled expenses and halved revenues and instead in the warmth of Wall Street's pandering acceptance.

    This second possibility holds little interest for me. The first one however does. If Erck conjured this event up to divert our attention from dwindling cash flows this will no doubt become a tactic other firms will use in similar situations if for no other reason than that it worked so beautifully here. We all admire people who are clever and this would have been shrewd indeed. Not because there haven't been other "Analyst Days" - I'm sure there have, but because it would have been timed to distract.

    The Announcing of Major Events Through Form 8-K

    The real focus of our attention however, as hopeful investors, is that this is a showcase for something big. In that first article I mentioned several possibilities including; fast track status for RSV-F; a significantly larger offer of support by either BARDA or PATH; or perhaps a partnership.

    In today's article, I want to concentrate on this last notion because I've been doing some digging and scrutinizing that has me thinking this is the most viable of all the dream scenarios.

    The U.S. Securities and Exchange Commission issues form 8-k to public companies for the expressed purpose of announcing major events that shareholders should know about. Known as the "current report" it must be filed within four business days of the occurrence of any material event. The list of "events" is long and contains 31 specific items. The first of which is as follows.

    Item 1.01 Entry into a Material Definitive Agreement

    Now, if Novavax were to have attained fast-track status for RSV in the elderly which remains an open possibility, they would have had to report such an event already unless they had received notice from the FDA that a decision would be handed down on say, Monday, September 23rd a day in advance of their Analyst Day.

    Were this to be the case and the decision to be a rejection, we would have to be especially forgiving of Mr. Erck because he might be just as surprised as we would be if no surprise were on offer. The same would be true for either a BARDA or PATH commitment to enhanced pipeline support.

    Could Novavax Be Soliciting A Partnership Or Buyout Through Lazard Capital Management?

    It is interesting that William Tanner, senior biotech analyst for Lazard Capital Markets reiterated his buy rating, praised the virtues of Novavax' RSV-F vaccine and raised the target price on Novavax' shares to $11 less than 24 hours after Stanley Erck spoke at Wedbush. Amusing not because someone in power finally caught on to what Novavax' shareholders already know, but interesting because Lazard Capital Markets is a biotechnology deal broker in New York City.

    I visited their website found here and discovered two interesting items for your consideration. Under the heading, "Services" within the "About LCM" section we find these words.

    With origins dating back to 1848, the firm provides advice on mergers and acquisitions, restructuring and capital raising, as well as asset management services, to corporations, partnerships, institutions, governments and individuals.

    Of course the words "advice on mergers and acquisitions" piqued my interest as it was at the close of his Wedbush presentation that Stanley Erck for the first time in my hearing addressed the issue directly.

    Obviously this is a global concern (RSV-F). We have three different large market opportunities (Europe, U.S. Rest of World). We have taken the position that we want to advance this as far as we can go on both non-dilutive financing and investor capital. We think it's really important to advance the program on a time line that we control and plus keep the economics for as long as possible.

    So, ultimately we'll partner with somebody whether it's a license agreement, whether it's a marketing agreement, and we keep certain territories. I don't know yet. But we're going to keep it for a long time.

    Now, if you're going to seek a partner or solicit a buyout the last thing you want to do is say that this is your goal - see sorry Amarin (AMRN) management for a perfect example of this. Rather, you want to do what Erck just did, state that the possibility is out there but you're perfectly content to continue on your own.

    And why shouldn't they be? Novavax is well funded through a $50M ATM agreement, a $179M BARDA contract and a partnership with PATH that reimburses their expenses for RSV phase trials in women of childbearing age. Did I mention that they have $40M in cash on hand which should provide a nice runway into 2015?

    The second thing that interested me on the Lazard website was the credentials of Mr. Tanner found here. Clearly, William Tanner knows a thing or two about biotechnology but especially about immunology.

    Bill received a PhD from Texas A&M University in Physiology and was a postdoctoral fellow at Monsanto in the Molecular Genetics and Mammalian Biology Group. Prior to starting his Wall Street career, he was a research associate in the Department of Pathology and Immunology in the Division of Immunology at the Washington University School of Medicine in St. Louis. He is the recipient of a National Research Service Award from the NIH. He also received an MBA from the Olin School of Business at Washington University.

    If William Tanner has been called upon by Stanley Erck to ferret out interested partners, he will have no trouble conveying the tangible qualities of Novavax blockbuster RSV-F vaccine.

    It's also entirely possible, that Tanner through Erck has been commissioned to find a buyer in lieu of a partnership agreement to be signed on September 23rd. In the absence of a buyout, the partnership agreement would be signed and announced on Analyst Day, September 24th.

    Does this sound a bit like wishful thinking? Perhaps. But remember the Medimmune cast of characters that now comprise a large portion of Novavax' staff that I alluded to in my last article? They not only provide expertise on RSV visa-vie their creation of Synagis, but they also served through one of the epic buyouts in the history of biotechnology, Astrazeneca's $16B acquisition of Medimmune in 2007.

    Granted, the companies are considerably different in their respective evolutions but their product offerings are remarkably the same.

    (click to enlarge)

    The Analyst Day Catalyst Playbook

    So, how do you play Analyst Day and is it too late to get in on the run-up? The answer to the first part of the question is simple. You click on the "Follow" button above and to the left of this article under, Scrying Biotech. That way, you get in at the start and are welcomed over the finish line as well.

    The second part of the question is just as easy for me to answer. No, it's not too late. I'd wait for a slight pull-back to $2.75 and place a buy order with a limit at a 5% discount to the previous days close. If you're an options trader, please feel free to comment on this article with your suggestions.

    I'm mulling over whether or not to take some profits off the table in advance of Analyst Day and I probably will. That said, if this event is what we hope it will be, I'll probably regret that I did.

    Disclosure: I am long NVAX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: The purpose of my article is to provide information the accuracy of which is as good as the public sources it was derived from. If providing my opinions on matters related to any investment has entertained you then I have accomplished my only goal. Do not act on anything I have written. Rather, do your own due diligence and consult an investment professional before making any investment decision. Acting on what any one writer, including me has imparted to you is foolish at best. I have no better access to resources or gift of opinion formulation than you do. There are a myriad of things which can happen in lieu of any forward looking statement I have made. Any stock featured in an article I compose is subject to all manner of influences which can change its value in dramatic fashion upwards or downwards. Invest at your own risk and attain the reward your efforts have wrought.

    Tags: NVAX, long-ideas
    Aug 22 4:19 PM | Link | Comment!
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