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Follow @SmithOnStocks on Twitter for more updates (http://twitter.com/#SmithOnStocks Please read this section carefully for some important disclosures. Who Am I? My name is Larry Smith. My career was spent on Wall Street as a biotechnology and pharmaceuticals analyst and also as Director of... More
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  • Cytokinetics: New Collaboration With Astellas On CK-2127107 Greatly Improves Investment Outlook
    • This deal adds a third leg to the development pipeline at Cytokinetics along with omecamtiv for congestive heart failure and tirasemtiv for ALS.
    • My Buy recommendation has been based on the possibility that tirasemtiv will begin a phase 3 in ALS in 2015. Investors had written this product off after a phase 2b disappointment.
    • This deal reduces the downside risk if I am wrong on tirasemtiv.
    • It also provides the cash resources needed to conduct a phase 3 trial for tirasemtiv without the need for new equity funding or a partner.

    The Astellas Deal is a Major Positive

    The announcement of a much expanded collaboration with Astellas centered on CK-2127107 and follow-on skeletal muscle activator compounds adds an important third leg to the product development platform for Cytokinetics. It will also bring the year end cash to an estimated $107 million giving the Company great flexibility and obviating the need for any equity financing in 2015, probably in 2016 and perhaps beyond. Cytokinetics has announced that it will hold a conference call on January 5th at 8:30 EST in which it will give more details. I suspect that the Company may also announce at that time that it will begin the phase 3 trial of tirasemtiv.

    For additional details on my thinking about how this affects the investment outlook and leads me to a $10.00 price target, you can access a more extensive report on my website. The report is free and does not require a subscription.

    Disclosure: The author is long CYTK.

    Dec 24 8:38 AM | Link | 1 Comment
  • Neuralstem: Some Encouraging, But Very Early, Information On Chinese Ischemic Stroke Trial Using NSI-566 Stem Cells

    I received an e-mail communication from one of the SmithOnStocks subscribers who has a good insight into the Chinese drug and drug development market. This is the first report on any kind on patient outcomes that I have heard on the trial of Neuralstem's Chinese trial of NSI-566 stem cells in ischemic stroke trials. You can access this free on my website.

    Disclosure: The author is long CUR.

    Dec 18 1:27 PM | Link | 1 Comment
  • Washington Post Calls For An Investigation Into Hedge Fund Trading And Adam Feuerstein's Blogging

    In a hard hitting article, the Washington Post has called for an investigation into potential stock manipulation by short sellers of NWBO and other emerging biotechnology companies. The article was written by Steven Pearlstein, a 2008 Pulitzer prize winner. The Post suggests that there may be a wide spread criminal conspiracy that has victimized many small biotechnology companies and their investors. The Post also focuses on the prominent role of Adam Feuerstein in this situation. I have written a detailed analysis that elaborates on the Post article and provides further background information that can be seen at this link.

    Small biotechnology companies and investors have been clamoring for years that short sellers are manipulating the prices of emerging biotechnology stocks. This has largely fallen on deaf ears as the SEC has taken no action. However, it appears that the heat has now been turned up. The Washington Post is one of the most prominent newspapers in America and highly influential in Washington. Its most famous investigational reporting piece was about Watergate and it carries great prestige. Securities regulators, politicians and law enforcement agencies are likely to be prompted by this article. It could also trigger wide spread media investigations.

    If hedge funds are indeed collaborating in a stock manipulation scheme, they are now faced with the probability of possible SEC and Congressional investigations accompanied by an FBI probe and media digging. For the first time, they could be facing investigations from institutions with subpoena powers. If there is coordinated trading and naked shorting and fomenting by friendly bloggers as has been alleged, it will be discovered. If the Post is correct, we may be in the early days in an intensive Watergate like investigation that could expose a criminal enterprise of vast proportions.

    The tag line for this investigation could very well be that a band of rapacious hedge funds are manipulating the prices of small companies trying to develop treatments for cancer, swindling small investors out of hundreds of millions of dollars and blocking treatment of patients from potential cancer drug breakthroughs. This is a compelling story for any politician or regulator and could be especially the case for politicians with enmity to Wall Street such as President Obama and Senator Elizabeth Warren, not to mention Attorney General Eric Holder.

    So what are the stock market implications? If indeed there is ultimately shown to be a criminal conspiracy, how bold will the hedge funds be in the interim. Nothing in the past has had any effect on their behavior and perhaps this will also be the case with the Washington Post article. Moreover, there is no objective evidence that I am aware of that comes together to prove a criminal plot. The evidence, however powerful, is circumstantial. If the hedge funds are confident that they are acting legally, nothing will change in their conduct.

    However, if there are guilty consciences, we may see a sharp reduction in their shorting activity and possibly some could begin to unwind their short positions. This could create an enormous short squeeze in the case of Northwest Biotherapeutics where there are 8 million legitimate shorts and an estimated 4 million or more naked shorts. The effective public float of the Company after subtracting out management and closely held shares could be about 20 million shares. If the shorts begin to panic, we could see a short squeeze of enormous proportions.

    You can follow comments on the Washington Post article on this link. So far, they have been overwhelmingly supportive and appreciative of the Post article and there is an overwhelming consensus that there appears to be manipulative stock trading practices on the part of hedge funds.

    You can follow comments on Mr. Pearlstein's article at this link. I have also written an extensive summary on the Washington Post article. The Washington Post article included the following chart which shows that the shorting activity against tiny Northwest Biotherapeutics bears a striking correlation with Feuerstein's blogs. The Washington Post notes that his articles seemed to have been timed to blunt the effect of positive developments and drive down the stock price.

    Graph of spikes in short sales in Northwest Boi

    Disclosure: The author is long NWBO.

    Tags: NWBO
    Sep 29 1:28 PM | Link | Comment!
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