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AB Science : Uneducated Small Holders Provides A Great Entry Point : THANK YOU

|Includes:AB Science, Paris (ABSCF)

I've recommended to buy AB Science shares for the long term due to the fact that the company has all the tools (should i say, all the data) to succeed in the long run for any true investor that knows how to invest long term.

Since my first recommendation, the stock skyrocketed but after i reiterated by buy rating on it the stock plummet roughly 25%-30% (however still much higher then the price after my first buy rating).

Does that price movement on the downside change my position ?

Well not at all, in fact it is probably one of the best entry point you could in the future.

Why the stock is dropping ?

Well it is - according to me - a combination of three factors :

- Overall market that is negative (especially in France)

- Funds that are waiting for what they all expect "failure in Pancreatic Cancer" to come out in order to start to buy (as the biggest concern would be out)

- Uneducated small holders that is the major base (if not the entire base) of sellers that triggers the downside move (due to low liquidity on top of that).

So let's go factor after factor :

- Overall Market that is negative

The effect on AB Science is easy to figure out : Negative sentiment push funds to stay on the sideline for what they call "risky investment" which dry the short term liquidity of the stock on the buy side mainly.

- Funds that are waiting for the "failure in Pancreatic Cancer"

Out of the multiple phase III underway for AB Science, Pancreatic Cancer is the one everyone (including analyst) expect to see as a clear failure due to the very high difficulty to expect any kind of efficacy (even partial for a small group of patient). Everyone failed in it so everyone expects AB science to do the same.

So most of the fund manager are simply waiting for the big bomb to drop so they can start to accumulate with the biggest uncertainty behind them.

The reason of them staying on the sideline until what they expect to be "failure" in pancreatic cancer is to capitalize on Small holders that would sell on it and therefore accumulate before pushing the stock way higher to more logical valuation. We would be in a classical market manipulation when the small holders loses and the big fund wins....

- The small holder is selling on fear of delay for data or simply because they lost patient on waiting for Pancreatic Cancer data or that they already "think" the data are bad that's why the company is taking time to issue them etc...

The main reason of the drop off is because the seller is easy to target : The small holder. Based on the stock activity we see a clear pattern of selling from small holders claiming that Pancreatic data are taking too long to be issued so they must be negative or just getting fed up about waiting for those data etc...

Those holders clearly lack experienced and had no reason to be in the stock in the first place. Buying AB Science isn't only about Pancreatic Cancer Data but it is about the overall scientific program that has so many huge growth potential that even now with or without pancreatic data the stock is way too undervalued.

The good part of it : The weak uneducated investor that never should have purchased shares of AB science are getting out, and it gives great buying opportunity for the true long term investor that really do understand the story.

Now what is our expectation :

- Pancreatic cancer data release ?

When the data will be release doesn't matter much, investors needs to understand that companies cannot retain information GOOD or BAD. Therefore if there is a delay in the data release it isn't an indication of positive or (what many uneducated investor thinks) negative data. It is just that for whatever reason the data are delay, it could be many reason for example statistic analysis etc.

Now, what scenario for each case :

Data issued are negative entirely : Study is closed

We expect the stock to in fact go up in the next couple of days following the news because the smart money expects the failure in pancreatic cancer (just look at every analysis from brokers they give a 5% success rate on Pancreatic cancer just to avoid giving 0% by respect to the fact that the phase III is ongoing). The only people that hopes on pancreatic cancer is Small holders, therefore funds expect them to sell in order to start buying on it and run up the stock after the biggest fear is out.

Target price on the stock within a month : 14-18 euros

Data issued are positive entirely

No need to elaborate, the stock would explode however that situation is very unlikely to impossible.

Target price on the stock within a month : Sky is the limit ? :)

Data issued are positive for a group of patient that the company might have isolated or not but at least they see that it works on a group of patient.

That should be considered as positive data since it would be the first time we see a product effective for a portion of people that has pancreatic cancer. That would catch all the marker by surprise since the expectation is pretty much : failure.

The stock would skyrocket on that most likely since investor would need to price the unexpected : Pancreatic cancer potential success.

Target price on the stock within a month : 30-60 euros , hard to evaluate

our take : I don't expect the data to be totally negative, based on the Phase II trial. I have hope that it would work out in a certain group of patient. Now will the company be able to isolate that group right now or in a later study. That is the main question according to me.

We believe that pancreatic cancer will be an entry point of many funds with or without positive data, on top of that we believe the result will surprise the market which could lead to a more bigger upside.

What are the schedule to look at as an investor :

- Next 3 month : Pancreatic cancer data (just to allow investor to start to get in), Full release after the US conference of the GIST data (we will finally know the true composition of them and see if it is that huge or not...)

- Next 12 month : Potential conditional approval in GIST 2nd Line ? (Expectation is low but probability still here to occur since the product has already a solid safety profile and we are talking about a "rare disease" with statistical significant on data despite the low number of patient)

- Next 24-36 month : Approval in GIST. Based on the Phase II data (and mainly the P-value of it) we can believe with very high confidence that the product would eventually be approved after the phase III (that explain the 24-36month target).

So all in all : any true long term investor should hold their shares and in fact use ANY dip as a buying opportunity to increase their position. The value of the company didn't change, we are just seeing the full effect of investor not understanding where they invested and that are over reacting and selling on fear that makes no sense at all...

Disclosure : Big holders of AB Science, and buying regularly for personal portfolio and client portfolio regularly taking advantage of that dip opportunity (No need to be aggressive... sellers comes to us :D)

Disclosure: I am long OTCPK:ABSCF.

Additional disclosure: Buy regularly to take advantage of the dip for me and my client.

Stocks: ABSCF