My first blog post. I am detroitblues twitter.com/Detroitblues. Really wanted to get my research and information out on ABIO the short sale which cost me dearly on Friday. Easier in a blog than 140 word tweets. Posted most of these thoughts passionately on Yahoo tonight.Will try to summarize into this blog post.
Saw the news on patent Friday and researched saw all news had been previously released and never really moved the stock. Mistake of shorting and worst trade for me in over a year. Totally screwed up by not stopping out and not realizing incredible volume was not going to allow for any price correction.
Many thinking this could be next ten bagger ie another VRML DNDN VNDA and they are so wrong. Here are the facts in my research. Fast track designation in no way hints the drug bucindolol is any way near approval. Just google fast track designation and you will find companies such as NVLT fast track given 2006 company currently 23 cents a share on otcbb. Try OSIR fast track PROCHYMAL Jan. 8 2007 currently in phase III trial over 3 years later. OSIR stock price near $30 Jan 2007 now $7.75. Not the automatic quick approval the uninformed are hyping. Quite the opposite company issued complete response letter by FDA June 2009 as FDA did not approve and requested more clinical trials. Companies study protocol for review was filed 12/22 and revised on 3/25/10 so still has not even received approval for a trial. After trial approval and funding it will be at least 1 year till it commences and 2 more years of trials. There will be needed cash raising and the outstanding shares will balloon.
This company was brought public Jan 2009 reverse merger of Nuvelo red flag. Stock spiked to $15 awaiting FDA and then dropped to $6 when unable to approve. Company released 40 of 62 employees in cost savings move. Stock continued to dip going concern was issued and company needs to raise cash. On 12/8 filed with Wedbush for a $10 million offering to sell during market hours as I understand whenever timing was good(maybe Friday) prospectus was looking at 3.5m shares or so. Does this sound like the next 10 bagger wonder stock? Is the biotech community so blind that they wouldn’t try to bring this to market as IPO or it would at least have some analyst coverage. This is a highly speculative stock with one failed trial .
Some are making big news of patent . Company noted they were going to get this patent in early January stock never moved. Patent is worthless if the underlying therapy is never approved. In summary nothing about this company changed Friday except possibly that the trial is now delayed until 2011 instead of late 2010 which company had hoped for. Approx. $42 to $60 million (if shares were issued) was added to market cap for no reason other than a momentum driven short squeeze.
Stock may gap up Monday on massive pump this weekend by longs but in my opinion it will come back to earth before long and one day could go as low as zero.If thinking of riding this move do yourself a favor and read the companies filings at sec.gov its free and could save you $$$$$$.
Disclosure: Short ABIO