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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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  • If You're Going To San Francisco 10 comments
    Jan 10, 2014 1:03 PM

    This has always been one of my favorite songs and I love the lyrics.

    If you're going to San Francisco
    Be sure to wear some flowers in your hair
    If you're going to San Francisco
    You're gonna meet some gentle people there

    For those who come to San Francisco
    Summertime will be a love-in there
    In the streets of San Francisco
    Gentle people with flowers in their hair

    So what does this song have to do with biotechnology? Well, every January there is a biotechnology love-in in San Francisco that centers around the JP Morgan conference on health care. This conference began in the 1980s and has grown beyond all expectations of the people who started the conference. There are now two other conferences held at the same time; One Med Forum and Biotech Showcase focus on very small biotechnology companies. Perhaps more importantly, a huge number of biotechnology companies take advantage of the confluence of biotechnology investors and analysts to hold one on one meetings.

    San Francisco and the January Biotechnology love in brings back a lot of memories for me. In the late 1980s, I was recruited by Hambrecht & Quist to head their health care research and to help with the then budding H&Q conference. I was primarily recruited by David MacCallum. He and I had both been pharmaceutical analysts who were beginning to expand into the newly emerging field of biotechnology. David had decided to move on into investment banking and I was hired as his successor as an analyst to also run health care research for H&Q.

    Because of the brilliant leadership of Bill Hambrecht, H&Q's founder, H&Q was the leader in financing biotechnology companies. At the time, none of the major brokerage firms took biotechnology seriously and financing and research coverage was left to the small, entrepreneurial firms like H&Q, Robertson Coleman, Montgomery and Alex Brown. These were the "four horsemen" who laid the foundation for the biotechnology industry. But, I digress.

    Bill Hambrecht is one of the most brilliant men I have met on Wall Street and David MacCallum is not far behind. They came up with the idea of holding the H&Q health care conference in January in San Francisco. David provided the energy to get the conference off the ground. I remember that most brokerage firms scoffed at the idea of holding a conference. They felt that it could not possibly lead to any profits. With perfect hindsight, we can see that the H&Q conference has exploded into an annual cultural event of enormous magnitude.

    I give Bill and David 99% of the credit for starting this January, San Francisco biotechnology love in, but I would like to claim some credit for a part of the other 1%. I ran the conference from 1990 to 1995. This was a period in which the conference continued to gain momentum. I got to know some of the people who pioneered biotechnology-George Rathman, the founder of Amgen (AMGN) and Bob Swanson, the founder of Genentech- and of course, this led me into a 25 year plus involvement with the analysis of biotechnology companies.

    This little bit of nostalgia brings me back to the point of this note. I am going to San Francisco next week and I have scheduled one on one meetings with the following list of companies. I will also likely meet with additional companies on an ad hoc basis.

    Northwest Biotherapeutics (NWBO)

    Cytokinetics (CYTK)

    Corcept (CORT)

    Repligen (RGEN)

    Inovio (INO)

    NovaBay (NBY)

    Rigel (RIGL)

    Cadence (CADX)

    Chimerix (CMRX)

    Derma Sciences (DSCI)

    Geron (GERN)

    Alexza (ALXA)

    Titan (OTCQB:TTNP)

    Discovery Laboratories (DSCO)

    I would like to think that one of the things that distinguishes SmithOnStocks from most biotechnology blogs is that I have strong relationships with managements. While one cannot accept everything that managements say as gospel, I think it is critical to get to know them and understand their strategies, strengths and weaknesses. Investors can't just depend on press releases to try to understand these companies.

    Anyway, next week promises to be a busy week. I start with a cocktail party at 8 PM on Sunday followed by a dinner. Then on Monday, Tuesday and Wednesday I start with breakfasts at 7:00AM or 8:00 AM and each night I have a dinner with a company. You may not hear from me next week on my blog, but this will jump start the analysis of my research works in 2014.

    Disclosure: I am long CYTK, NWBO, RGEN, NBY, CADX, DSCO.

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Comments (10)
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  • Angry Vet
    , contributor
    Comments (51) | Send Message
     
    Excellent, Mr. Smith. Looking forward to any insight you may find on INO.
    10 Jan, 01:06 PM Reply Like
  • Bio Bull
    , contributor
    Comments (224) | Send Message
     
    Sounds like it would be fun to go to that. Great city and a lot of great companies presenting.

     

    I know you cover Neuralstem as well. I believe they are at the conference. Considering checking-in with them?
    10 Jan, 01:23 PM Reply Like
  • Smith On Stocks
    , contributor
    Comments (831) | Send Message
     
    Author’s reply » Yes. I will see Richard Garr when he presents on Tuesday afternoon. I will publish a new article on CUR next week.

     

    It is not fun. There is an incredible amount of effort required to prepare for these interviews and working 12 hour days doesn't leave time for sight seeing.
    10 Jan, 02:18 PM Reply Like
  • Bio Bull
    , contributor
    Comments (224) | Send Message
     
    I don't work in the biotech industry. I know you have and maybe it feels more like a chore to you, but to me it sounds exciting to have so many promising companies and treatments coming together next week. I realize you need to make the most of your limited time with these management groups and look forward to hearing about your experiences.

     

    At least Alcatraz if you haven't been yet... :)
    10 Jan, 05:38 PM Reply Like
  • Smith On Stocks
    , contributor
    Comments (831) | Send Message
     
    Author’s reply » When I worked for H&Q, I spent a fair amount of time working in San Francisco. I am also an avid runner and it was my custom to run early in the morning around 5 AM. Hence, I have seem the central part of San Francisco at times when there were very few people around and have a good feel for the city. I have been in most of the corners of downtown and across the Golden Gate but have never made it to Alcatraz.
    10 Jan, 08:49 PM Reply Like
  • Bio Bull
    , contributor
    Comments (224) | Send Message
     
    The prison is interesting for the history but the island and bay make for a great view! I hope to get back there in a non-work capacity to see more of the downtown area you mentioned.

     

    Enjoy the conference. I look forward to your updates.
    10 Jan, 09:12 PM Reply Like
  • Valueplay98
    , contributor
    Comments (580) | Send Message
     
    Well the weather should be fantastic (as far as SF goes) it's a chilly 60 (joke for the freezing people), and surely going to be sunny.

     

    We only had 1/4 of our normal rainfall in 2013, and we didn't get much to begin with...
    10 Jan, 03:59 PM Reply Like
  • Smith On Stocks
    , contributor
    Comments (831) | Send Message
     
    Author’s reply » Hope it doesn't rain. I have meeting in 12 different hotels and restaurants.
    10 Jan, 05:29 PM Reply Like
  • longimgn
    , contributor
    Comments (199) | Send Message
     
    WOW & THANK YOU.....I had no idea when I was reading your seemingly informed opinions about your background in BioTech.....Now it makes complete sense for how you describe the risks and rewards and cautions on the companies you sooooooo
    graciously share with us..........This has led me to entirely new realms of science and innovation in a field that has the best chance of helping sooooooooo many people in sooooooo many places......I may just break down and subscribe to your newsletter, but certainly thank you for what you provide to me and others from your generosity and insight........Have a safe and wonderful trip....can't wait to see how you think things are shaping up in the world of cancer vaccines.......cheers and blessings
    10 Jan, 04:12 PM Reply Like
  • Smith On Stocks
    , contributor
    Comments (831) | Send Message
     
    Author’s reply » It has been a fascinating journey over the last 25 years. I think that I have made every mistake known to man in investing and yet I have had a very profitable investing career. Any good investor has to take risk and on occasion will get blown up. You just have to factor this into the equation and that is what my asymmetric investment thesis is all about. When you think about it in the overall sense, Wall Street analysts are paid hundreds of thousands of dollars. You are paying $149.99 and I believe that I can compete with anyone on the Street in terms of understanding technology. I think that my experience gives me an edge in stock picking. I have probably looked at 200 to 300 different biotechnology companies.
    10 Jan, 05:28 PM Reply Like
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