balabanovj

China Biologic: Why I'm Long

One of the best posts on this company and the sector in general I've seen in a long time. I concurr on everything said. Their recent collaboration with the transfusion instutute also bodes very well for future growth potential and tells me that the company is thinking along the lines of diversification of it's product mix within the sector. This is a long term hold for me.

James Balaban, M.D.

China Biologic Collaborates with Blood Transfusion Institution to Strengthen R&D

This is actually one of the best developements for CBOP. I bought in last year on the announcement of planned acquisitions, which of course have done very well for them, but with acquisitions alone, I couldn't see any dramatic future growth, outside of exports, gradual increase in pricing, and the general growth in health care access in China. This collaboration changes everything and tells me that CBOP is striving to diversify into full fledged discovery/R&D biotech. If successful, you can be sure that they'll develope and grow new revenue streams from this- monoclonals, protein based therapies/drugs, etc. The company is now large enough and are at that inflection point where their earnings are great enough to fund clinical trials as well as the construction of new facilities to manufacture any new products they might develope out of this collaboration. In my view, this is a rock solid company with great management, in a recession proof business, with plenty of organic and acquisition based growth potential.

James B. Balaban, M.D.

Two Positive Notes for Arena Pharmaceuticals

For you, maybe qnexa would be the right choice, but for many others, safety would be the first consideration as well med/med interactions. Another potential use of Lorcaserin, provided the safety profile holds up long term is to prescribe it chronically for appetite mitigation. Most of us who lose weight fail to keep it off. As a doctor, and having treated many diabetics for example, who come in with skyrocketing blood sugar levels, you can tell them 'till you're blue in the face that they reeeeeeeeeeeeeeeeeeeealy need to lose weight, but 99/100 times, they just wont. Lorcaserin might be able to be Rx'd for years to acheive long term appetite suppression, enabling those who have lost weight, to keep it off.


On Sep 19 04:11 PM makk wrote:

> Hmm? My Dr says to me " I have this drug (vvus)you take once a day
> and you can lose 9% of your weight in 6 months to a year or you can
> take this drug (arna) 2x a day and lose 3%". Sounds like a no brainer
> to me. There is a reason the market values VVUS stock at double the
> cap of ARNA. I do think lorcasrin will be approved but the numbers
> dont compare to qnexa and contrave. Why buy 3rd in class?

Two Positive Notes for Arena Pharmaceuticals

Regarding Lorcaserin, the following points should be noted:

Firstly, the upper quartile of the BLOSSOM study lost 16.3% of their body weight, an amount of weight just shy of Qnexa's drug. Many drugs have a profile where they benefit a specific subset of patients more than others, and Lorcaserin is one of them. So in that regard, Lorcaserin will have very significant benefits for that group and of course less for others. Secondly, Lorcaserin can be prescribed long term- anything with phentermine in it, simply cannot. Lorcaserin also has great co-morbid benefits that Qnexa's drug doesn't- decrease in blood pressure, increase in HDL cholesterol, decrease in lipids and enhanced glucose uptake profile. Lorcaserin is also a single agent, minimizing interaction potential with other drugs these patients might be on. And lastly, Lorcaserin will definately be the only drug to be prescribed to a large portion of the population who simply cannot take drugs like phertermine- hypertensives, those predisposed to CVA's, those with just about any sort of underlying coronary pathology, etc. So Lorcaserin definately has a huge market and will satisfy a very large unmet need in those currently untreated because of their own unrelated health issues.

James Balaban, M.D.

China's Wind Energy Development Hits a Road Block

APWR may be a poor candidate to shine a negative light on, as they've been expanding their offerings. Their partnership with GE should also give them the edge over much of their competition when things do pick back up. They have also better positioned themselves for larger tenders by creating the Shenyang Alliance, which has already netted them one potentially very large contract(the LP gas terminal for which a MOU has been signed). Will all this take a few years to come to fruition? Perhaps yes, but they're already a nicely profitable company with a proven track record in DPG, so I can wait for them to pull their other ventures together. Once industrial output really takes off again in China, APWR, with their strong government contacts, will be uniquely positioned to to successfully bid on many contracts they would not have been able to consider before. And remember, in China, it's not just the lowest bid that counts, it who you know. Barring massive dilution, APWR should be a nice 4 bagger or more within 3 years or so.

J. Balaban, M.D.

China Medical Technologies Still Stumbling

I don't really buy the anonymous letter excuse. If there weren't price and margin errosion, customers would not have abandoned CMED. The fact that their attention was diverted, perhaps kept them from responding earlier to change their price structure. The company knew this right from the start and persisted with the anonymous letter reasoning. In reality, they told a lie of omission, which is very common in reporting from Chinese companies. Most Western companies would just come right out and say that "our margins have erroded due to the price war going on with products x, y and z. Here we have dishonesty and lack of transparency. Additionally, at least for me, the sale of the HIFU business stank! Even if everything was on the up and up, knowing that Chinese companies are notorious for related party transactions, they should not have done the deal. That was my signal in fact to stay away from the stock and I'm very glad I did. I believe they were also duped into paying much more than they probably had to for the HPV platform. All this said, they do have some very sound revenue generating products, but as with any lucrative business, the competition has stepped in and made it a bit less profitable for them. If it were not for their Chinese brand of "honesty" and lack of transparency in this regard, I might be tempted to open a position at these levels. Unfortunately, management hasn't shown me that they can be trusted with my money.

James B. Balaban, M.D.

China Sky One Admits Under-Reported Revenue

CSKI is a company that stradles markets from prescription meds to the occasional dubious nutriceutical. They are certainly not the only company who promotes what are probably less than effective weight loss products. At the other end of the spectrum, they are making nice inroads into the Chinese biotech market with various test kits, injectables, etc. I happen to like the company and the way they're run. They just need to stop taking "baby steps" when it come to their accounting. My communications with Stanley Hao, I've come to the conclusion that there is probably nothing really amiss with their general financial picture. They are clearly wanting for experience though when it comes to GAAP/non-GAAP accounting and in my view should just let PWC do the entire job.

James B. Balaban, M.D.

A-Power Energy Generation Systems: Headwind or Tailwind?

Your article is perfect to be featured on our website, "Irresponsible Journalism.com." Can we have your permission to put your article front and center?

Ken Lewis Is Fully Responsible for the Merrill Lynch Acquisition

The ML acquisition will wind up being one of BAC;s best. Reading and even considering anything negative is a waste of my time!

James B. Balaban, M.D.

GM May Be Heading for Quick, Packaged Bankruptcy

I keep reading in articles that refer to suppliers that Lear is short of cash. Well, this just isn't the case. Yes, they would like to have more to assure their survival even better through the next year, but they have over 1.2B as of this moment and during their last conference, they said their total cash burn through the end of the year would be no more than 200m. This cash burn will also complete their restructuring. The only uncertainty with Lear is whether or not their counterparties will re-negotiate their loan covenants in a more long term way. Unless they are well covered on CDS's, I think re-negotiation would be in their best interest. Lear is a great company, and when business is good, they have better margins then just about any of the rest, so if they can "squeak" by through all this, without going Ch11, those who are holding their stock now will be sitting very pretty! Lear is heavy into the Chinese car market, which happens to be doing very well right now and it's looking very much like a turnaround in the US and Europe by the end of the year, so IMO, given forbearance by their lenders, Lear can tough it out. They have enough cash to service their loans and the complete their restructuring, and then some. If they survive, lear will be back to $20 by the end of next year and perhaps $40 by the end of '11.

JBB
Disclosure: Long on LEA

China Sky Confusion: Management Is Flying in Circles

Clearly another desperate attempt to drive down the price of CSKI. You are so very blind to all the positives this company has to offer. Your short position will either wind up being dead money for you, or you'll have to cover. For a short, your stock picking ability is abysmal!

JBB

China Sky's Reported First Quarter Earnings Raise More Questions

I've read your articles on CSKI before and this one is especially groundless, so I 'm not going to spend any time addressing your points. I've done in-depth DD on this company and they are my top holding and are likely to remain in that position. Management is not perfect when it comes to following Wall Street rules, but they are learning fast. As for managing the day to day business, no Chinese pharma does it better! They're aggressive in persuing their market, conservative in their capex and other expenditures and the most shareholder friendly company I've come across.

James Balaban

China Biotech Smallcaps: Are They for Real?

CBPO will likely hit the $8-10 range by years end- eps will be at least 0.90 in FY '09. They're solidly run and are ramping up exports, which give them much higher margins. You could even see $12. LTUS's prospects are more questionable, simply due to their cash position, so it's difficult to preduct price movement. $2 would be the max at the moment I would imagine, until they can pad their balance sheet a bit. Nevertheless, they're very profitable and are making great progress. Another company to really keep an eye on is CPHI. They too are growing very strongly, but have a very large accts receivable balance. I just received an email form Diana in IR though, who explained the standard credit cycle with govt hospitals, which at the moment are their primary customers. The following is a quote from her email, "Following the prudent accounting principles, we accrue the allowance for doubtable receivables. The percentage of a trade receivable that is deemed doubtful is as follows: 100% after 720 days; 50 % after 360 days; and 7.5% up to 360 days. During the 15 years of operating history, the company has never had any uncollected receivables." This makes me feel quite comfortable with their accts receivable balance, since I know they will get paid. CPHI has one of the most impressive product portfolios and pipeline I've seen and provides visibility for continued strong growth for at least the next 5 years. At current levels they're a steal. They also have plans to re-list at some point, either on NASDAQ or AMEX. This is probably one company you can feel comfortable buying and holding. Discloser: Long on all of the above.

James Balaban

China Sky One Medical: Response to Cabeza Howe

While I cannot validate some of the claims in Cabeza's article, I can say that I have had a significant number of contacts with Stanley, CSKI's CFO, and found him to be absolutely above board. If there is someone on their board of directors who is supposed to possess an area of expertise that he doesn't, I have 100% faith in Stanley to remedy that situation. As for previous mistakes, I'm sure they've been learning experiences for management. They're not "Wall Street" yet, but they sure are doing a great job of executing the business that they know.

J. Balaban


On Apr 30 08:06 PM Ma-lin wrote:

> Cal, thanks for posting this. Too bad you did not do it a bit earlier
> (I sold my CSKI stock in a panic). I wonder what you have to say
> about their accountancy problems and the other issues raised by Cabeza
> Howe

China Sky One Medical: Response to Cabeza Howe

Truly Excellent rebuttal! I am one of those who entered queries to CSKI over the negative article, so I'm very pleased with the results of your efforts. Thanks very much for your well done due diligence.

J. Balaban