User 283977

Swine Flu Stocks - Just Wait Until Fall

I know I am wordy, so here is my cut to the chase impression.

I agree with the logical argument of Freya. She and others see an opportunity for a larger upside potential relative to the downside. To me, that defines investment savvy.

Here is the basis for that impression.

The key questions I see concern whether there is money on the table associated with this pandemic, and if so, are the companies discussed above likely to benefit?

Yes, it’s speculative and therefore by definition, risky. However, I see no less than THREE market forces interacting here. One is the fact that the WHO declared a pandemic. Two concerns the necessity for public health organizations to order sufficient product relative to 'projected' needs. I think the safer bet is that public health organizations will more likely err on the safe side and order large quantities of product, particularly given that it takes time to manufacturer and distribute the product. If public organizations order too little product, its their heads on the platter. The third force and probably the most speculative concerns the innovative drug development platforms for two of these companies NVAX and VICL.

In my business experience, large companies often buy innovations developed outside the company as opposed to developing them in-house. The recent acquisition of MEDX by BMY is a good example of this in action. No one would have bought MEDX based on their business fundamentals. They were, after-all a start-up. The people that did buy it bought on the basis of a combination of their knowledge and research efforts. In that particular situation investors of MEDX won. In addition a lot of those investors subsequently bought BMY figuring that BMY purchased MEDX for a good reason.

To me there are two sides to risk. Downside risk involves making an investment that goes south. Up-side risk concerns NOT making an investment in the presence of reasonable upside potential and consequently missing subsequent up-side gains. ALL investments have a risk. A fact that a lot of people learned when companies with impeccable business fundamentals went down the tube in the recent past. Even if you have your funds in dollars, their real valuation is subject to things not under your control like inflation. Sure the Government statistics say there is little to no inflation. Now look at the price of milk, and bread and other staples.

I don't make investments totally on the basis of what other people say, but I do listen to their arguments. Everyone needs to do their own homework. I started out investing in businesses I knew. If someone knows a lot about pharmaceuticals, like Fran Grady, than you listen very carefully to what that person has to say. If you don't know a lot about pharmaceuticals, and you are thinking of 'putting some skin' in the game, than you should start reading everything you can get your hands on. The smart play is to do what you can do to understand all of the risk components, downside AND loss of potential upside.

SO .... I agree with the logical argument of Freya. She and others see an opportunity for a larger upside potential relative to the downside. To me, that defines investment savvy.

Swine Flu Stocks - Just Wait Until Fall

Vical announced that the company successfully completed second-year milestones under a $6 million grant awarded in 2007, and is advancing with the development of a DNA vaccine manufacturing process named "RapidResponse" with the potential to produce several million doses of vaccines in a matter of days. That RapidResponse system is designed to allow extremely rapid and large-scale production of DNA vaccines with low capital requirements.

I went with NVAX once again because of production capacity potential. They have developed proprietary recombinant cell culture technology which enables production of custom VLPs (Virus-like particle ) against a strain of influenza within weeks. Again, the ability to respond rapidly is an important factor in the evaluation of alternative investigational vaccines.

VICL and NVAX are production method/ capacity plays. If these production methods are successful, I suspect both of these companies could be acquisition targets. Their Mcaps are small change for the big boys (VICL 163M, NVAX 434M).

My third play, SVA is a Chinese bio-tech company and is currently field testing three different versions of their Panflu vaccine. My reasoning here is that a Chinese manufactured vaccine will be among the first selected by the Chinese health authorities in treating their massive population needs.

I started looking at the investment opportunities here because I follow Freya, Yellowhoard, and OptionsGirl discussions. They were the ones that started me thinking about H1N1 related investments. That's how I found Everyday Finance too. Thanks guys!!!