Just like Coronado Biosciences Inc, (NASDAQ:CNDO) was my #1 pick in 2013 ; Regado Biosciences Inc (NASDAQ:RGDO) is my #1 pick in 2014.
For those of you who still don't see how on earth RGDO is gonna double in the short term with very limited risk just like CNDO did last year , I suggest you spend some quality time reading my last year's (also my 1st Instablog on SA) writing.
Like I mentioned before, the investment thesis in RGDO is almost identical to the CNDO case. Both company experinced the pps fiasco after their major clinical trials failed with their stocks trading at far below their cash value (or book value for that matter) and only a teeny tiny fraction of its 52-week high. However, both companies managed to raise a significant amount of capital right before data readout, making them both a cash-rich monster and paving the way for their future comeback.
Following the latest PR this afternoon, with around $61 mil cash at hand at the end of Q3, 2014, RGDO currently has a cash/share value of a little over $1.8 and trading only at around $1 at the time of this writing while CNDO's cash/share value was around $3 and trading ridicuously at below $1.5 last November when I initiated coverage. Within a flash of THREE month, CNDO saw over 100% gain.
Even though neither of these two companies have a strong pipeline for the time being, their cash reserves are more than enough to justify a much higher pps. Let's not forget the simple fact that cash itself is also a perfect indication of value inside.
One important dissimilarity to note here, however, is that RGDO is somewhat in a even better situation than CNDO last year in the sense that, unlike CNDO whose Phase 2 clinical trial evaluating TSO targeting Crohn's disease was sentenced to death after the unsuccessful top-line results , permanent termination of enrollment in its REGULATE-PCI phase 3 trial does NOT automatically translate to the end of the trial. There is still a possibility that upon completion of the final data analysis, the company may be able to find some previously unidentified results (for example, a sub-group of the trial polulation had a statistically significant reaction to the treatment without any "adverse effect"). In addition, with over $61 mil cash as of Q3 2014, the company has the flexibility to "initiate a campaign to evaluate a broad range of strategic alternatives that could maximize returns for its shareholders in the near future." And this is exactly why I referred to RGDO as the "advanced version" of CNDO.
Finally, when making investment decision, ask yourself, how many biotech companies with (this super slim) market cap of less than $40 mil you've seen before have such incredibly rich cash reserve as RGDO does? Make no mistake about it, even until today, CNDO is still able to trade at around $1.9 (above its cash/share value of $1.72 as of 6/30/14 ) whereas RGDO is trading at... Therefore, I think it makes sense to anticipate RGDO to at the very least reach its cash/share value and most importantly, this short-term PT should materialize almost risk-free (this is probably the simplest and most straightforward case of fundamental analysis and I heard some people even called it a "no brainer").
"If you missed CNDO last November, consider yourself unlucky; but if you miss RGDO this September again, consider yourself unwise."
Disclosure: The author is long RGDO.