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December 2008

Recs

13

Small cap biotech: The GOOD (part II)

December 22, 2008 – Comments (10) | RELATED TICKERS: CVTX.DL , LGND , VPHM

 I've been remiss in keeping up with my good biotechs, and I've been punished by seeing 2 or 3 jump up almost 50% as I procrastinated recommending them. I found three which haven't gained that much in the last two weeks to get me to the halfway point of the theme.  [more]

Recs

9

Small cap biotech: The GOOD (part I)

December 09, 2008 – Comments (8) | RELATED TICKERS: ONXX.DL , MDCO

Nothing exciting happening in biotech world so far this week so I can't put off this post any longer. If there is such a thing as BAD, then there must be GOOD otherwise we wouldn't be able to define BAD. Several factors establish a small cap biotech as one of the better investments in the sector. The most important is their track record of success. This differentiates true players from the numerous bogus outfits that exist solely to enrich their founders. Look for companies that have gained FDA approvals, acquired and successfully marketed drugs, sold developmental projects for significant sums, and achieved unequivocal success in phase III trials. At the same time they need to be undervalued. It is very important to make a database of similar companies to get a sense of which have been unfairly pushed down and have the greatest potential returns. Of course in the current market, virtually all baby biotechs with good track records are undervalued by historical metrics. Finally, do not fall in love with a stock. Seek out reasoned criticism and challenge your investment every time you review it. Be prepared to exit at a moment’s notice, even at a loss, if the risk/reward ratio has changed.   [more]

Recs

9

Small cap biotech: The BAD (part II)

December 02, 2008 – Comments (5) | RELATED TICKERS: DNDN , IDIX , CADX

This is the second part of my list of ten Bad biotech companies that I believe will become Ugly biotech companies in the near future. It’s truly amazing how many companies have already made that journey in 2007 and 2008, and how few new biotechs have gone public. I hope we’re seeing a paradigm shift where biotech will no longer be an easy place for fly-by-night operators to collect hefty executive salaries and options while blowing endless smoke about hopeless pipelines. The seemingly endless ability of these companies to finance themselves with debt and dilution may have come to an end for the foreseeable future. I saved some of my more controversial choices for the end.  [more]

Recs

10

Small cap biotech: The BAD (part I)

December 01, 2008 – Comments (4) | RELATED TICKERS: CGRB , OSIR , OPK

Here's where things get nasty and Yahoo pumper trolls start to froth. I've decided to pick ten Bad biotech companies I believe will ultimately fail, based on my experience with Ugliness. It's actually rather difficult to find these companies now as so many have already failed in the last two years. This is not a recommendation to short or even to red thumb, as several may outperform in the short or mid-term based on momentum and false optimism. Later this month I'll choose ten Good biotechs I think will be successful in the long term. If you disagree and find my analysis woeful, please keep it to yourself and do not try to convert my blog into a Yahoo message board. The nice thing about CAPS is that everyone gets to make their picks and everyone can see how accurate they are. That way, you don't have to argue with anyone. When their score is low, you can just ignore them, which is what everyone else does. And by blogging my picks I'm raising the stakes on myself even higher. I'm putting a year horizon on my Bad and Good picks. In shorter time periods it becomes almost impossible to overcome stochastic factors. And longer term accuracy? Well, who wants to be proven right after they die? So after a year I'll re-examine this month's picks and determine whether I should keep rating biotech or switch to reviewing movies on IMDB.    [more]

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