Fresh bottoms for the grabbing
2% down in the S&P means 5% down in the average speculative biotech. One has to be philosophical about these temporary paper losses (as long as one isn't way out on margin or long calls) and simply look for more buying opportunities. Claiming to have identified bottoms in a seeming bottomless market may seem like the height of overconfidence, but I wish I had suffered from more overconfidence in March 2009. For those unfamiliar with my trading strategy for 2010, you may find it here. So here are a couple more beaten down biotechs which may provide substantial returns when the market rebounds.
Idera Pharmaceuticals (IDRA) - market cap 99M, share price 4.2. Cash 38M, debt 0, burn 0. I've made myself score leader in Idera over the course of about ten winning picks and I don't think I'm going to start losing now. Other biotechs have a more impressive discrepancy between cash and market cap but the nice thing about Idera is that they make their cash go a long way. One of the more painful events after a GBMB buy is a dilutive financing, which I think is a very low probability in the near term considering the burn rate that hovers close to zero. The share price hasn't seen these levels since November 2006, having only dropped as low as 4.66 in March 2009. The most likely short-term positive catalyst is more early phase data from IMO-2125 in hepatitis C. Although results from the Toll-like receptor program haven't been strong to date, the disappointments have been baked into the share price and then some. Numerous early trials are now in progress and I still believe the company remains a strong buyout candidate due to their technology. In CAPS world, Aracer just joined me in the green which is nice. GBMB buy under 4.
Myriad Pharmaceuticals (MYRX) - market cap 99M, share price 4.01. Cash 144M, debt 0, burn 11-13M. Speaking of discrepancies between cash and market cap, wow. Myriad's pipeline is valued at negative 45M, not including the 13M that the company will receive from Javelin for the termination of their planned merger. And after Javelin's recent troubles, bonus to Myriad for being out of that questionable deal. Admittedly, the pipeline is shaky. There's a reason why Myriad Genetics spun off their developmental pharmaceutical division as MYRX last year to focus on profitable genetic testing. I have to wonder about the wisdom of spending resources to resuscitate beviramat, the HIV drug that killed Panacos. And Azixa hasn't impressed anyone with interim data in glioblastoma and melanoma leading into ASCO. Nevertheless, benefit seems to be the clear winner in the wrestling match with risk here. In CAPS, Portefeuille is the main booster with six of his profiles bleeding on the stub. Several other top players have weighed in green and virtually no one has tossed in a red thumb. My fingers are twitching when I look at this share price, but I'm waiting to see the whites of its eyes. GBMB buy under 4.