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GBMB update

Recs

17

August 11, 2010 – Comments (8) | RELATED TICKERS: MYGN , DSCO , BDSI

Has it really been three months? I've been dreading this update since I don't think I've done very well recently and I'm going to hate seeing it in black and white. Also, I've gathered so many companies into the GBMB fold that it's going to take hours to write progress notes on all of them. But I guess when I decided to publish all my biotech trades I took on the risk of looking bad, so here goes ...

Current holdings:

BDSI 5000 shares bought at 3.95, current price 2.34

DSCO 50000 shares bought at DCA of 0.375, current price 0.27

MYGN 2000 shares bought at 18, current price 15.59

MYRX 3000 shares bought at 3.8, current price 3.78

EXEL 3000 shares bought at 3.69, current price 3.14

BIOD 3000 shares bought at 3.94, current price 4.08

RTIX 3000 shares bought at 2.95, current price 2.55

IDRA 3000 shares bought at 3.35, current price 3.41

FOLD 1218 shares bought at 2.9, current price 2.88

Recent sales:

IDRA 3000 shares sold at 4.16 (bought at 3.7)

RGEN 5000 shares sold at 3.63 (bought at 3.25)

FOLD 5000 shares sold at 2.6 (bought at 2.1)

RIGL 2000 shares sold at 7.21 (bought at 6.49)

Status:

Total value of current GBMB holdings = $110768

Unrealized losses = $20454

Realized gains = $21660

 

Yowzas. Throw in a couple hundred bucks in trading costs and I'm up a grand in seven months. The only thing that makes me feel better about GBMB is that the picks I stole from top Fools are biting the dust like its going out of style.

So how are the kids doing?

MYGN – I thought I lucked out grabbing Myriad at 18 after a big gap down in May, only to see continued downgrades and weakness. Earnings were released today and seemed to be in line with guidance, although the after hours action looks negative yet again. The market is acting like they think health care will permanently regress and the most cutting edge diagnostics will be simply discarded. That’s the only explanation I can come up with for the persistent drops in companies like Myriad, Genomic Health, and Genoptix. Myriad is using some of their sizable cash reserves to buy back up to 100M in stock. I’m holding my position.

DSCO – once again I thought I did a good job holding out for a good price, only to see cheaper and cheaper prices appear every time I averaged down. Discovery seems to have a never-ending appetite for dilutive financings, and the failure of the phase II study of Surfaxin in acute respiratory failure sure didn’t help. I think Discovery at 0.18 was probably one of the best risk/reward buys a biotech investor could have made this year. Why didn’t I double down again at 0.18? Because of the Sequenom effect. Any baby biotech stock, no matter how good it looks on paper, has the potential to suddenly reveal a negative catalyst that can obliterate its value. At 50000 shares and $18750 invested, I’m done buying Discovery. Now it’s just a waiting game for phase II data for the KL4 surfactant in cystic fibrosis in Q3 and the resubmission of the Surfaxin NDA in Q1 2011. I’m still seeing Discovery back over 1 within six months.

BDSI – this remains my biggest mistake so far with the GBMB strategy. I considered 4 to be a bottom based on looking at the chart, and thinking that the push up to 8 after Onsolis approval couldn’t have been completely misguided. As it turned out, 4 was a ledge and the stock continues to seek a bottom. Meanwhile, the path forward is extremely murky with very limited information from the company’s quarterly statements and other sources. Onsolis has generated some slight royalties by the most recent earnings statement, but it is unclear if they will continue to increase. BDSI isn’t providing any updates on their pipeline, or on the status of the BEMA fentanyl submission in Europe. I’m continuing to hold my 5000 shares because I don’t have enough information to justify selling them.

MYRX – this stock remains a cash play. The discount of market cap to cash was substantial at the end of last quarter, and the next quarterly numbers remain to be seen. Meanwhile the company appears to be tightening up the pipeline by discontinuing their HIV programs. I’m not seeing much chance of exciting clinical developments in the near future, but a partnership or buyout remain distinct possibilities. The share price has dipped as low as 3.6 but bounced back to current levels. I’m fairly comfortable that I executed this bottom-feeding play correctly.

EXEL – the financial position looks pretty good to me after reviewing the last earnings, with a healthy 308M in cash including long-term investments. I’m kind of shocked to see the stock flirting with 3 just on the basis of Bristol-Myers dumping XL184. It’s a setback, but nowhere near as bad as the drug failing completely. Exelixis still has other proprietary drugs in their pipeline and XL880 farmed out to Glaxo. The share price is within a buck of the all-time low of 2.4 seen in the depths of fall 2008 misery. I’ve got room to double down on this one below 2.9.

BIOD – the only story here is the Viaject PDUFA of October 30. I thought my bottle imp was jumping this week but it looks like a false alarm. I’m still hoping for at least 6 but I will not be holding this stock through the PDUFA under any circumstances as I think the likelihood of rejection is high.

FOLD – I made an abortive run at 2.9 and got 1218 shares and then forgot about it until Portefeuille called a true bottom last month which allowed me to rack up $2500 with a new investment. How he does it I’ll never know but I don’t argue with profits. I confess to being clueless about the movements of this stock since no strong catalyst is expected until Amigal phase III data in mid-2011.

MIPI – I can’t leave Molecular Insight alone because of its bizarre behavior this year which at one point resulted in a gift of nearly $10000. The company is surviving at the mercy of bondholders who are providing one or two week waiver extensions that allow operations to continue. But three times this year the share price has suddenly shot upward, at one point almost 300% (and thus my $10000 gift). The share price is now at an all time low of 1.12, and the next waiver extension runs out August 16. Will the bondholders require the company to declare bankruptcy this time and send the share price to 0? Or will whoever is controlling this stock make it quadruple for a few hours before it sinks again like a dispirited soufflé? I hate to admit it, but I’m seriously considering buying a couple of thousand shares just to see what happens.

I think I’ll leave it at that for now, and hopefully find time to discuss IDRA, RTIX, RGEN, RIGL, MDVN, GHDX, OPTR, ITMN, ANDS, ADLR, TTHI, DEPO, and ANX later this month.   

 

 

8 Comments – Post Your Own

#1) On August 11, 2010 at 8:04 AM, Seansonfire (40.12) wrote:

I did the same thing on BDSI as 4 looked like a good entry point.  I think you still have a couple of winners here.

 Watch out for taxes at the end of the year if you are closing out all your winners but none of your losers.

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#2) On August 11, 2010 at 8:41 AM, TheStreetOutside (< 20) wrote:

Another suggestion for the GBMB portfolio-  Celldex below $5 given they will announce a start to phase 2 pivotal CDX-011 in breast cancer and phase 3 details regarding CDX-110 in glioblastoma sometime in 2010. 

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#3) On August 11, 2010 at 9:18 AM, mhy729 (30.80) wrote:

Any thoughts on ALXA?  Recent dilutive financing with PDUFA on Oct. 11 for AZ-004.

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#4) On August 13, 2010 at 3:45 AM, zzlangerhans (99.83) wrote:

Celldex is already below 5. And Celldex was 4.28 on July 6. Market cap is 150M, cash is 66M, and burn was 16M last quarter. I smell impending dilution especially with any upward price movement. Trial initiations, especially of the long cancer variety, don't move these stocks much. Regarding the ongoing studies, it's difficult to time interim data updates. Celldex had a nice pre-ASCO run, the data was unexciting, the share price cratered again. I don't have anything against Celldex, after all I have a green thumb on them, but there are much better places to put real money right now.

I don't look at Alexza much since I've been upside down on a green thumb for years. Fool me once ...

This past winter was the right time to get into Alexza. Between December and May the share price nearly doubled on submission and acceptance of the AZ-004 NDA. Since then the share price has fizzled in a smog of debt and dilutive financings. Here are the two main problems with Alexza and AZ-004: First, why is the company diluting aggressively prior to the NDA unless they doubt AZ-004 will get first pass approval and need to carry themselves over to resubmission? Second is the nature of AZ-004 itself. Here, you agitated paranoid schizophrenic, please wear this gas mask until you fall asleep. ER docs such as myself smile politely when we hear about this kind of medical advance.

Yes, there are counter-arguments which are easily found in Pumperville. Personally, I believe the likelihood of first-pass approval for AZ-004 is less than 25%. I don't expect Alexza stock to see much of a kick before the PDUFA but if they go over 4 I may be putting.

In summary, I hope to close out many more winners and pay loads of capital gains taxes for 2010. 

 

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#5) On August 17, 2010 at 3:50 AM, expatriot08 (28.95) wrote:

Thanks for taking the time to do this. It is always nice to hear your opinion. I wanted to mention BDSI. They may have allayed some of you concerns in the Bank of America  conference they participated in. The webcast may still be available on their website. Mark Sirgo, mentioned the pipeline timelines, europe approval. Onsolis sales, etc.

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#6) On August 21, 2010 at 8:29 AM, expatriot08 (28.95) wrote:

EXEL- nice size insider buys this week. It marked the bottom last  fall, maybe this time too.

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#7) On August 26, 2010 at 1:13 PM, 1337172979 wrote:

ZZ, do you know of any short-term catalysts for EXEL? I'm looking to buy some shares or calls. Thanx

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#8) On August 27, 2010 at 12:01 PM, zzlangerhans (99.83) wrote:

I'm not a good source for company minutiae, especially on a Swiss watch like Exelixis. If it isn't a PDUFA or phase III trial data release, its usually a surprise to me.

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