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Sniffing around for more bottoms



January 19, 2010 – Comments (6) | RELATED TICKERS: LGND , RGEN , TTHI

To be successful bottom grabbers we must adhere closely to our tightfisted principles. Even if our brokerage account remains unmolested for weeks, we cannot relax our exacting standards lest we wish to see our hard fought gains vaporize overnight. However, a careful perusal of my watchlist reveals three more small biotechs which could reach buying thresholds in the near term.

Ligand Pharmaceuticals (LGND) - market cap of 222M, share price 1.96. Cash 43M, debt 0. Slight profit last quarter that was not due to higher revenues or better margins, burn hovers close to 0. Cash reserves difficult to predict going forward due to company's proclivity to purchase blown out baby biotechs at a discount - Pharmacopeia, Neurogen, Metabasis. Year low 1.66 in November after spending most of the year in high 2's. Catalysts and long-term potential are extremely difficult to predict due to atypical business model of licensing piepline compounds to larger pharmaceutical companies early in development. They seem to have a good track record of success with FDA approvals, but their monetary benefit is opaque and revenues have not been increasing. The possiblity of future approvals and a widening pipeline indicate revenues are much more likely to increase than decrease. Not much recent CAPS activity from Top Fools except for a Portefeuille4 green thumb in November. Consider a GBMB buy below 1.8.

Repligen Corporation (RGEN) - market cap 110M, share price 3.59. Cash 43M, debt 0. Burn remains 0-3M due to an ongoing weak revenue stream from protein A sales and Orencia royalties, as well as sluggish R&D spending. Despite being one of the most boring companies on my watchlist, Repligen became an attractive potential buy after a pipeline smash-up in December brought the share price down close to two-year lows, after topping 5.5 in July. I wasn't much of a fan of secretin for MRI imaging anyway. The company has a phase IIb trial or uridine for bipolar disorder in progress which will complete enrollment this year but will not generate topline results until 2011. Again, I'm not tremendously excited but the phase IIa trial reported positive results and anticipation could drivethe share price up from lows. No recent CAPS activity from Top Fools. Like all GBMB stocks, Repligen is cheap for a reason but they've just gone down too far to make sense. Consider GBMB buy below 3.5.

Transition Therapeutics (TTHI) - market cap 85M, share price 3.66. Cash 38M, debt 0. Burn about 6M. The share price recently got crushed from 8 to as low as 3.46 after an Alzheimer's trial was terminated due to higher mortality in the study arm. Oddly, the share price had more than doubled in the months prior to the negative catalysts from lows around 3.77. With AZD-103 out of the way for the foreseeable future, the looming near-term catalyst is topline phase II data for TT-223 in diabetes, which could be released at any time by my calculations. The impending major catalyst is a relative contraindication to a GBMB buy, which leads me to set my threshold at a lower level and make this a lower priority buy. However, upside seems to outweigh downside at this level. Since the big drop, BravoBevo and StKitt are way underwater on green thumbs. Possible GBMB buy below 3.4 prior to TT-223 data.  

6 Comments – Post Your Own

#1) On January 19, 2010 at 5:05 PM, dudemonkey (53.14) wrote:

Anyone else think this should be "Headline of the Week?"

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#2) On January 19, 2010 at 7:59 PM, motleyanimal (38.24) wrote:

There seems to be a theme here: "To be successful bottom grabbers we must adhere closely to our tightfisted principles. Even if our brokerage account remains unmolested for weeks"


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#3) On January 21, 2010 at 11:46 PM, sirwanksalot (< 20) wrote:

zzlangerhans, With your new manifesto, which stocks from your blogs have you entered? I noticed that TTHI and BDSI dipped below your possible entry points

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#4) On January 22, 2010 at 12:00 AM, Tastylunch (28.66) wrote:

what do you think of TELK?

interetsing pitch here,

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#5) On January 23, 2010 at 9:07 PM, zzlangerhans (99.75) wrote:

Regarding Telik, this is a more interesting link than the one you gave me. I won't go into the details of the pump post you linked to, but Telcyta will never be approved. It kills people, and the company allowed a trial to continue for months after this became apparent. I'm surprised the management isn't in jail, let alone continuing to flog Telcyta. Telintra is in phase II trials, with results that can't be predicted. Given the company's record with Telcyta I'm not optimistic. All that being said, it's anyone's guess what could happen with Telik's share price in 2010. Just look at Pharmacyclics, GenVec, and Synta. But I'll be there with a red thumb at some point if they crack 100M.

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#6) On January 24, 2010 at 3:40 PM, Tastylunch (28.66) wrote:

Thank you very much  ZZ!

I stayed away from this one in real life as I it takes a me awhile to do DD on biotetch and now I'm glad.

I think a lot of Fools got suped bythis guy, he raised my suspicions though by never including the ticker at the top of the page...

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