dcsilver (57.50)

Speculative Biotechs, Government Contracts, and Zzlangerhans – NVAX, PBTH, & SIGA

August 10, 2011 – Comments (2) | RELATED TICKERS: NVAX , SIGA , PBTH

Normally, zzlangerhans is my starting point for identifying speculative biotechs to investigate and trade in.  I find his knowledge useful and more accurate than most filings and websites.  So it’s odd for me to have actually identified three recent stocks that zzlangerhans has green thumbed and noticed they were already in my personal portfolio.  While I normally dabble in biotechs and trade in small banks (SNBC trading at a 52 week low is a personal favorite), out of the blue my personal portfolio has suddenly become heavily balanced in biotechs led by MDP favorite EXEL.  I don’t use CAPS for its intended purposes, I use it more as a tracking mechanism for stocks I like to see when the market inappropriately punishes them and then I pick up a few shares.Let’s look at zzlangerhans thoughts and I’ll add my two cents (which is about all it’s worth)

-SIGA – (zz submitted 6/14/11) - The ups and downs of the SIGA soap opera have been great fodder for volatility traders. As I understand it, the ST-246 contract has been signed with BARDA but the company has not yet initiated manufacture pending resolution of a post-award protest by Chimera. There is still an outstanding lawsuit by PharmAthene claiming that SIGA had guaranteed them rights to manufacture ST-246 (although all the relevant documents are apparently headed "non-binding") and word today of a congressional investigation into potential insider dealings between major SIGA shareholder Ron Perelman and BARDA. The way I see it, the contract is signed and SIGA is ready to supply. The protest, lawsuits, and investigations are not going to stop what BARDA perceives as a solution to a national security issue. I don't know if this is the bottom, but I'm about 80% sure that ST-246 delivery will eventually proceed.

I tend to agree with zz’s legal analysis.  I was a fan because I think SIGA has an opportunity to hit $30 if things break right.  Of the three this is the stock I know and understand the least.  ZZ’s green thumb has given me renewed optimism with this up and down stock.  I bought in around $6 so I’m not thrilled with the recent decline.

PBTH – (zz submitted 8/8/2011) - One of the worst aspects of the debt crisis for me was the way it fell on the same week that Prolor finally reported positive results from their phase II trial of extended-life growth hormone hGH-CTP. A week earlier and the share price would have been up 20% or more and I would have been out of my GBMB investment with a solid gain. As it was, the news came on the worst day of last week and the stock finished the day with a loss. I still think this was a great result, both in terms of the commercial prospects for hGH-CTP and as proof-of-concept for Prolor's broad CTP pipeline. Unfortunately, I'm now holding my 2000 shares as a long-term growth investment rather than the quick catalyst play I wanted. I did a quick in and out on CAPS to lock in a positive score and start a new pick at a lower price. Hooray for the completely inappropriate S&P benchmark.

I had identified PBTH because I am a religious follower of Phillip Frost.  I’ve traded in and out of a lot of his stocks because I use insider trading as my personal thermometer as to whether or not I like a stock.  Frost and his associates have been buying shares of PBTH for awhile.  I actually missed the boat on this one because I identified it around $4.50 and only purchased it this morning at $4.78 (pre-market).  I’ll take advantage of the stock being punished because of overall conditions not bad news from PBTH.

NVAX – (zz 5/22/2010) - A long-term chart of Novavax's share price looks like a photograph of the Himalayas, spiky peaks interspersed with craggy plains and deep crevasses. It seems fairly obvious that Novavax is a stock made for short-term traders and CAPS players but a total dead end as a long-term investment. Every time influenza makes an appearance and the hysteria machine cranks up, the share price shoots to the moon only to plunge back to earth once the market realizes that the vaccines are going to be coming from a large traditional vaccine maker and not one of the army of microcaps trying to horn in on the action. For the years I've been following Novavax, it seems like they've been puttering away in early clinical trials of their influenza vaccines while companies like Sanofi simply produce them and get them on the market rapidly to fill a need. Now their strategy seems to be aimed at marketing vaccines in the third world.What I'm doing here is finding a nice, relatively quiet spot to hibernate until the next influenza epidemic or other unpredictable catalyst that will send the stub back into the 5's or 6's. I'm not sure it's a good way to put cash to use, but in CAPS I have the slots so why not?

This one I don’t get.  The US government (Department of Health and Human Services) had awarded the vaccine developer a contract worth up to $179 million to continue development on its VLP-based vaccines for seasonal and pandemic flu. Novavax plans to use the funds to run clinical trials for its pandemic vaccine in combination with various adjuvants, or boosting agents, and conduct certain Phase II and Phase III studies for its seasonal vaccine. The company also intends to build a manufuacturing facility that can produced finished vaccine within 12 weeks and can produce up to 50 million doses within six months after a flu pandemic is declared.  When this first broke the stock hit $3.00 again.  I’m buying chunks in the $1.30 range and hoping this one recovers.  It’s in the crapper for no good reason as far as I can tell.  I even called into the Quarterly call last week.  Maybe I’m missing something (like why the CEO left), but the stock chart looks like the friggin Himalayas and I’m guessing that this stock is seeing the bottom (could drop further but I’m in for the longhaul).  I think this one has a solid foundation.  I see could things this winter. I’ve got an average price around $1.40 (I started over $2.00).