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Three more bottoms that might be good in a pinch

Recs

17

January 14, 2010 – Comments (4) | RELATED TICKERS: GHDX , FOLD , BDSI

Let's have a look at the market capitalization, cash, debt, burn (or profit), historical stock performance, catalysts, and long-term potential of a few more stocks that have been sinking of late.

Genomic Health (GHDX): Market cap of 494M, share price 17.28. Cash 59M, debt 1M. Burn has been <5M each of last four quarters. The three year low was 15.7. The share price was volatile in 2009, peaking at 27 off the March lows, then dropping back to 16, rising back to the low 20's then falling to current levels. Oncotype DX revenues have been steadily increasing, allowing the company to pursue research without burning cash rapidly. A recent intraday dip to 16.5 was caused by announcement of total 2009 revenues at low end of guidance. But those 2009 revenues were 150M, compared to about 110M in 2008. The next earnings may well be inflated by delayed revenue that hurt earnings last quarter. In 2010, the company will begin marketing Oncotype DX in colon cancer as well as breast cancer, although the impact will likely be limited due to mixed results of the Quasar validation study. But the bottom line is that long term prospects for growth are fairly good, and the share price has been considerably higher in the past on lower revenues. There are no likely short-term negative catalysts or threats to viability. In CAPS, Fransgeraedts and Portefeuille are underwater on green thumbs with me, likely in part because of my enthusiastic pitch. But they don't dogpile all my picks by any means. Probable GBMB buy <17.

Amicus Therapeutics (FOLD): Market cap of 88M, share price 3.87. Cash 89M, debt 4M. Burn 12-14M. In 9/09 share price began to crap out rapidly and has been unable to struggle much above 4 for the last two months, with a dip as low as 3.36. There was good reason for the decline - Plicera failed in a phase II trial and the collaboration with Shire encompassing all products in clincal trials was terminated. Given the crippling of the AT2220 program due to side effects, this left Amigal as the only viable compound in clinical trials. The Amigal phase III trial was initiated in 10/09 and is not expected to complete enrollment until the end of 2010. Unspecified results are expected in mid-2011. What makes Amicus potentially attractive is their apparent bottoming at cash value. They will not need to raise cash for about a year unless they choose to, which will likely occur only if the share price rises. The highest risk of the play is some interval disaster in the phase III trial such as failure of an interim futility test or development of severe side effects. I consider this unlikely given the phase II trial results. In CAPS, Portefeuille went in with several profiles after the bad news and is obviously underwater. Sorry, Port. The stock is now unratable. I wouldn't get in unless the cap fell significantly below cash. GBMB buy <3.7.

BioDelivery Sciences (BDSI): Market cap 87M, share price 4.15. Cash 26M, debt 0. Burn all over the place, most recently 3M. In July 2009 BEMA Fentanyl finally achieved FDA approval but the share price trended downward in a sell the news response. For about two months the share price has remained relatively stable at 4, with an absolute low of 3.84 not including intraday. The cash crunch was eliminated by a 25M milestone payment from Meda. The market seems dubious about the commercial potential of BEMA fentanyl, but no sales figures have been released. Even if BEMA Fentanyl sales are poor, the company's proprietary BEMA technology has been validated by the approval of that compound as well as phase II success for BEMA buprenorphine. Other BEMA compounds are in the pipeline. At such a low cap, future potential is high as an independent company or especially as a buyout candidate. In CAPS the stock garnered 48 active green thumbs from Allstars before becoming unratable. GBMB buy <4.

 

4 Comments – Post Your Own

#1) On January 14, 2010 at 12:14 PM, EnigmaDude (98.06) wrote:

I love your racy blog posts!

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#2) On January 17, 2010 at 2:12 AM, valuemoney (99.99) wrote:

Your blogs on biotech are like crack. I better stop looking at them because they will get me into trouble. You make me want to gamble on these equities. Love your posts.

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#3) On January 17, 2010 at 2:22 AM, TMFUltraLong (99.96) wrote:

"burn rates" - a technical term describing precisely why I regularly hate on biotechs.

UltraLong

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#4) On February 07, 2010 at 6:45 PM, bigrabbit66 (< 20) wrote:

agree totally with your GHDX assessment. Stock looks like it hits resistance around 16 and it's there now. Just becoming profitable with continuing growth and no significant competitor as far as I can see. Looks like a buy.

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