Mast Therapeutics, Inc. (NYSEMKT:MSTX)

CAPS Rating: 4 out of 5

A biopharmaceutical research and development company focused on commercializing proprietary product candidates for the treatment of cancer and infectious diseases.


Player Avatar TSIF (99.96) Submitted: 11/17/2011 5:14:32 PM : Outperform Start Price: $0.64 MSTX Score: +11.71

I caught Adventrx Pharmaceuticals, Inc plunging like a rock on November 11th and I stopped in to see if my favorite CAPS bio followers had rated it. ZZlangerhans had just given it one of his speculative upthumbs. Speculative meaning that it's long term potential was too far out and overall not generally bright, but in the current cycle of such a biopharm, there might be some room for a trade for a patient investor not interested in the final outcome of the drug portfolio. The basis was on the excellent cash position, the burn rate, and the timeframe given to Adventrx to interest speculative biopharm investors. Sure enough when you comment on a biopharms solid cash postition they decide to dilute anyway.

We bantered this on ZZ's pitch. One can issue more shares at a 30% lower price because one wants to ensure an even safer cash margain to work with, or one can do it because management has poor expectations of end results and wants to collect a paycheck as long as possible. Adding the $15 Million to current cash and backing out the burn rate and we have a nice long runway for something to fizzle or pop. I'll take my caps play well below the offering price and well below ZZ's unfortunate entry and watch this one for awhile. Of the two drugs, ANX-188 for acute sickle cell may have some potential. ANX-514 appears to be a reformulation of an existing chemo drug. Long term potential is beyond my abilities at this point, I prefer to play this one as a swing trade on the drop below the dilution price and the large cash postion. This type of play requires monitoring and getting out before any Phase III data if the share price has not risen to provide some margin.

Report this Post 4 Replies
Member Avatar zzlangerhans (99.85) Submitted: 11/20/2011 10:27:45 PM
Recs: 0

Too far out and overall not generally bright? I resemble that remark!

Member Avatar TSIF (99.96) Submitted: 11/21/2011 12:13:58 PM
Recs: 0

The market has a way of kicking us around from time to time. With a little luck and persistance we can pick ourselves back up, brush ourself off, maybe learn something, and get ready again to have the wind kicked out of us again!! ;)

Sorry to add some dust to the wounds!!! ;) The theory seemed sound, but on any given day management of a company can toss sound theory out the window!!! ;)

Member Avatar pugnaciously (29.87) Submitted: 12/7/2011 5:28:06 PM
Recs: 0

I address this to ZZ and/or TSIF. The small biopharms look treacherous enough as it is to even get a drug to Stage 3. The fact that the quality of management in each and every firm is hard to know makes the game even tougher. What can you do to assess the management of each and every tiny biopharm that you are picking? I assume that these picks are not where real money is going, but I don't know that for sure.

Member Avatar TSIF (99.96) Submitted: 12/8/2011 5:08:13 PM
Recs: 0

zzlangerhans puts a lot of investment money into biopharms. He pitches everything he calls here on caps and generally indicates which ones he's honing his bipharm studies on and which ones he's in RL. His blogs are also excellent if you're interested in biopharms. His focus is bottom calling between catalysts.
My favorite of his blogs is:
Hard to believe he penned it 20 months ago, I must be getting up there in "CAPS age". Still very applicable in the context.

I generally have at least one active biopharm call in real money, but not nearly in proportional to how I play them in CAPS. They are too risky for me generally. My win/lose ratio in RL is about 50/50, mostly sticking to ones near final FDA approval, not the early phases.
Port will also give some buy/sell advice. I got my initial intest in FOLD from one of his short blogs, followed with ZZ's thoughts, and dug in.

AS far as management, very hard to discern. Some have had more than one run some have not. Some make better doctors and designers of the drugs/trials than they make management.

Most aren't repeat managers with a track record. Some are and you can generally find them by reading the news articles. Seeking Alpha has a few contributors who dive that deep. Some need a track record first and you pick it up by how they do on analyst calls. It's generally a good idea to listen to read the transcripts or listent to the call directly when you can each quarter. They are generally accessible on the company's website.

I don't know a better way than manual labor, maybe ZZ has some thoughts.

Management is very important in any investment, but for biopharms I don't think it's as valuable pre-FDA as the scientiests on staff. Management is more critical if they go to production and they often flip CEO's for one with more experience in that area.

Good luck

Featured Broker Partners