Review of SmithOnStocks Recommendations; August 17, 2015
Purpose of Report
I am leaving on vacation and will be back on August 27, 2015; you won’t hear from me until then. As the second quarter conference calls and accompanying updates are almost behind us, I thought I would provide a quick summary of where I stand on the15 companies I cover. These are going to be one liners in contrast to the detailed reports that I usually write.
Three Asymmetric Investments: All Buys
There three companies that I view as having paradigm changing technologies in which they are the clear market leaders. They are Northwest Biotherapeutics (NWBO, $9.57), Neuralstem (CUR, $1.32) and Discovery Laboratories (DSCO, $0.48). They are developing products which would truly change the face of medicine and are my true asymmetric investments. The products of all three companies have shown signals of activity but have not yet completed trials that establish proof of concept. In the case of Northwest and Discovery, such trials will be completed in 2016 and in the case Of Neuralstem in 2016 or 2017. As true asymmetric investments we are looking at several fold increases in price as upside in the event of success and enormous downside in the event of failure.
Recent reports are:
Northwest has not yet reported 2Q results and I will like do an update when I get back. I see the major overhang on the stock as being concern about a financing (Woodford is likely to play a major role). The potential upside catalysts are a collaboration with probably BMY on DCVax-L and BMY’s Opdivo and long awaited news on German reimbursement for DCVax-L.
Two Almost Asymmetric Buys
Agenus (AGEN, $7.27) and Cytokinetics (CYTK, $6.45) almost make the list of asymmetric investments. They are both buys.
Recent reports are
Three Fundamental Situations I Really Like But…….
There are three companies I really want to buy I am deterred by the current price from being aggressive. However, you couldn’t pry these companies out of my portfolio with a crowbar. I am looking for an opportunity to be more aggressive. Repligen (RGEN, $34.78) has the best business model that I have seen in biotechnology. ZS Pharma (ZSPH, $50.23) and Chimerix (CMRS, $49.98) have novel products (not quite paradigm changers) that should be approved in late 2016.
I think that Antares (ATRS, $1.89) has the potential to reach $4.00 to $6.00 in late 2016. ImmunoCellular (IMUC, $0.48) could be a surprise in the universe of companies that I follow. Investors give it no credit for being a player in immune-oncology.
Recent reports are:
Other Companies on Which I Am Neutral
I am watching Alimera (ALIM, $3.89) closely. The launch of Iluvien could be catching traction in the US to the surprise of most investors. However, the company is burning cash at a prodigious rate and may have to do a financing under distress late this year or early next. pSivida (PSDV, $4.05) is a play on Iluvien without the financing risk, but will likely trade in concert with Alimera.
Celldex (CLDX, $16.34) has gotten clobbered lately because of the FDA telling the Company that it will not accept an NDA filing for Rintega. There aren’t major milestones until late 2016 or 2017. I think that this Company will eventually be acquired for its impressive pipeline of products. See Celldex: Meaningful Data on Two Lead Products, Rintega and glembatumumab, is not Likely Before 2017 (CLDX, Hold, $16.99)
Inovio (INO, $7.37) is kind of betwixt and between for me. They have novel products which interest me and they have done an excellent job of strengthening the balance sheet, but like Celldex, there will be some time until we see a major milestone.
Derma Sciences (DSCI, $6.48) appears to hit bottom with its advanced wound care products and is getting back of a growth track. AWC was up 17% in the 2Q, but Medihoney unexpectedly declined in the quarter. Topline data the wound healing product aclerastide will be available in 1H, 2017. This could be an upgrade if management can get a fix on the issues with Medihoney.
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