continued from previous post:
As to Q Nr2: It might be wieser to stick to biotech/medtech only. However, if an entire sector sells of like O&G did, I cannot help but to dip into it (I was, of course way too early. However, the last two days have repaired much oft he damage, especially since I continued to buy on the way down (pex I added 60% to my SFY at 2.75), and added (re-entered) „new“ names at the bottom, such as RRC, CHK and RES. Anyway, so far –overall- not a great investment yet, but I see it not as a merely 1 month-story, but as a long term one...
Reply to your last 2 posts:
As to Q Nr 1, NPSP: The 8:5 vote was the reason why the stock tanked a couple of weeks ago. I think the Naptara results/possible side effects are solid enough/not alarming enough for the drug to be approved. (What’s more, the Shire buyout rumour ist starting again). I recently made decisive adjustments to my biotech portfolio: I reduced most positions significantly. I did not reduce TSRO (average buying price 30.5, now 36.5), NBIX (average buying price 14.75, now 22.5), nor CCXI (average buying price 5.95, now 6.75 USD), which finally had good news to tell; nor did I reduce NPSP significantly. However I cut my large positions in INCY (at ca 75), PCYC (at ca 127), MDVN (at ca 104) to merely moderate ones. They all had excellent runs over the past two years (although there might be more room to run in the long term). I sold 80% of BLUE at ca 87 (which I might buy back later, hopefully at a lower price...) and I exited KITE at ca 54, another winner (competition is heating up, JUNO and BLCM are going public this week: kepep an eye on them). I bought small positions in Fibrogen (at 23, now 27) and Sage (at 35, now 39), two IPO’s of 2014. Sage, with a market capo f ca 1 Billion USD has an intersting compound for super-refractory Status Epilepticus (SRSE) in advanced studies. The drug seems to work, the road to approval is short, and there are additional compounds in the pipeline. Above all a drug like this is sorely needed and will be used very soon not only in SRSE, but much earlier in the ICU setting. So far SAGE has retained all the rights to its drugs. FGEN is targeting large markets with a unique approach (anemia, fibrotic diseases) which look compelling to me. Market ca ca 1.4 bill USD. Unfortunately, I missed ASPX so far...
My largest „pure play“ biotech in the US are now : large: NPSP, CLDX. Moderate: TSRO, INCY, PCYC, NBIX, MDVN. -- continued
JR, I don't have an educated opinion on MEIP. At first glance it looks not without some appeal, though
As to the OG-sector: so far I probably sit on a on my OG-basket. It is always difficult to call a bottom, however when a sector sells off like this one now, I cannot resist to dip into it (diversified, small positions. Is it wise? Only god knows...
I sold a nice gain the following positions (before the most recent fall: CHK, RES, WLL.
I hold onto SLB (minus 5%), PTEN (minus 13%, CVEO (minus 30%!) and SFY (minus 30%; in fact I bought some more SFY yesterday at 4.6 and I took a small position, also yesterday, in another pariah, GDP (at 4.6). I intend to hold those positions, might add to some names when they fall more...
Generally though I continued to raise cash, lightened up in INCY, PCYC, MDVN, and in some smaller positions (sold out of RCP, after another double. I owned it at 25 and sold at 40, bought back at 60 and sold at 124). I did not cut my stakes in NPSP, TSRO and NBIX. I sold 5% all over the portfolio, including TECH, MDXG and AXDX, but 5% only, i.e. just to raise more cash. I did not sell any MRIC, and plan to buy more on the current weakness (of course I am in the red with this one, but I don't really care, because i expect a rather bright future....FWIW)
anyway, don't listen to my mumbling, as always...
just a thought which crossed my mind: FG doesn't mention clear trace neither. could it be that they plan to sell the "cardiac indication" of their IP to Siemens and focus on neurology? might be a nice, non-dilutive way of raising funds and stick to the core competency...?
sorry for the late reply. The final test will be the phIII study. But -as the stock price suggests- these recent results were very reassuring to me (reason why I added to my position on the day of the news.
BTW, I built a position in Tesaro (TSRO), at ca 29-30 USD/share. It is now at ca 32 USD/share. Market cap of a bit over 1 Bill, no debt, excellent cash position, experienced management team. Oncoloy focus with a) rolapitant, a neurokinin-1- rec-antagonist product nearing approval, (antiemetic especially for late antiemesis after chemotherapy with some advantage over already approved similar products) b) niraparid a one PARP-inh in ph 3 for ovarian cancer (& other cancer studies) with promising results so far, and c) importantly, an early stage immuno-oncology pipeline (anti TIM3, nit LAG3, anti PD-1...), which, IMO, is not being appreciated by the street.
The ride won't be smooth, but it is safe to say that FG brings probably the best qualifications for a CEO of a medtech start up in the minimally invasive field, such as MRIC. This, together with FG's Rolodex and his credibility from the previous job are great assets. Let's wait for the financing, then.
FG definitely has the grasp to tell, if a medtech start up has potential or not. My guess is, that he might have got top jobs at larger companies, but he decided to go with tiny MRIC. He is no outsider, so he knows the competitive landscape, especially in the minimally invasive field. If, therefore, he decides to go with MRIC, he knows exactly why.
By the way, the big boys become more and more interested in neuro-navigation (as exemplified by MDT's recent acquisition of Sapiens).
MRIC is not a no-brainer, but IMHO, the risk reward is extremely favorable, especially if you buy below 1.2 USD, or even, as now, at 0.9 (or lower)...
continued from p#$%$rt 2:
Identified problem: how to #$%$dd #$%$ddition#$%$l #$%$pplic#$%$tions for the Cle#$%$rPoint pl#$%$tform?
„Our current involvement in six promising drug tri#$%$ls is #$%$ good ex#$%$mple. I believe we c#$%$n continue to grow the number of drug tri#$%$ls th#$%$t involve Cle#$%$rPoint #$%$nd exp#$%$nd the use of Cle#$%$rPoint to include #$%$ddition#$%$l neuro procedures. Our go#$%$l is se#$%$mless integr#$%$tion of our Cle#$%$rPoint pl#$%$tform with the full r#$%$nge of the most effective current #$%$nd future foc#$%$l neuro ther#$%$pies.“
Wh#$%$t FG does not t#$%$lk #$%$bout in this PR yet is, how to #$%$ddress the c#$%$pit#$%$liz#$%$tion oft he comp#$%$ny.
Of course, the comp#$%$ny will need to r#$%$ise c#$%$sh (second#$%$ry? B#$%$nk lo#$%$n? Coll#$%$bor#$%$tive #$%$ggreement with #$%$ l#$%$rger medtech comp#$%$ny involving #$%$ signific#$%$nt upfront p#$%$yment#$%$. I think FG will #$%$ddress this question #$%$s#$%$p, once he is #$%$t the helm. Even if the sh#$%$re price will tempor#$%$rily suffer (which is by no me#$%$ns #$%$ured), the long term outlook for MRIC (now tr#$%$ding #$%$t 0.93 USD) is –IMHO- very promising. I, for one #$%$m very ple#$%$sed with the recent events in MRIC #$%$nd continue to buy sh#$%$res. Let’s t#$%$lk #$%$g#$%$in, when the m#$%$rket c#$%$p re#$%$ches 250mill USD, #$%$ opposed to the current 55mill USD. Rel#$%$x. Remember: sometimes it is blessing when the street does not t#$%$ke notice...
continued from pt 1
Third, peer-to-peer selling is #$%$ uniquely powerful tool in growing new m#$%$rkets. We h#$%$ve #$%$lre#$%$dy incre#$%$sed our p#$%$rticip#$%$tion in region#$%$l neurosurgeon courses #$%$nd we #$%$re #$%$dding c#$%$se observ#$%$tion sites for interested neurosurgeons to see Cle#$%$rPoint in clinic#$%$l use. Fourth, we #$%$re implementing #$%$ddition#$%$l rigor into d#$%$y-to-d#$%$y oper#$%$tions to improve focus #$%$nd execution, #$%$nd incre#$%$se the effectiveness of the org#$%$niz#$%$tion."
III) Now FG goes to the long-term str#$%$tegy, #$%$nd l#$%$ying out #$%$ four point pl#$%$n:
Identified problem: How to replic#$%$te the success of the Cle#$%$r Point system in #$%$ few hospit#$%$ls?
"First, we must incre#$%$se utiliz#$%$tion #$%$t our current Cle#$%$rPoint sites..... (We h#$%$ve) #$%$ few high volume sites in pl#$%$ce, #$%$nd our successful efforts #$%$t these sites c#$%$n be replic#$%$ted #$%$cross the other sites. This is #$%$ccomplished by t#$%$rgeting the movement disorder, epilepsy #$%$nd tumor surgeons within existing #$%$ccounts #$%$nd g#$%$ining #$%$ gre#$%$ter sh#$%$re of their procedure volumes“ „Second, we must continue to exp#$%$nd our inst#$%$lled b#$%$se. This is #$%$ccomplished by eng#$%$ging multiple neurosurgeons from the very beginning of the s#$%$les process. This #$%$ppro#$%$ch gives us multiple clinic#$%$l ch#$%$mpions within #$%$ hospit#$%$l to compress the s#$%$les cycle.“ „Third, we will improve our communic#$%$tion with the medic#$%$l community. Our Cle#$%$rPoint product enjoys the support of neurosurgeon thought le#$%$ders throughout the country. We need to incre#$%$se peer-to-peer events #$%$nd enh#$%$nce our conference presence, en#$%$bling these neurosurgeons to tell other neurosurgeons #$%$bout their positive experiences with Cle#$%$rPoint. This #$%$lso me#$%$ns highlighting the existing published d#$%$t#$%$ supporting Cle#$%$rPoint #$%$nd better communic#$%$ting the Cle#$%$rPoint v#$%$lue proposition.“
to be continued pt 3
...well it doesn't accept. Anyway, read the PR,, in the end it's all in there. In a nutshell: FG outlines a clear strategy and I am optimistic about MRIC. Recapitalisation will be an issue, but is weighing less than the promising future. At 0.94 MRIC's market cap is 55 mill USD. Let's talk again ,when the MC reaches 250 mill USD. Regards
PS: yes, there will be bumps in the road... but bumps are not lethal
More often than not the „new strategy“ proclaimed by a new CEO is not a strategy aa such, but the mere formultion of a wish-list, or a „vision“. “Focusing on the customer“ being „the preferred company to work for “ or adressing the „huge potential“ of the company without going into specifics is just blabla. A streategy implies a roadmap, which will lead from point A (now) to the outlined „vision“ or goal B (future).
In MRIC’s most recent PR, CEO-elect Frank Grillo talks strategy. He is specific and lays out, how the intends to achieve his goals. No blablah.
I) First, he lays out the current market conditions/starting point: „ClearPoint opportunity in the U.S. alone is more than 55,000 procedures per year. Using our current ASP, that translates into an annual revenue opportunity of over $400 million.“... „Published data supporting ClearPoint is strong, demonstrating the value of ClearPoint regarding accuracy, patient preference, procedure times and outcome“ ... „Growth of the DBS market is accelerating, rapid adoption in the laser ablation market is occurring, and the use of MRI-guidance in the treatment of brain tumor patients is expanding. Finally, the field of MRI-guided therapies is now garnering the support and attention of major medical device companies.“
II) Then, FG talks about his 6 weeks experience with MRIC, specifies which problems have been identified, which corrective steps have been taken and which foundations have been laid for future accelerated growth:
Identified problem: Increase the efficiency of sales team. “We are doing this (ie increase the efficiency oft he sales team) with the addition of an enhanced training program, which has already begun. Second, we have augmented our management team with the addition of a seasoned medical device executive as our Vice President, Marketing.
-- continued in part 2
...well the results look good. OS benefit is nothing to sneer at. Since CLDX is amongst my top 3 US "pure play biotech" holdings, I am happy about todays move. (Of course I would be even happier if i had bought more at 12.5, but no regret there). I added 10% at the opening (averaged at ca 17.1)
As to MDXG: I did not know the company before you mentioned it on this m.b. After doing my own DD and listening to some CC’s I came away impressed by Pete and his team. I started buying a smallish position at 1.2, if I am correct. However, as it became clear Pete&Co perform as advertised, I added on the way up (and during the recent dip into the 5’s). Due to MDXG’s great performance my position in MDXG has become larger than my stake in Techne (by some 30%).
As to Chemocentryx (CCXI): I hold a sizeable, but not a large long-term position (currently 15-20% in the red). The science is top notch. The balance sheet is in good condition (100mill cash, no debt). The company is cheap (EV of 100mill USD). The pipeline is well diversified. Chemokines and/or their receptors can be valuable drug targets (p.ex CCX5-R inhibitors). Even though CCXI had rather disappointing clinical results so far, I intend to be patient. The ANCA-vasculitis related nephropathy ist he trial which I am most interested in.
I still own a very small position in Rigel (RIGL; ca 50% in the red). I reduced my existing position when it became clear that another trial/indication (dry eye trial) failed. As with CCXI, the science at RIGL is first class (but valued at 0 by the market: EV of 0). There is no debt and enough cash (150mill). There is some hope that the ITP indication might work, but the tiral I am interested even more in is the IgA nephorpathy-study. However, I do not know how the enrollment is going. So far RIGL produced one disappointment after the other. The air is getting thin. For those who see the glass half full, now is the time to buy. I, for one continue to hold onto my small position.
ANTH, my „two times looser“ is the other „into thin air“ company in my portfolio. I own a bit more shares in ANTH (down some 60%) than I do in RIGL, but less than in CCXI. ANTH at least). If bisblimod works in SLE or IgA nephorpathy, ANTH will be a huge huge winner. If, if, if......
I myself do not buy any new CLDX shares until the Rindo results are out. Then, I might buy more: if the trial is positive and the shares spike, I might buy. If the trial is negative an the shares tank, I might buy as well.
Apart from that, the 20% haircut in relation to the breast cancer trial redesign seems overdone.
However, since I already have a sizable position, I do not add now. Since the beginning of the year, I have become much more defensive in 2 stocks: CLDX and ACAD. Both face a binary event, the outcome of which I can only guess. Therefore I cut my position in both during the year. Probably I should have cut my CLDX more than I did, but oh well...
MDXG is doing great. TECH is on the right way. AXDX seems to be on the right way as well, but, of course, it is kind of a "black box" and therefore not suitable for everyone (I myself "love" the company). MRIC's share price is eroding again. Not too surprising. I might add more during the downturn. I bet on the combo of MRIC&new CEO. It was no big surprise that both INCY and PCYC posted better-than-expected results. Good companies.
Two biotech's which I bought in the last couple of weeks: a good chunk of KITE (buying price ca 32-33: exciting CAR-T technology) and some RGLS (I bought AFTER the 80% jump at ca 12.8: intruiguing platform play, HCV, fibrotic conditions...) . KITE, RGLS as well as Bluebird as well (BLUE, which I mentioned a while ago in the 20's) are "hot stocks" - but rightly so, I might say.
Apart form that, whats noteworthy? HOLX is slowly starting to move up (I added at 23.5-24). COH (Coach) is still in the doldrums (minus 20% for me). Bought back a small position in REED at 5.7. The company might turn the corner....
In the oil&gas field I bought small amounts of Civeo (CVEO:at 12: O&G lodging spin off from Oil States Intl), Swift energy (SFY: at 6.5-7), Schlumberger (SLB ca at 94), and made some okay trades in Chesapeake (CHK), RPC (RES) and Whiting Petroleum (WLL).
The CEO bought for a mere 100'000 USD. Not a "huge vote of confidence" To the contrary. I'd love to see some real insider buying, though...
Theranos claims that they are developing a culture free system for 6-8 hrs identification of antibiotic susceptibility testing of infectious agents. However, there is even less public information available regarding their scientific approach/status of development than we have with AXDX. Therefore, I have no opinion about which system is superior.
Theranos is a private company and a poster child for the business press such as Fortune (or was it Forbes?). Theranos has an "the most impressive BOD of any American company". However, I ask myself, whether a healthcare company needs a BOD made up of ex-Generals and Ex-Secretaries of State, including Kissinger.
AXDX is a public company in which I can buy shares. Their management team and BOD have a proven track record in the life science field. They are very seasoned and have delivered plenty of "shareholder value" (Ventana, Stericycle etc). In addition, they continue to buy shares in their company at current prices. Therefore, I am quite comfortable owning AXDX, even though as a shareholder I know that I own kind of a black box. BTW, both, Theranos and AXDX might develop a good product. A little bit of competition is fine, isn't it?
PS: the Yahoo finance blog article posted a week ago by a short-hedge fund was not very enlightening. I guess they gee the task to write this article not to the smartest guy in the room. It is a solid - but unsparing - "bad mouth" piece, which might cast some doubt over AXDX only in the most uninformed investor, if at all. Using a lot of demagogic parlance, the piece is -of course!- silent about the fact that AXDX's management and BOD have been highly successful in the health care sector...
Thanks for the roses...but it might be better to be all in cash at the moment -which I am , of course, not. While I did reduce my positions in PCYC, INCY, MDVN, CLDX and ACAD at somewhat higher levels, than where these stocks trade now, I still hold considerable positions in each outfit (only ACAD is a rather smallish position now).
AXDX will take hits during the coming days, I suppose (you can paint AXDX as a good short-story, which is currently being done by some types). I guess biotech, MRIC and even MDXG will fall as well in the next days to weeks. We'll see.
Currently I am dipping the big toe into some beaten down oil&gas related companies (a basket of 5 different low and ultra high risk plays, which probably will continue to fall more, let's see)...
Yes, DRTX was a good story. However, at one point in the past (far below the current buyout price) I decided to sell & switch to Tetraphase TTPH (bought TTPH at ca 11 USD). TTPH has an intriguing tetracyclin-platform upon which they build their pipeline. While my sale of DRTX was ill advised, I did well on TTPH (the stock doubled; yesterday it traded at 21-22USD and I sold 40% of my TTPH).
What else? I received BioTechnes Annual report. Good reading, I like the way Kummeth brings in fresh air.
MRIC posted a profit warning yesterday. The stock would have fallen much more than a mere 10%, if they had not Grillo, the recently hired CEO from ISRG on board. I increased my position (at 1.12 USD) by another 10%. So far I more than doubled my stake in MRIC since Grillo's election.
Accelerate (AXDX) continues to surprise as a stock. After a wining street (8-- 31) it lost about 50% in value (31-- 16), just come back with a vengeance (16-- 28). An insiders continue to buy all the way up and down... I did profit from the fall to 16+ and upped my position by 20%.
Most biotech's have had a difficult time since spring (except for the big 6). Small caps are being hit hardest. CLDX is down 60% from its high. I did reduce my stake in CLDX, but still have a sizable position in the stock. I a waiting for the Rindopepimut ph3 results: Although the results with this compound for GBM been ok so far, I am wary and brace for a "negative" surprise. I intend to buy more CLDX, regardless of the outcome: either the stock tanks 50% or it spikes 30%...
The street is betting that NPSP will face headwinds with the approval of its second drug (8:5 vote) and its stock has been weak lately. I am holding onto my stake (my largest US-hardcore biotech position by now).
Bought a small stake into a new biotech (veterinary), Kindred Bio (KIN) at ca 9.5USD. KIN has a CEO from Genentech/Roche, a well diversified pipeline, plenty of cash, insider buying... regards! Dr. John