You are raising valid questions, but have you applied this reasoning to the 100+ biotech companies?
KERX which I assume you are waiting for, has annual sales of $7 million, $80 million in cash and market capitalization of $850 million. If you apply the same reasoning to the whole biotech sector, you will come to the conclusion that PACB is the most undervalued.
FYI, in answering some of your questions; during the conference call they said the cash down payment will carry PACB until at least 2016, they expect the machines to be ready for Roche to sell in about 2 years and the marketing agreement is for 13 years.
The big boys have been accumulating over the past 2 days, they enticed individual investors to short the stock, now it is ready to resume the move upwards.
As I mentioned in a previous post, the deal with Roche is life changing for PACB, it will take it back to at least 80-90% of the IPO level (which was $18 per share) in a very short period.
With a possible short squeeze we might be there even much earlier.
Good luck to all
Based on my observation of the trading patterns yesterday and today, it looks like we are on track for another breakout on Monday or Tuesday. First confirmation, once we pass 5.73 today, second confirmation if we close positive for the day.
Good luck to all
I always do my own DD, but I am trying to point out what they are attempting to do.
If they neither agree nor disagree as you think, they will come out with one article each, but coming out with 5 articles (3 from Motley Fool and 2 from Seeking Alpha) within a period of less that 24 hours casting a lot of doubt on the success of the deal and labeling it as "many years before it comes to fruit", this can only be called a targeted attempt.
The "many years before it comes to fruit" is the most stupid statement to make in an article like this, because PACB always stated since IPO that it will not be before 2 years until they make a profit, and this deal is around the same timeline, so where does the "many years" and the iffy tone comes from.
FYI, sometimes big players are caught by surprise, they are not aware of certain developments within a company and were not able to load shares before big announcements, so when announcements come out they try hard to mobilize paid bashers.
Whether they are a news source or a blog, the information and view points they present are used by many individual investors.
Based on the action of the last hour, it seems they both were part of an effort to mislead more people into shorting the stock. Probably some MMs are planning to create a short trap.
Tomorrow will bring more clarity.
These two websites have been working hard to bash this stock, since yesterday they issued 5 articles bashing the deal. Why would anyone bash a company if it is a bad one, it will drop on its own, no need for bashing.
The only reason anyone bashes a company is when they miss the train and are looking for an entry point or they hold a short position.
If you look at the history of these 2 websites, they are a contrarian indicator 90% of the time.
Regarding the possibility of developing relationships with other players, see my post from about a couple of months ago about John Milligan who joined the board of directors. This guy is the COO of GILD, which is a $100 billion company, I can't imagine that this guy is sitting on the BOD of PACB which is $150 million company, unless there is a relationship between these two companies which is developing in the background.
According to the conference call yesterday, it is mutually exclusive, Roche will set the standards for which PACB will develop the products and and sell only through Roche, on the other side Roche will not develop competing technologies with other companies. But the agreement is only for human diagnosis equipment for clinical purposes; meaning plants, food, and sales for research purposes, etc. are not part of the deal, PACB can continue to develop and sell its own products.
Roche has $50 Billion in annual sales, and gigantic sales network, PACB does not need another seller.
Many people who are shorting this stock don't understand the news of today. This deal has shifted PACB from a speculative/testing phase company into a sustainable business. It is true that the fundamentals have not changed, but the market will look at this company in a different way.
Imagine you start a business, you start developing products, you come up with new technology but you are unable to make any meaningful sales because you are competing with large well established competitors selling products for almost one tenth the cost of your product, you are struggling to borrow funds to sustain your operations for another 2 years until you expect to a make profit, and you are largely dependent on selling products to research centers who rely on budgets from a government who is struggling to cut budgets. Suddenly, the market leader (Roche) with a market capitalization of $225 billion and annual sales of $50 billion tells you we want to buy all your products and you will sign an exclusive agreement to develop products for us, and here is a down payment of $75 million.
The big question is, are you still the same company? The simple answer is no, yesterday you were a speculative business and today you are a sustainable business supplying products to the market leader.
This company went into IPO for $18 when it was still speculative with a time frame of 2 years before making profits. It went down close to $1 because of some problems in the technology when investors realized it is going to be more than 2 years before it makes profits.
Now with today's news it will start to go up near the IPO level, it is just a matter of few days of publicity and we get there. If you google the name of the company, you will see that more than 50 sites have reported the news of today, and if you listened to the conference call there were more than 8 analysts, some are big names.
Expect upgrades this week which will take us closer to the IPO level.
I think 7 today might be a bit of a stretch, could happen though, but definitely beyond 7 in few days. As I said in a previous post, this is a life changing deal for PACB.
There was a question on the conference call if the $75 million cash is sufficient to take the company through profitability, the answer was yes, it will take the company into 2016.
This is a life changing deal for PACB, Roche is a giant company and when such a company makes such a sizable investment in PACB, it is basically removing the shaky image about its sustainability, so after this deal the question on whether PACB "can be sustainable?" has been removed. This will easily push it to the IPO level in a very short period.