Yep. The same Mr. Market who was willing to pay 10 - 14 dollars above the cash per share for the science just two - three months ago, now irrationally barely pays for the raw cash per share. $ 20 -30 dollars was extreme as is 5 - 6 dollars.
In late September they will announce two separate presentation. That should generate some good buying. The key is December when an avalanche of news will hit the market. The science will be good based on precedents, but if the market found it to be quite good, that is when you see a triple in PPS
In the interim there is a chance of a surprise partnership announcement; the management had at times hinted that this is what they are looking; it too can explode the stock on the upside.
Finally, any new coverage by anybody will lift the stock.
On a day the market had mini crash this stock hit its all time low, quickly recovered and closed up above its 52 week low. The price action today was quite encouraging.
This stock has seen its low for the year. Sorry, you won't see 4.49. If you want to buy, buy now.
That will be a phenomenal price: huge discount to raw cash in the bank, subtracting all liabilities. Pray the market continue to be in a state of sharp meltdown correction.
The micro biotech universe of the Russel is down by a whopping % 5 and given the disproportionately high beta of this stock, it should be down 7 - 10 percent. Yet, so far it has barely budged. If if stay above $ 5.03 during this correction, technically this will be very positive for the stock.
Regardless, the near 5 dollars cash cushion for a biotech stock selling at $ 5.16 is rare and unusually high.
Relax. The market is down huge, and extremely high beta stocks like CALA take on the chin. That said, barring significant correction, the stock has bottomed. For the next two months or so a narrow channel of 5.03 - 7.50 is likely to be the norm; if the market cooperates. They will announce in by late September exactly at which venue they will make the presentations; CEO said in CC it will be Autumn. If a credibly venue, expect the upper ceiling of the channel, good return from here
In early December they will be reporting data on two separate programs. If the data is good, the stock breas out on the upside.Meantime, it is healthy for the stock to keep basing above its 52 week low.
My hunch is that for now, short term, a good solid support at 52 week low exists, upper band of the channel is around 7. 25 - 7.75. This is roughly the trading range until late November, early December when they report an avalanche of data. Per CEO at CC, there will be conference presentation in 'Autumn'. So expect at least announcement of a presentation by the company in late September. I suspect it will spike the stock to the higher end of the band channel.
For now basing is good for the stock so that if December data is good, and I suspect it is because so far no negative regarding science, the stock will breakout on the strength of the data.
On CC at the very end the CEO said that there will presentation in "Autumn" (her words). Call Jenifer at Investor relations and find out roughly when in Autumn and at what Conference venue sponsored by whom, are the conferences. Next report to us. One thing I am absolutely certain: the company will be making presentation during the third quarter. Otherwise, the CEO would not volunteer this utterly unexpected information.
Also, it is toward the end of the year that the company will have avalanche of news
regarding the HB 839 and their more interesting second program.
Look, I just read in Barron that the micro biotech ETF in the Russel Index composed of stocks like CALA has taken 25 percent hit on average with some stocks down 50 -60 percent. Even the mighty Biogen is down 21 percent. And so nothing is wrong with CALA. That said, I am glad week hands have exited, transferring ownership to stronger hands and retail shorts are piling at the extreme low, providing fuel for PPS, when good news is delivered. Incidentally, for shorts the biggest risk is any unexpected news of partnership or collaborative work with a major biotech company which could explode the stock to crazy heights.
I would not wait because all the news is out, the market has already discounted all that we know. It is also true that the market is forward looking: (1) Presentations in Autumn ( Per CEO); (2) Pre clinical in Q3; (3) Major HB 839 Initial Data in Q 4; (4) Additional HB 839 Data in Q1 2016; (5) Complete HB 839 in 2016. Also, Phase I for the second program beginning in 2016.
A life time away, to be sure, but into Q3 and the market begins looking forward to each, the stock basing and slowly go up, with unpredictable intra day spikes until the big news.
If there is announcement of partnership, the spike could be gigantic.
You all have enjoy a weekend
You are right that the Investor Relations Director, the CFO and especially the CEO are utterly tone deaf when it comes to public relations. You would think they would be out there communicating the story to the market in a way that the market can understand, especially when the market has to wait until the 4th quarter for the CB 839 data. (although one data point is expected in Q3). Thus, securing analyst coverage, perhaps a piece in Seeking Alpha, etc, is a must
That said, a PR tone deaf CEO has her advantages: if and when the news is announced and it is good news, the credibility is that much greater, and the stock bolts huge. Until such time, longs suffer.
It hard to pick the absolute bottom. With its hefty 4.66 net cash ( deducting all liabilities) and $ 4.90 total cash per share, how much are you willing to pay for the science. If you think the science is worth something, I would buy now. Because, it go down a tad. On the other hand, it could stabalize and spike big. It is very difficult to believe now, but at today's price the risk-reward favors the long position.
If the stock didn't have the $4.90 cash cushion (and 4.65 net net cash, deducting all liabilities) , I would have agreed. But, I can't help but think that there are rational investors out there. Than again, margin selling plus retail shorts piling on plus demoralized longs throwing the towel plus a high beta stock in a nasty market, you get near extreme case scenarios, and this is one of those.
Today it is down big on a relatively low volume.
This equity is washed out- from margin calls to weak hands throwing the towel. Nibble here; add to your position if the market goes down and take the stock to existing 4.90 cash. Double your position, if the stock goes down to net net cash of 4.65. But it is unlikely to get there because it is highly likely that smart money will jump ahead of you and buy with both hands: one day the stock is up 20 - 30 percent and for no reason.
If the bear market-like environment for stocks like CALA with no earning/sales continue, sure it can go down a tad more. That said, we are approaching ridiculous territory, near cash and net book value level. As if the science is completely worthless, when if fact Mr. Market was willing to pay for the same, 10 - 14 dollars.
When Mr. Market is throwing the towel completely and has had with this equity, i you begin to nibble. It seems nearly impossible to fathom but a day will come when that same Mr. Market will take it off your hands for double the price the next time the stock is going up crazy because news of a partnership or collaboration of some sort of licensing, etc., is announced.
$ 5 dollar, roughly 10 cents above cash per share, is the floor for me, give or take a few pennies. It is hard to catch the absolute bottoms. It is better to nibble now. The company will have slew of news in the third quarter and in the fourth quarter. But stock could be up by than in anticipation of the news. Per CEO, the company expects to present at Conference "in Autumn", her words at CC.
Understood'; barring occasional 25 - 40 percent intra-day or multi-days PPS spikes, the stock will likely be be basing for a good two months. Still, in the short term, 2 -3 months, the cash floor floor is pretty much around $ 4.90 - $5. Therefore, one should be buying at these prices and not selling. It would be a mistake to abandon the stock at or near he bottom only to see it go up again.
if you bought higher, are sitting on a loss and wish to make up for paper loss in other PPS zooming stocks, by all means sell. And yes, drip drip lower low is painful. But short and intermediate term the worst is behind us. Sixty percent (perhaps a double, if the enrollment data is really good) from here is possible within the next 3 - 6 months, provided forthcoming data (Fall preclinical; Winter major enrollment data) is good.
I suggest patience.
My hunch is that the stock is likely to be Bollinger range-bound between 5 and 7.50 for the next couple of months until it reports the preclinicals. The news that has the potential to double the stock or triple the stock price is scheduled in Q 4 (enrollment data).
With five dollars book value, composed of 95 percent cash, my worst case scenario, if the markets continue to bleed, is 5 – 10 percent, may be in extreme worst case scenario, 15 percent or a discount to cash (which, if it happens, is total crazy) : The upside is 100 percent or more. I will add to my position, if market goes into bear territory and the stock completely melts and reaches net cash of 4.66 or lower. Thus, for the next three – six months (a life time for this stock) risk reward favors the long by a huge margin:
There is nothing wrong with the company to warrant almost no premium above book value. In terms of fundamentals, the company beat consensus estimate by one cent (or is it .04 cents if the consensus was actually .48 cents); there is nothing negative in the science except enrollment in a the lesser second program was subpar ( ‘not fabulous’, to use the CEO ‘s phrase), no Form 144 or related Forms regarding insider sales or changes in the composition of insider ownership has been filed.
The fact is that market is hellish for stocks like CALA with no sales/earnings and which are at phase one clinical stage companies. This segment of the market is in in fact in bear market territory. Plus, shorts have pounded this stock some more knowing that there are no news for another couple of months.
(1) If you can’t take the pain any more sell; if you worry about your position when in bed sell;
(2) If you are wedded to some investing discipline and you should sell, I say sell;
(3) If your emotions wildly go up and down with the PPS gyrations, sell;
(4) If you do not understand the balance sheet or will not read what is in the transcripts of Q 2 regarding the science, sell;
(5) If you are short, at this price you are two smart by half, please short some more;
(6) if the fundamental story is intact (CALA is in better shape than when it went public), buy when there is blood on the street. Buy now.
Five dollar book value 95 percent composed of cash is the floor. There is nothing wrong with CALA- the cash burn rate is moderate, they beat by one cent, the program is going as expected, and the stock is selling near its book.
Here is what is wrong: (1) The market has been nasty and it is the absolute honest fact that extremely high beta stocks like CALA with no sales and no earnings and in phase one take it on the chine as people unwind risk trades like CALA. Second, since the quarter was satisfactory but not great, the shorts have pounded some more because there will be no news from the company for a while (although the CEO did say there will conference news in Autumn). Thus, they have free hand. Also, it does not help the CEO is somewhat tone deaf when it comes to public relations. She things the science speaks for itself without explaining anything to the market. That last change can make a huge difference. Just one additional coverage, for example, can change investor sentiments. Another positive, no Form 144 (insider sales) filing.
Heck iit can go below below cash level and five dollars if the market continue to bleed. But do not wait for that magical low, in effect pennies on the dollar, to open a new position or add to existing position at today price.. Instead, people should take new position and buy with both hands or add to their existing position at today price of 5.40. Because the risk is 5 - 10, may be 15 percent. Yet the reward from these levels can be 100 percent or more.