To say that I was completely shocked by the news that GNVC released after hours on Monday would be a titanic understatement.  I’ve been holding shares of GNVC since the summer of 2009 and was consistently impressed with the positive news coming out of this tiny biotech company.  TNFerade looked like a promising new treatment for several different types of cancer, deals had been signed with biotech giant Novartis, and several fully funded vaccination programs were in the pipeline for 2010.  There really wasn’t much NOT to like for a company trading at under a buck per share.  The real big news started hitting the wires in January of 2010 and as it did, the stock price reflected investors positive outlook on the company.  For the past three weeks, the stock showed great strength trading above the $2.70 level which affirmed that the $28 million dollar stock offering back in late January was well founded (shares were sold for $2.50 each).  Based on results from a TNFerade trial for esophageal cancer in January in which the drug significantly extended the lifespan of its patients and a recent article describing how TNFerade suppresses the metastases of certain cancers it seemed like a slam dunk that TNFerade for pancreatic cancer would prove to be effective.  I had NO REASON to believe that the company was going to fall below $2.50 per share in the near future.  Reluctantly, I sold roughly one third of my position in GNVC shares during each runup of prices into the $3’s but held the other two thirds for the imminent release of the Phase 3 data for the PACT trial for TNFerade’s treatment of pancreatic cancer.  About the only news that would really tank the stock would be some kind of catastropic reporting that the drug was either not effective or not safe for human use.  But there was NO WAY that was going to happen right?

WRONG!

After trading hours closed on Monday I was greeted by the worst possible news that GNVC could report – “GenVec discontinues Phase 3 Trial Testing of TNFerade

OUCH!

Based on all of the previous positive news bytes that had been reported over the last 6 months, this news completely floored me.  My first reaction was, “F@(#)!(#* I just lost a ton of money”.  But my second thought was to read in and really find out what went wrong.  Turns out, GNVC isn’t completely abandoning TNFerade as a product.  They are simply shutting down the trial for the currently INCURABLE pancreatic cancer disease.  Obviously any daytrader or small-time investor with money is going to see this news and immediately sell but if you really think about it, the chances that this treatment would do anything different for a type of cancer that metastasizes.  I realize it may sound like I’m just trying to justify my poor decision to not sell any more shares of the company before the news came out, and maybe I am and just don’t realize it, but I know that I’m not the only one that made this mistake.  Furthermore, GNVC still has TNFerade trials lined up to tackle other forms of cancer including esophogeal, head and neck, and eventually prostate cancer as well as the previously mentioned vaccination and hearing loss treatments so long term I still have reason to believe this company will do well – its just going to take a while.  However, due to the fact that the companies most profitable opportunity to market TNFerade has been discontinued I’m going to re-adjust my target back down to about $1.20 per share in the short term.  About the only saving grace that could bring GNVC back up to the $2 range would be a buyout by a bigger biotech such as Novartis.   I have no idea how mergers and acquisitions take place in the biotech world, but it would appear that GNVC could be a bargain right now for any struggling giant looking to acquire a promising technology.

All in all, I’m taking this as a very important learning experience.  My biggest mistake trading GNVC was the fact that I didn’t sell half of my shares when I thought the share price had reached its peak.  My original target on the stock was $3.00 and when it hit that price I only took one third of my shares off the table.  I let greed and my cockiness get the better of me and instead of thinking about the potential losses I might incur holding those extra shares, I thought about the potential gains I would lose if this stock pulled an HGSI and shot up 200% in a day when positive news was announced.  Like any successful person will tell you, it always pays to experience some adversity before you can truly succeed.  I feel fortunate that the only losses incurred when trading GNVC were paper losses since my initial investment was covered long ago when I took those first third of shares off the table.  The market is a very unforgiving place and if you don’t take the profits when you have them they can be taken right back from you in an instant.

Lesson Learned: CTIC

No comments

So for those following my posts and the news on Cell Theraputics (CTIC), you’re already aware of what happened.  The FDA’s Oncologic Drugs Advisory Committee unanimously voted against FDA approval of Pixantrone, citing that there was not enough trial data to approve the drug.  Shares had been halted for most of the day on Monday until 1:40 pm EST, when the stock went as low as $0.12/share!  The past couple of days, though, the stock regained some of those massive losses (at $0.647 as of tonight), but the scar remains.  With the lawsuits being pinned on the company, I feel that they really needed the approval at this time to take away the bad publicity the company has been getting.

Despite everything that has gone on, I feel that CTIC is still undervalued.  Just because it wasn’t approved now does not mean the drug won’t get approved at all.  However, I do think it’s going to be awhile before we see Pixantrone get approved.  When that day comes, even after the damage these lawsuits do to the stock price, CTIC will rise again.  Right now, I would just watch what this stock does and keep the name in your back pocket.

High risk, high reward.  That’s the name of the game.  I took the risk, trying to bank on the reward but was burned in the process.  Regardless I wouldn’t have done it any other way.  I invested a good amount into this company, but not so much money that it would cripple me.  I’m going to look at the mistakes I made and hopefully learn from them so that it will not happen again.  You just need to move on from a bad beat like this one.

CTIC Update

No comments

Tomorrow, the FDA is scheduled to review Cell Theraputics’ drug Pixantrone (brand name is “Pixuvri”) for the treatment of non-Hodgkin’s lymphoma.  According to the company, patients treated with the drug in a Phase III trial attained a high rate of remissions compared to those patients treated with normal chemotherapy.  Last month, however, the FDA raised questions regarding the safety of the drug.  Adding to this are the recent lawsuits pending on the company in regards to the company’s directors and officers issuing materially false and misleading statements.  The next 30 days are going to be interesting, and I am still holding on to my shares of CTIC, despite the fact that it is a huge risk.  To let you know where I currently stand, I also have shares in GNVC, DDSS, and BCLI.  I’ve noticed a favorite of mine, SPEX, has retreated all the way back down to 1.40, and I think with another .05-.10 drop, I will be looking to scoop up some shares.

Apologies for the lack of posting the last few days.  I’ve been spending a lot of my time the last few days finishing up my taxes for 2009 and let me tell you, once you start making some serious coin trading stocks, it is important to remember that every capital gain that you make WILL get taxed.  A smart move is to just set aside 30% of each gain that you make so that you don’t get blindsided come tax season.  Anyways, now that everything is taken care of – here’s a quick update on the stocks that I’m currently playing:

  • GNVC (GenVec) – Currently my home-run hitter in my portfolio.  CTeezy talked a  bit about GNVC a few weeks ago but truth be told, we’ve been following this company for quite some time now.  In a nutshell, GenVec is currently in Phase III testing for a revolutionary new cancer treatment called TNFerade. Studies have shown that TNFerade successfully suppresses the metastases of cancer and as a result can increase the lifespan of anyone stricken by the disease.  Interim data on the PACT trial (pancreatic cancer) should be released within the next few weeks.  The last time results were announced back in January the stock price shot up to the $3.30 range.  If similar news is announced this time around, we could see new highs in the $4 – $5 range.
  • DDSS (Labopharm, Inc) – Another stock mentioned by both CTeezy and myself.  Less of a homerun hitter than GNVC but more of a play with some guaranteed upside.  Labopharm recieved approval for its anti-depressant OLEPTRO.  At a conference last week in Boston, the president of OLEPTRO seemed very excited about the possibility of finding a partner to begin producing and marketing this drug in the U.S. at some point this year.  Shares were offered earlier this year at a price of 1.70 per share so its only a matter of time that we begin to see the stock price rising.  The day that a partnership is announced should be a good day for any owners of DDDS.
  • CDII (China Direct Industries, Inc.) – Mentioned as a momentum play already, CDII has taken it sweet time getting noticed by investors.  I’ve picked up some shares around the 1.57 level as I believe this to be the bottom for CDII.  Rumor has it that they have agreed to sell off 90k shares of CNAM which was up huge last week.  Once this connection is made (or once CDII puts out some PR to talk about these gains) we should see this begin to climb up to $2 per share
  • PESI (Perma-fix Environmental Solutions, Inc.) – Wasn’t even on my radar until last week when they reported 4Q earnings results with revenues increasing 20.8% to $28.4 million.  In today’s economy, huge jumps in revenues like this don’t seem to come by very often.  Shares peaked around $2.50 the day these results were announced and I felt fortunate to pick up some shares on the pullback.  Looking at the 5year chart, I can see that PESI was once trading in the 3.00 range back in 2008.  With revenues higher now than they were back then, it only makes sense that this stock is still undervalued.  I’m targeting $3.00 on PESI over the next month or so.

Lately, biotechs have been heating up the market, which is why I bring to you another such company: Cell Theraputics, Inc (CTIC).  On Thursday, I had mentioned to Tendo after researching some stocks that CTIC looked to be a good one to invest in, for I saw many similarities to that of GNVC.  Not following up on this, I put it to the side and continued on looking for other big plays.

This morning I received a text from Tendo, telling me I was right on the money about CTIC (which at that point was up about 30% with heavy volume).  I was right on the money, except for the fact that I hadn’t invested any money into it.  I was sick to my stomach and frustrated for missing out on this huge jump.

But did I really miss out?  Or is this jump just a warning signal?  I researched CTIC again tonight and saw mixed reviews on the company, but let’s talk about them a little bit before we move on.

Cell Theraputics Inc. is a company that specializes in developing treatments for different types of cancer.  Their latest drug, Pixantrone, is looking for FDA approval to treat relapsed as well as refactory non-Hodgkins lymphoma.  Today they announced that the facility that has been manufacturing Pixantrone, NerPharMa (in Nerviano, Italy) has been approved by the FDA to continue manufacturing the drug product.  Off of that news alone, the stock was up over 28% on the day, tripling the volume from the previous market day.

I’ve done a little research on CTIC and found an interesting report:
Cell Therapeutics offers bigger cash bonuses for 2009 while stock languishes

The article talks about how the execs in the company were offered cash bonuses despite the fact that the stock was plummeting.  One could play Monday Morning Quarterback and say that this was a sign that they knew some good news was going to come out of this facility NerPharMa.  However, towards the bottom of the article is something that really stuck out to me:

“Cell Therapeutics stock has been down for several weeks since FDA staff issued a critical report on pixantrone, saying it has “substantial” side effects for patients with non-Hodgkin’s lymphoma. The drug is the company’s only product candidate with a chance of winning FDA approval anytime soon. An FDA advisory panel is scheduled to recommend whether the drug should be approved on March 22, while the agency’s deadline to complete its review is April 23.”

The words “substantial side effects” don’t seem to make me feel all warm and fuzzy inside.  How can a stock with that kind of news on a Friday still go up nearly 30% on a Monday, even if the facility where they’re creating the drug has been FDA approved?  Despite all this, I’m considering taking a HUGE risk on this stock.  Tomorrow morning (premarket), I will decide whether to buy into this company and bank on FDA approval of Pixantrone, or hold tight and just watch from the sidelines.  I would have to say this would be the biggest stock risk I’ve ever taken, and could easily cost me about 50% of my investment.  You’ll also have proof of me doing this since my Covestor account is attached to this blog as well.  Regardless of what happens, I will look back at this entry and learn what I did right or what I did terribly wrong.

Let the games begin……..

I’ll be the first to admit that this stock never was really on my radar until a couple of days ago.  For quite some time now, it seems like all investment advisors are telling you that Chinese industries are a good place to invest your money.  I don’t know if I completely buy into that thought, but sometimes when trading stocks you have to follow the stampeding herds if you want to make a profit.   After all, volume is a big factor in changing a stock price.  This is why I would consider this play a “momentum” play since I’m expecting a price runup due to increased activity in the stock/sector.

So what does CDII do.  From their website:

We are a U.S. company doing business in China. We acquire controlling interests of Chinese business entities. We are committed to improving the quality and performance of each subsidiaries by providing an array of resources to augment their efficiency and growth. These resources include management advice, investment capital, business development services, strategic planning, internal control, macroeconomic industry analysis, and financial management. Through this ownership control, we provide resources, enabling these subsidiaries to successfully expand their operations.

The buzz around CDII actually arose because of another Chinese company having a very huge week.  China Armco Metals is up over 90% the last two days after announcing they were entering into a $100M contract with a major Chinese Steel producer for 2010.

CNAM 3 month chart (notice the huge run the last 3 days)

How does this impact the price of CDII you say?  Well, if you do your research you will know that CDII has a large holding in CNAM.  A quick look at the institutional holders of CNAM on shows the following:

Date Company Shares Type
31-Dec-08 CHINA DIRECT INDUSTRIES, INC.
Beneficial Owner (10% or more)
1,289,800 Indirect Statement of Ownership N/A

In December of 2008 CDII owned 1.28M shares of CNAM at a value of about $3.5 M ($3.50 per share). This means that the new CNAM price of about $10 per share is going to net them a lot of dough should they choose to sell and lock in some profits.  It is only a matter time that the “herd” notices this connection and begins to load up on shares of CDII.  I’m going to be eagerly awaiting a SEC filing to report the sale of CNAM shares by CDII.  CTeezy is a lot better at math than I am, but just scratching some stuff on paper I came up with the following target for CDII:

  • CDII intial investment of CNAM (approx): $3.5M (about 1.2M shares)
  • Current CNAM stock price: $9.60
  • Current value holidng: 1.2M * $9.60 = $11.52 M (~$8M profit)
  • CDII Current Shares outstanding: 27.63M
  • CDII Current PPS: $1.73
  • CDII Current Market Cap: 47.8M (47.8 / 27.63 = $1.73)
  • CDII Market Cap with estimated gains from CNAM: 47.8M + 8M = $55.8M
  • CDII new PPS: 55.8M / 27.63M shares outstanding = $2.02 per share

To me it just seems like a NO BRAINER that this stock is undervalued by $0.30 right now.  And that is just based on the effects that CNAM has on this stock price.  As a holding company CDII has several other ventures, such as contracts with some European auto makers, as well as commitments to continue growing business in China.  In time I plan on doing more DD on this company to find out just exactly what else they have to offer.  But in the immediate short term I feel confident putting my money here for the almost guaranteed 16% gains that are on the way.

Biotech Spotlight: DDSS

No comments

Looking at DDSS when I woke up this morning, I decided to put my money where my mouth is and buy some shares.  Back on February 17th, I had mentioned to pay attention to this stock and, more importantly, its volume.  However, with the decrease in volume, there was also a decrease in closing price.

Last week I purchased shares at 1.57 and figured that maybe the stock would drop a bit lower but wasn’t really worried too much about it.  I just wanted to have some shares on hand because, quite frankly, I don’t have a whole lot of time researching the market.  I work pretty long hours and most of the time the only chance I get to check things out is after the market is closed for the day.

Of course, the stock dropped, and this morning I saw the opportunity to purchase more shares pre-market at 1.44, which I did.  With the stock closing in at 1.48 today, I can see DDSS being back in the 1.50s range for the next few days.  After that, I would look for it to come back down to the low 1.40s before shooting back up again.  I see a lot of similarities between the GNVC and DDSS charts:

Notice each stocks’ graph after each of their massive drops.  I see DDSS right now being where GNVC was at February 1st, close to a support level.  In the coming days, I see it going up a few cents (probably around 1.53-1.54) before coming back down and retesting that low 1.40ish support level.  I may try to swing trade this one if the opportunity presents itself.

As we ended last week, JTX was up a cool 16% since we featured it as our bounce play of the week (BPotW). There was a slight selloff on Friday and as the market opened on Monday I decided it was time to lock in some profits so I sold 1/4 of my shares for a 16% gain. My plan was to hold the rest to reach my $4 target, however as the week dragged on the stock continued to fall (along with many other stocks on the market). This is when I had to make a decision. Since I was still in the green from my initial entry I had no problems holding on to JTX as it tested the 2.40s range. However once it broke the initial price at which I bought it for (2.35 for those of you keeping track at home) I decided to set a stop loss and just see what happens. Normally I would suggest against setting a stop loss because its like showing your hand to the dealer in a game of poker, but in this case I knew that I wasn’t going to have much time to watch the stock while at work today and didn’t want to lose any of my original investment. So, as expected, my stop loss order was triggered and my position with JTX was closed out. Despite the drop, I was able to make my profit at the peak and will look to rebuy JTX if it closes out the day lower than my original 2.35 entry. The 1 month chart shows a bottom around the 2.05 – 2.10 levels so that could be the ideal re-entry point. Key here is that you have to manage your greed at times to ensure you get a profit because the drop can occur just as fast as the bounce if you aren’t careful.

JTX 1mo Chart

Here are a few stocks I’ll be looking over the next couple of weeks:

1) DDSS – With a news conference coming up on Thursday, I don’t think the price will skyrocket up, but I do think we’ll hear some good news out of the company.  I’ll be looking to hopefully grab some shares before the conference.  Right now it’s hovering right where I thought it would, at $1.52.

2) BCLI – Brainstorm Cell Therapeutic develops stem-cell therapeutic products that, three months ago, found it’s products to have a positive result on treating neurodegenerative diseases, such as multiple sclerosis, on a mouse model.  Last week it secured funding to conduct clinical trials and offered 6 million shares to 3 investors at the price of February 11’s 30-day moving average, which was $.25.  Today, it’s 30-day moving average rests at $.29.  In my eyes, a $.04 jump in the 30-day MA is an indicator that this company will steadily increase over the next few months.  And check out the volume over the past couple of days (970K on Friday and 1.7mil today).  People are going to start to take notice.

3) SPEX – Spherix has some great long-term potential.  This is definitely my ace-in-the-hole for 2010.  It has a promising drug in Naturlose that has been given positive results in a Phase 3 trial.  It will most likely try to find a partner and look for FDA approval of its drug in late 2010 or early 2011.  I’ll be watching over this stock closely.

Again, as stated at the bottom of the website, these postings are for Tendo and my trades only.  Do your own DD (due diligence) and research when buying or selling any securities based on our or other people’s postings.  Do not base your decisions to buy or sell securities on this website.

End of Week Update

No comments

Although it was a holiday shortened week, CTeezy and I finish the week in the green.

JTX bounced as we suspected on Tuesday and continued a strong rally until today’s small selloff.  Still, anyone who bought in on Tuesday would be up a cool 16% in 4 days.  Not too shabby.  Right now JTX sits in the 2.70 range but I suspect that as we plunge closer and closer to the April tax deadline these shares will rise back to the $4 – $5 range.

CTeezy’s analysis of DDSS also proved to be right on the money.  The recent dilution of shares/ infusion of capital has driven the price down to around the 1.50 level.  On Thursday they company announced that they were closing out the recent public offering (meaning they have sold all shares).  Normally one would assume that the climb back to the 2.00 would occur however near the end of the day on Friday underwriters of the recently closed offering exercised in full their over allotment option to purchase an additional 1,764,706 units at $1.70 per share.  What does this mean for DDSS?  Short-term this means that the stock will most likely drop in value as the number of outstanding shares is diluted.  Long-term this means that someone out there likes what DDSS is doing and want to load up while the price is low.   To my ears this sounds a lot like “Attention KMart shoppers – free money is available in aisle 6”.  I’m looking to load up on some cheap shares under 1.60 next week.