Monday, July 10, 2006


First, the hype:

Second, the company: IDIX

Third, our history with this Hype-Pop-Scalp:

I'm easing into IDIX today, maybe next few days as I review the facts. Last time, SGMO ran from about $5.00 to about $8.00 in the days surrounding the "news."



A said...

Another installment of the hype
Dear S&A Investment Research Subscriber,

I sent you an email yesterday about a private meeting taking place this Thursday, July 13 at 7 PM Eastern.

The founder, CEO and president of a small pharmaceutical company will discuss critical changes to an ongoing clinical trial, details of which should unlock substantial value for shareholders of this small company.

We have reason to believe that after this meeting, the company’s stock will rise 20% to 40% in the next two weeks. As the information discussed at this meeting continues to spread, there’s little doubt that much larger gains will develop. Our top medical analyst expects the stock to double perhaps as soon as the end of this year.

We believe this opportunity is important enough to publish a series of free reports so that by this Thursday, when the final details emerge, you will be ready to act.

This is the first of four free reports. Let me get straight to what our top medical analyst discovered:

Beginning in 2003, Novartis began to position itself as the dominant force to treat HCV, which doctors call the modern day “stealth plague.”

If you’re not familiar with HCV, you may know it by its more common name - hepatitis C.

Right now, there are 3 million Americans who are known to be infected with HCV. Most who are infected don’t seek care because current treatment isn’t safe or effective.

HCV is a deadly disease that launches a calculated and clandestine attack on the liver. Most people don’t notice symptoms for 10 to 40 years after the initial infection. As a result, millions of Americans may be infected who just don’t know. Untreated, the viral onslaught can result in cirrhosis of the liver and cancer. HCV is the leading cause of liver cancer – the fifth most common cancer in the world. Once diagnosed, most patients die within one year.

Anyone who received a blood transfusion before 1990, essentially the entire Baby Boom generation, may be at risk for HCV infection. The virus wasn’t even discovered until 1987 – and a transfusion-screening test wasn’t available until 1992. For this reason, medical experts believe the HCV market will explode within the next 10 to 15 years as the number of infected individuals skyrockets.

Today, only 10% of HCV infected patients get treated. The current standard of care is archaic and ineffective: the treatment causes terrible side effects and only helps half of the patients.

This is why HCV is one of the hottest areas in drug development today – and why Novartis is trying to grab the lion’s share of the market. Novartis CEO, Daniel Vasella, calls HCV an “area with high unmet need and big market potential,” and has made the disease a strategic focus of the company:

This past October, Novartis acquired Chiron Corporation (former Nasdaq: CHIR) – the vaccine-based biotech company whose scientists were the first to discover HCV. The price tag – $5 billion.
In June 2005, Novartis struck a deal with Anadys Pharmaceuticals (Nasdaq: ANDS) to gain access to a drug aimed to displace the current HCV treatment. The deal was worth a potential $570 million.
This month, Novartis signed two more HCV-related deals. The first was a collaboration with tiny biotech company Genelabs Technologies (Nasdaq: GNLB) for access to its HCV drug for $195 million.
The second deal this month was with Human Genome Sciences (Nasdaq: HGSI), worth $510 million.
But the first, and most important, strategic move took place in May 2003. Novartis struck a deal to buy 54% of another small pharmaceutical company. This is the company that’s meeting with our analysts, industry experts and investors around the world this Thursday.

This company is the leading innovator in HCV therapy and owns a pipeline of drugs, including one awaiting FDA approval. But for investors, the key consideration is Novartis’ backing of the company.

The Novartis contractual obligation calls for it to pay almost all of the development costs associated with the small company’s leading HCV and HBV programs. As you may know, it can cost up to $1 billion to bring a new drug through all the steps from development to the market. With Novartis backing the costs, this small company doesn’t pay a large portion of these bills... and is ensured to have all the funding it needs to bring new products to the market.

For Novartis, the move to corner the HCV market is a great corporate strategy.

In the landmark collaboration between the two companies, Novartis took a 54% equity stake in the small company, in addition to multiple milestone and future royalty-sharing options.

According to official SEC filings, Novartis has committed up to $1.4 billion. This is amazing if you consider that in May 2003, when Novartis first started pursuing the rights to access this company’s revolutionary discoveries, the small company was worth less than one third of that... just $472 million.

Daniel Vasella, Chairman and CEO of Novartis, said, “Our strategic collaboration with [this small company] will provide us with a rapid entry into the anti-viral field, complementing our pipeline with several oral medicines with potentially significant benefits for patients around the world.”

Other insiders seem to agree. And they’re betting their money on it...

On May 9, the small company’s CEO purchased 10,000 shares of his company’s stock on the open market. Today, he holds close to 5% of outstanding stock... worth close to $20 million. Our top medical investment analysts anticipate the CEO will see a double or more on his investment before the end of the year.

This situation is, in our minds, the perfect set-up for investors because you have the upside of a small innovator, with the financial security of Big Pharma.

How did we come by this information?

We hired our own biomedical specialist

This amazing opportunity first came to my attention thanks to a secret resource behind several of our company’s best medical recommendations.

His name is Rob Fannon.

As our biomedical specialist, Rob has investigated more than two dozen companies for us. Every time he’s told me he was convinced a new medical technology would work, it did.

For instance, Rob was our lead analyst on our recommendation of Crucell (Nasdaq:CRXL). Rob knew from his lab work that most companies make vaccines using chicken eggs, which have the potential to be very dangerous.
So Rob found a company called Crucell, which had developed new vaccine technology called PER.C6. It was safer and faster than existing vaccine methods, and could be used by dozens of companies. As a result, the stock has shot up 221% since March 2004, when Rob recommended it.

Likewise, Rob was the source for our recommendation of Esperion, a company that developed a radical new way to treat heart disease. Here, Rob’s expertise was critical. In his previous position, he worked in a lab down the hall from P.K. Shah at Cedars-Sinai Medical Center in Los Angeles. Dr. Shah was one of Esperion’s clinical researchers.
Rob knew how excited the clinical community was about Esperion’s Phase II results, which showed the drug could remove arterial plaque and reverse heart disease. Once mainstream investors found out, the company’s share price went up about 70% over the course of several months in 2003 when the company was in the midst of drug trial.

We recommended Esperion to our readers and three weeks later, they had a chance to make 55% gains overnight when the company was sold to Pfizer.

I have known Rob for three years. I've been trying to hire him for just as long.

His background is perfect for our business. Rob also worked at Cedars Sinai Medical Center, where he was a researcher in the hospital’s Comprehensive Prostate Cancer Research Program.

At Johns Hopkins University, Rob earned a master’s degree in public health and an MBA.

After finishing his advanced degrees, we were able to convince him that working for us would allow him to see more kinds of technology... meet more experts... and make a greater personal impact on a business... than anywhere else.

He was excited by the opportunity – especially to share his knowledge with people in a way that would have an immediate, measurable positive impact.

In other words, I know Rob’s research can help you make a lot of money. In fact, over the years, every single investment Rob researched for us has resulted in big gains in short order. He's never given us a losing recommendation.

Now we’ve hired him to do the same for you...

To give you an idea of how thorough Rob’s work is, look at what he’s done over the past month to report on this new medical discovery...

He hired a full-time analyst, George Huang, to gather information about this small drug development company. Rob found George though the Hopkins Biotech Network. Both of them served on the executive board where George was the president.

Next, Rob and George visited the company’s corporate headquarters and met privately with the Senior Vice President of Biology... the Executive Vice President of Clinical Development and Chief Medical Officer... the Executive Vice President of Operations... and the company’s Chief Financial Officer.

The next day, they spoke to the president and founder of the company. Of course, they’ve also read just about every major scientific journal article on the company... As well as interviewed top scientists to get second and third opinions.

This Thursday, our two analysts will hold a private meeting with the founder, CEO and president of this small pharmaceutical company. They’ve also invited an outside expert... Dr. Douglas T. Dieterich, M.D., the Chief Medical Officer of The Mount Sinai Medical Center in New York City and a Clinical Associate Professor of Medicine at New York University School of Medicine.

When we’ve held private meetings like this in the past, the company’s stock has risen 20% to 60% in the following two weeks.

This time we have reason to believe this company’s stock will go up even more. Tomorrow, and the following days, I’ll send you more information telling you why:

This small drug development company is led by four leading medical scientists. They’ve worked for drug giants like GlaxoSmithKline... and have been involved in the development of nearly every HIV medication used today. Thursday’s meeting is about two new drugs that promise to become the gold standard of care for the two epidemic diseases HBV and HCV... the most common blood-borne infections in the United States – and the leading causes of liver cancer and liver transplants.
That alone would make this company a great investment. But our the biggest opportunity comes from analysts who’ve already covered this stock. Let me explain...

Not being medical professionals, Wall Street analysts misunderstood the results of this company’s medical trial reported on earlier this March. As a result, they dumped the stock and drove it from $20 to less than $10 today.

Yet, five days after the stock dropped, Novartis gave this small company another $25 million in advance license payments for future rights to sell the drug. At Thursday’s meeting, the misinformation that drove the price down will be explained. And once the medical community and mainstream analysts catch on to the real picture... we anticipate the stock will return to its previous $20 trading range and higher.

As a subscriber to S&A Investment Research, you are invited to join us – via conference call - with our analysts, independent experts, the company’s senior management and a group of experienced investors from all over the world.

We believe this situation will prove to be the No.1 investment opportunity of 2006. And, to make sure you’re fully informed about the opportunity, we’re going to send you another free report – with more details – tomorrow.

On the other hand, if you already know about this situation, you can do your own due diligence right away... prepare any questions you may wish to ask at the meeting (we’ll teleconference you in)... and if you wish, buy shares early before the meeting even takes place.

To get your report now, click here.


George Rayburn,
Publisher, Stansberry & Assoc. Investment Research

A said...

And this post from Yahoo on how to play such opportunities:

when SGMO was the stock in this newsletter with it's "Z-finger" technology, many of us on a well known mIRC stock daytraders board thought it was total crap & posted much on how the only finger being given was to idiots who bought it long. Well, those "idiots" got a run from $5.22 on the open May 24 which was a pop from previous close of +10%. The POS SGMO crap then 'only' went up over the next 5 days to hit a hod of $8.28 on June 1, for a 58% gain from the pump.
Moral of the story:
Is the stock crap? doesn't matter
Is the pumper crap? doesn't matter
DO shorts post ad infanitum how the pump is bull & the stock is a joke? doesn't matter
Does the pump eventually die? doesn't matter

Play what's given. People read the newsletter
People buy what the newsletter promotes
Stock price increases on the buys
IDIX is definitely the stock discussed in the newsletter
You make the choice:
don't buy & end up saying 'shouldawouldacoulda"
short & end up saying "what was the license plate of that stock that ran over me
or buy
and make alot of cash playing the game

A said...

And, for you scientific types, some "dewdiligence_on_SI"

Anonymous said...

A...what's your trading plan on this one? It has some space between here and 200dma

A said...

A...what's your trading plan on this one? It has some space between here and 200dma

I have shares and calls (Aug $10.00), periodically taking shares off putting calls on, and vice versa, trying to maintain a core position trade via both, while taking profits on day-trades.


A said...

From, late May

07:55 Calls of Note: Round III

Bear Stearns out positive on IDIX noting that as of market close on May 23, 2006, Idenix had a market cap of $434M and cash of $200M. This implies an enterprise value of ~$234M. Novartis (NVS) owns 56% of Idenix's outstanding stock, leaving the remaining 44% spread among the rest of the Street. The remaining 44% of Idenix's $234M enterprise value is essentially worth $100M. Thinks that at $10, investors are ascribing almost zero value to NM-283. Firm maintains Outperform rating and $22 tgt saying it's too early to declare NM-283 dead

Anonymous said...

Hi A:

Why not play the July 22 options. the July $10 were trading a $.20 yesterday, now %.45?

This hype-pop-scalp play should be finished by July 21.

Unfortunately I can't play the options because I am trading from a Roth IRA account, or I would have bought the July $10 calls yesterday.


Ronny said...

Hi Allan,has been helpful in your trading?
Hope you are well,Ron

A said...

Hi Allan,has been helpful in your trading?

Yes and no. My trading partner here, Ilene, likes it a lot, but I'm more of an agnostic on it. At $300 a month, she thinks we make our money back in spades with it, so it's pretty much her pet project. It's not a part of my personal trading system, so I seldom take their trades, but look at them more as a research arm that get's to the bottom of stock specific news in a hurry, sometimes in time to make a buck, but sometimes at the end of the spike. I think they offer a free trial, but tread carefully on taking recommended trades until you get a good feel for it, or it won't be "free" at all.


A said...

Why not play the July 22 options. the July $10 were trading a $.20 yesterday, now %.45?


I liked the liquidity of the August calls better at the time.


Anonymous said...


Is Ilene still interested in DSCO as a longer-term hold, it seems to have stabilized around the $2.00 level here?



A said...

Is Ilene still interested in DSCO as a longer-term hold, it seems to have stabilized around the $2.00 level here?

Ouch, Steve. What have I ever done to you to suggest I broach the subject of DSCO with Ilene? Damn, what I won't do for my readers......ok, she says, "I still own all my shares, DSCO has turned into a much longer term play then I expected, it will work, or they get bought out along the way."


Anonymous said...

Thanks A,

Actually, since I did the no-no of adding to a losing position and bought more at $1.34 a few weeks ago, I am at a tiny gain on the whole position now.

Thanks for all the help you (and Ilene) have been this last year.


Anonymous said...

Hey Allan,

Can't help but notice the frequency at which GTN is popping on Sally. They're sitting on the downside of their 52 week low. Lot's of i-buys across the board. High marks in the pop score department. Not much upward movement though. Is there something I'm missing here?

If nothing else, seems like a good mid-term buy, no? Assuming, that is, the insiders really do know something we don't. Have you been able to suss out a reliable way to tell the difference between mids and shorts with these?

As always, thanks for your input.


AvidVines said...

Some technicals on IDIX for you here. If you and Irene would like to demo the screening service that works in real-time, let me know.