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Biotech / Medical : Lidak Pharm. [LDAKA]

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To: Red Dragon who wrote (598)	9/11/1997 8:47:00 AM
From: Henry Volquardsen	of 1115

RD, Your comments concerning the broker are not news unfortunately. I have heard this story before about a hyperventilating broker and a over enthusiastic pr firm before. They were apparently involved in the IPO but I am not certain. They did a lot of harm to Lidak's reputation and one of the reasons that I believe Lidak is so conservative in their announcements is because they felt badly burned. The timing mentioned in your post makes me believe the call was less sinsiter than it was desperate. Let me speculate for a moment. You mention the call came in early 94. Yes the stock took a large drop beginning around May of 94. But the the trials that indicated that Lidakol was no more effective than the placebo were phase III trials not phase II and they were not released until 96. They had not even been begun in 94. The cause of the 94 drop was several statements by Dan Dorfmann on CNBC (or FNN if it was called that then) stating that the stock was way over valued and should be no higher than $1. Here comes the speculation. The brokerage and pr firms I mention earlier were most likely paid in stock. I know the pr firm had 500,000 shares at one point. Inasmuch as their pay was being battered by the decline in the stock the brokerage firm was probably trying to sell to get their own money out hence the note of desperation you mentioned in their voices. People trying to set up shorts don't sound desperate, they sound like used car salesmen <g>. The idea that they were selling because of a leak is implausible because the announcement was two years off. All the announcements at that time were on time and positive. Regarding those Phase III trial, they did indeed show Lidakol was no more effective than the placebo. This however was because the placebo was incorrectly prepared and turned out to be active as well. That trial did show that Lidakol was effective. The second Phase III was just completed and looks encouraging. I first learned of Lidak via BI REsearch as well. I took a small position then, have watched this stock closely for several years and started building a large stake in the last three weeks of December 96.

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