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Biotech / Medical : Alfacell (ACEL)
ACEL 11.09-2.1%3:59 PM EST
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To: John Jenco who wrote (535)6/25/1997 11:14:00 AM
From: GCL   of 1533
 
From, "HOW TO PLAY HOT BIOTECHS" :

I know I've posted this information before, but inlight of the recent posts I thought it appropriate to bring it to everyones attention again.

1. "Be suspicious of companies that are well into clinical trials without securing a marketing or research partner, a sign that the drug's commercial prospects may be limited. Look for substantial milestone payments and cash commitments when the deal is announced, not just nebulous talk about a research alliance."

2. "Watch the piggy bank": " It takes cash and lots of it to keep the Bunsen burners going. Look for companies that have a minimum of two years cash reserves. Twelve months or less and alarm bells should be going off. Cash strapped companies are in a weak bargaining position with potential strategic partners and investments bankers."

3. "Don't fall asleep at the wheel": " Like junior mining stocks, biotechnology require more diligence than most investments because events can move quickly against you. There are a number of things to look out for that may indicate all is not well in the lab.

A. Insider selling: While the sale of stock by insiders could mean something as innocuous as estate planning, it generally should'nt be considered a strong vote of confidence in your company's prospects.

B. Delays in clinical trials or regulatory filings: Be wary of companies that miss self-imposed deadlines. If they say Phase III trials will begin in May and nothing happened by Christmas, it may be a sign of serious problems. Stocks generally get clobbered by delays, a way of discounting the increased risk.

C. Sudden changes in research focus.

D. Sudden departures of key senior officials

E. Inability to secure a marketing partner.

Any thoughts on some of these items?

G. Lamb
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