What do you think of the risk/reward ratio for NFLD now that they have stumbled?
I haven't looked at NFLD closely for a long time, so I don't have a useful opinion. I could never get comfortable with management -- their PR's often sounded to me like they were hyping something, talking about minor issues as though they were great accomplishments, and the like. And now some years later they are still a long way from crossing the goal line.
One thing I recall that limits NFLD's upside: the raw material for their product Polyheme is recycled human blood (after it has passed its 4-5 week shelf life). That limits the amount of Polyheme that can be produced to the amount of blood that can be recycled from the Red Cross, etc. (And if I remember correctly, they need about 4 or 5 units of blood to recycle to one unit of Polyheme.) That was a bigger issue when Baxter, well-financed and better plugged into the blood distribution system, was at work on a product needing the same raw material (Baxter's product was abandoned a couple of years ago, I believe), but still it limits amount it can make, as well as gross margins.
Moreover, NFLD still needs to build a plant, at a cost well above their current cash. That was a big issue 3-4 years ago when I stopped paying close attention; that it still is doesn't hearten me about NFLD's prospects.
My underinformed guess is that, even if Polyheme eventually gains approval, NFLD is going to stumble a while longer.
BTW, if you want to look at the FDA issues, go to the FDA website, plug "blood substitutes" into the Search field, and find the transcripts of some FDA multi-day conferences on the issue -- lengthy, enlightening, but somewhat daunting for those who want oxygen therrapeutics to be approved. TSC's recent article on NFLD refers to one of these, at which NFLD was quizzed closely some time ago about
trial design, apparently its current difficulty.
As I said before, BPUR is probably the pick of this litter. But as Peter Suzman has said about a couple of other stocks, this is one on which I'll let somebody else have the first double. If BPUR gets approval, I'll likely buy a bunch (huge, huge market), but I'll stay away for now.
--RCM |
