The price isn't sliding, it's eroding which is the worst of all Chinese Water Torture worlds. I submit to you that if the arguments presented for the bullish case by the participants on this thread were valid, some of those privy to the elite sophisticated knowledge would have stepped in and supported the stock. They haven't done that.
Who was creating the "hype"? H&Q? No. Money managers? No. Wall Street? No. The financial press? No. Then who? Types like the biophysicist elite who presume they know something when their field is impossibly complex or the company spokespeople. The most important fact for a biophysicist is to recognize how totally inadequate human understanding is of the molecular biological world. Do any of those types lurk here? It is absolutely appalling to see people who claim to be scientists acting like the most narrow minded effete prejudiced fools wearing the latest line of the emperor's new clothes. Now you know why the historians have a problem understanding why the church chastised Galileo for his heresy. So why would scientists jump on the bandwagon prepared by spokespeople? Greed. Pretense to knowledge. This "hype" rationalization is scapegoating. CFOs shouldn't be saying that.
Everything I said was discounted on the basis that it was ad hominem, but most of the counter arguments were ad hominem. They were built on the assumption that big money, big intellects, and big egos, can't be wrong. Abbott and Glaxo can buy truth. The arguments I presented while not entirely rigorous scientifically do get at the core problem. The problem is that you can't succeed by foisting risk onto someone else and then enjoy the benefits of implied success. You can't get something for nothing. The valuation of such a scheme has a low multiple.
Those "expectations" are more collaborations. Is the CFO saying that more collaborations at the rate expected are not materializing? Didn't De Castro recently claim to the opposite? I see. There are more and more collaborations but they aren't significant. True. I can tell you after having talked with too many CFOs that comments like a., b., c.,d., are just the wrong things for me to hear. Especially d. If the allies are satisfied with ARQL's results, why aren't the money managers? What feedback are they getting from the allies? The answer is that when a molecule is engineered to work in extremely specific ways the plethora of near misses and the cost to evaluate them goes up exponentially with the number of candidates. The allies have to bear that cost. Declining returns to scale so eventually you have to reduce the scale. When a booming stock market pumps up the potential amount of money that can be designated for throw-away research, the cost/benefit of molecular synthesis can be swallowed. When the pharmas' profitabilty slows which is happening now, the reins are pulled in on risky propositions regardless of their criticality. This effect is felt first in speculations like ARQL.
You asked me to suggest biotech companies for investment. I suggest staying clear of bottoms up technology and looking at why pharmas go to ARQL in the first place. To find new drugs. Why? Address human health problems. A human is an organism, not a mechanism, not a mechanism of quadrillions of micro systems. In an abstract sense the human may be modelled in that way, but the implications of the modelling are too complex to expect concrete pathogenic results except in the realm of the highly improbable. Occasionally the ARQL's will find the needle in the haystack.
There is the more probable tops down approach of addressing the diseased organism. Can we help the organism to help itself? This doesn't presume the next 10,000 years of research knowledge to work. We try to find ways to enhance the immune system's ability to do the job it evolved to do sine qua non. We try to support genetic structures which have a weakness in configuration to the billions of other microorganisms trying to use their evolved advantage. We try to resolve imperfections in the almost-perfect immune system's machinery which causes it to be misdirected to attack other parts of the human organism. If bottoms up can help tops down realize its goal, then bottoms up will be pharmacologically successful, but tops down will receive the emphasis and the return on investment because it provides the biggest added value results. I don't see bottoms up as being added value. Thus, I can see ARQL popping up, but then you have to sell.
There are about 15 companies doing tops down. Divulging what I like won't help you to find what makes sense for your style of investing. The fund I run is 70% in cash so I'm not much interested in any Pies-in-the-Sky currently. |
