Harold,
Clearly the market doesn't see this company the way I do, and we are going to have to wait to find out who is right. I can only guess as to the reasons for the decline, as there has certainly been no (disclosed) seriously bad news out of the company and all indications are that the company is still on track.
Here are some possible reasons:
1. The weak biotech market - many second/third tier stocks were badly punished until the end of August, althought there have been some nice recoveries since then.
2. The MRVT weakness. Miravant is a pure photo-dynamic therapy play that has seen a stock price collapse on doubts about the size of the PDT market.
3. Overly aggressive (in terms of timing) earnings estimates by some analysts are being brought back to reality. Biotechs need to learn to over-deliver, and this means reining-in overly aggressive estimates.
4. Some possible delays in their PDT trials for breast cancer as they sort out the best dosage to avoid excessive pain at the time of treatment.
5. Soros is a significant holder, and I wonder if there was some selling in some of the stocks his funds hold when the Russian problems surfaced, given they may have had some liquidity issues.
In the face of the above, why do I still like this stock? (In fact I bought a little more at around $14 recently).
In my view, the PDT for cancer is a red herring when considering this stock's prospects. I view Gd-Tex as an order of magnitude more important, and this program is still very much on course, with the recent announcement of Phase III trials commencing.
I view Gd-Tex as standing a reasonable chance of becoming a standard adjunct to all radiation therapy, and if this happens PCYC could be a 10-bagger. PDT is very much second fiddle, although if the roto-rooter application works it could join Gd-Tex as a potential home run.
Having a Phase III trial might move PCYC onto some more buy lists, as there are certainly investors and funds out there that will only buy biotechs in Phase III or with approved drugs. The company has plenty of cash, which is important in today's environment.
Of course there is always the chance (as with all biotechs) that the reason for the decline is some bad news the company isn't telling us. That's why (aside from SEPR) I remain quite diversified amongst the biotechs.
Peter |
