Perhaps I am getting proved wrong, but I do not share the common explanation for the decline in the stock price.
IMO the discussion right now is based too much on hope instead on facts. I know, most of the participants here do not like to hear anything bad about PARS, but keeping the eyes closed is no solution.
Whenever it comes to a decline in stock prices, everybody is jumping on the train to blame CC. Well, I have heard the same story twice the last year, everybody telling how strongly the price will jump up if this or that dateline is over, and when QX figures are published. Let's face it, for the next few month there are no really good reasons to buy PARS. And this is the major reason for the price decline. Not CC sales. Even if they are selling, as long as there would be interest in PARS, the shares would just change hands, that's all. Only if nobody is buying the stock will come under pressure; and that is what we do see right now.
I have given an explanation before, why I do not see any reason to buy PARS now, but looking at the actual discussion I will do so again.
1) Alrex and Lotemax: Even if we saw an increase of sales in Q4 of 125 % (impressive on first view, but the basis is very small - if I sell one in the first month, and two in the second, well that is an increase of 100%, but nothing to build a rising stock price on), both products will not be able to bring PARS into positive territory for some time (with more than 46 million shares outstanding earnings of $0,1 per share would mean revenues of more than $10 million. Against all expectations PARS and BOL did not name a new marketing partner - and nobody knows, if there will be one in the next few month. uncertainty.
The so long expected disclosure of entering the European market is still pending - for how long? uncertainty.
2) LE-T will not be available before Q2 2000. And even than, it will only serve a small market, nothing what investors really attracts.
3) HU-211: IMO most participants on this thread overestimate the speed in which a partnership is discussed and signed. I would be happy to be proved wrong, but I do not expect a signing before Q3. - uncertainty.
Nearly everybody here seems to take it for granted, that PARS is completing it's PH III successfully. But hey, nothing is granted. A lot of other products have failed in Ph.III, and till now every other medication for TBI failed. So why is it guaranteed that PARS is winning the game? Have all the others be so stupid, and only PARS knows how this game is played? Even if PARS has good chances to succeed, it is NOT granted! - uncertainty.
Against most opinions, HU-211 is not a blockbuster drug. A blockbuster starts with sales of $1 billion, the market for TBI is $500 million, half of what one calls a blockbuster. And even if you take stroke into account, the drug would not be on the market before 2005/2006 (for stroke). And even for TBI you should not expect any major revenues from HU-211 before 2002. If one is looking for blockbuster drugs, take a look at Enbrel from IMNX. This drug is a real blockbuster with further big potential. And even here the stock rocketed only after FDA approval, not with signing a partnership.
4) Financing deals: Everybody seems to excited of the new deal done by PARS. No doubt, it is much better than that with CC and it takes a lot of pressure from PARS in the short, concerning their financial future. But there are already about 46 million stocks outstanding. Given the actual price, this deal will add another 5-8 million shares - just some more dilution.
5) Daily turnover of PARS is just about $250-500k. No institutional investor is buying in such an illiquid stock. If an investor would be interested in buying PARS for $5 million, it would take him 20-40 days, and he still would be responsible for half of daily turnover.
6) PARS is valued under $100 million. Take that same investor from above. If he would have managed to buy all the shares without influencing the price to much against his own interests, he would find himself with more than 7% of PARS. There are only very few investors that are looking for such an investment. So our investor would be limited in buying PARS shares for a maximum amount of $2,5 million, if he is not interested in crossing the 5% boarder. This might still be a big amount for us, but it is not a big amount for typical biotech investors, especially not if this is an institutional investor.
Summary: PARS does not offer a blockbuster, it's success is still uncertain, new shareholders still have to face major further dilution, turnover and valuation is much too small, products on the market are too small to offer significant earnings. PARS has still a long way to go before it offers real big opportunities. As any other share PARS has to compete with other stocks, that have an interesting story, too. PARS is not the only stock that might offer some interesting future. We have to face it.
As most other I have added shares in the past. It seemed always to be a good buying opportunity - to loose money. Well, before there is not much more certainty and facts available, I will stay at the sideline; perhaps missing some uptrend, but definitely not loosing money!
Soory for being that long, but I thought some not as optimistic thoughts might be quiet helpful to understand some of the development we are witnessing,
Richard |
