VaxGen should be a killer investment.
When the phase III trials were approved last June, the story was carried on the front page of all the major papers (N.Y. Times, Washington Post, L.A. Times et. al.), was reported by the national television media, including CNBC, as well as the major radio networks, including NPR. When the IPO comes out of the quiet period the buzz should be intense.
After all, we are dealing with a potential childhood / worldwide vaccine for a plague that is currently infecting tens of millions.
What would you pay for the potential of a piece of an $85 billion dollar market? $15? $50? $100 a share?
90% of drugs never make it to phase III; and, in the case of VaxGen, the FDA has already said that the vaccine phase III trials only need to show 30% effectiveness to be approved. The company's scientists believe that even if the efficacy is 30% they can, using their "sieve" technology, quickly identify breakthrough viral strains, adapt new antigen pieces for them and "boost" the vaccine (thereby increasing efficacy).
Everything is a risk in the market. I've invested in solid blue chip stocks and taken a beating. I've lost money in Municipal bonds. I think everybody has. With a stratospheric upside potential, my bet is that institutional investors and the little guys are not going to want to be left behind, and everybody is going to want some part of VaxGen.
Two quick analogies: Centocor was a Biotech stock with a phase III sepsis drug (not even close to the market of an AIDS vaccine) and it was selling in the 60's expecting approval, as I remember. By the way, the phase III trials were not approved and the stock crashed to single digits. Entremed, last year, without even a phase I trial under its belt rocketed to 80 in a day on the basis of front page coverage of a possible cancer cure. The stock backed off when James Watson denied approving statements.
If people would pay 60 and 80 for a complex drug they don't understand, and the idea of an anticancer compound, they will pay 100 for a phaseIII AIDS vaccine.
That's how I see it. |
