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Biotech / Medical : Biotech vs. Shorts -- Ignore unavailable to you. Want to Upgrade?

To: Mark L. who wrote (100)	8/4/1999 1:05:00 AM
From: scaram(o)uche	Respond to of 427

Traditionally, it's rising tide stuff for biotech rallies.... the crud often rises with the good science/business plan companies. Shorting on the basis of fundamentals can therefore sting you during a rally. For long-term, fundamental shorts, you clearly want the subset of companies where the research premiums are large but science and/or management is wanting. I don't think that too many board veterans will give you a list. Back in the misc.invest.stocks days, I would occasionally lend criticism, where it was due, for an issue where I had no vested interest. I've done it a few times here too, but not lately. It often means stalkers and threats. For the correct incentive, I'll provide you with a list of 10 companies that will, collectively, significantly underperform the sector for the next five years.

To: Mark L. who wrote (100)	8/4/1999 10:36:00 AM
From: Biomaven	Respond to of 427

Mark, I'd be curious as to why you don't think ENMD is a good "extended-period" short. I think your comments here would strike at the heart of what a good thinking-man's approach to biotech might be. In other words, the issue is not "could something come along which would validate a price?", but "what is a fair price to discount the risks inherent in Phase trials?" ENMD is complicated by the hype factor. Let's assume they get some good efficacy in their early trials. Do you think anyone is going to stop to ask if they will necessarily end up with an approvable drug? Thus you are not betting against them coming up with an approvable drug, you are betting against them coming up with any encouraging results. This skews the risk-reward ratio against shorting. Not many shorts would be willing to hold it up through 80 again in the hopes that the spike is just a temporary phenomenon. As for Asensio, my feeling is that sometimes (often?) what he says is correct, but that he undoubtedly sometimes exaggerates and, putting it mildly, stretches the truth. I certainly don't hold with his philosophy of doing whatever it takes to make sure the stock goes down. Further, I feel that often he is simply playing an inverted "pump and dump" scheme. First he shorts, then he makes a big announcement which causes his followers to follow suit and scares some longs, and then he (maybe only partially) covers at a lower price. Just as I decline to follow the regular P&D's, so I decline to follow him. Bottom line is that I just don't like playing in stocks where the price is controlled much more by who shouts loudest than anything related to stock fundamentals. It can take years to find out if a biotech is a dud or not, and meantime the misinformation on both sides is the main driver of the price. Peter