A good read in the stupidity and ignorance associated with Groupthink,...applying faulty logic and assumptions to a analysis of a stock, and actively blocking contrary ideas from mixing into the group think.
Now Titled: Islands of stupidity in a sea of market reason (or Stupidly holding from $6 to pennies)(ggggggggggggg)
Subject 4878
Date: May 24, 2002 11:11 AM
It is about time this subject was updated (nothing since 1996) and I can think of nothing better to use than a post made by a long time investor called Jim Kayne.
Wayne Agee
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Jim summerises the current situation with DMX very well in this post:
AZ, this is an interesting stock. It is the classic Contrarian Play, as you point out. It may become The Defintion.
As I got into the stock, I reviewed all the posts on Stockhouse, and later on SI. They told a fascinating story.
There is an interesting split in the psychology of the posters/investors.
Among the older investors, the division is into two classes: those who have maintained their equanimity, and taken the time and effort to understand what forces have really been at work. By and large, they have stayed the course. You will find their posts "islands of reason in a sea of stupidity".
The second class represents a group of posters who are bitter, disappointed, and incapable of (or unwilling to do the work involved in) understanding what has happened. Some have taken up an active campaign against DMX. While one has to consider negative viewpoints at all times, it quickly becomes apparent that some of these posters simply don't have the equipment to reason it all out. Their posts consist of vague allegations, illogical thinking, and unsubtantiated (unverifiable) statements based on anger, frustration, disappointment and the inability to marshall a logical argument. In short, drivel.
Newer investors see the possibility of significant returns in a short time frame. As I have tried to point out (this is what some people call "pumping", LOL) the facts support a positive view - extremely positive.
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There is no question that the DMX story involves a highly idiosyncratic approach to getting a drug pipeline started. This is not your traditional pharma!
As others have pointed out, REK represents the entrepreneur par excellence - she has made mistakes. She has missed timelines. She has alienated some.
Does DMX have enemies? The probability is very high that some very dirty games are being played against DMX. Competitor Analysis is a subject that seems to have escaped the FUD artists. I urge you to read Prescription Games, first brought to our attention by Mark. The conduct of Health Canada WRT DMX raises some serious questions, and the prospect of anti-competitive measures through the mechanism of political interference cannot be ignored.
"Prescription Games", indeed.
When you examine the chorus of negativity, you have to ask yourself, "What did these people expect?"
Did they expect that REK would take DMX instantly to the stars, like a seasoned pro? Or did they expect that a young, emerging pharma, with a "green" CEO, would trip occasionally, on the way?
However, no matter how much credence you give to the negativity (and some of the better posters have brought up some good points) the question has to be,
"In the overview, what is the status of DMX NOW?"
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Very, very good. Outstanding. The following statements have all been discussed, and reviewed ad nauseum by credible, informed posters.
(1) 2 drugs have successfully been taken through Phase 3. The factual and logical evidence that they will attain FDA/HC approval is very good. It bears repeating, though, that an awful lot is contingent on FDA approval. That was true 5 years ago: the odds against it are very small, now. It is still not a certainty: approval is an extremely high probability, in both cases: Pennsaid and WF10.
(2) The arduous approval process for Pennsaid continues in the EU, with success.
(3) UK regulatory approval has been gained, and sales have been disappointing for some good reasons. There are questions about the suitability of Provalis as a distributor, and whether a better distributor could have been found is unresolved. At best, in both the EU and UK, the reception for a topical NSAID promises to be difficult. There is reasonable hope that in time, the efficacy of Pennsaid will attract a market.
(4) The marketing of Pennsaid in the Caribbean has begun, as an OTC product. Contrary to the shrill cries of the FUD crowd, this avenue shows considerable promise as a revenue generator, and Caribbean sales will provide an interesting "window" on the possible future of Pennsaid.
(5) JnJ continues its quiet, steadfast support for DMX. There is sufficient evidence to conclude that JnJ is a reality, unannounced though it may be. It is interesting to note there are credible pharma sites that currently list JnJ/McNeil as active partners for DMX - in newly updated information.
If you accept the JnJ connection as "logically proven", then you can also accept the tremendous marketing resources that will be brought to bear, on Pennsaid.
Many have suggested that JnJ is the logical partner for WF10, and I agree with them. As posted, if JnJ is not interested, there will definitely be others.
(6) There are other drugs, and other applications in the pipeline. FDA/HC approval of Pennsaid will mean that DMSO has finally made it into North America's pharmacy. This will open the door to other therapeutics using DMSO.
WF10 has attracted some controversy. Its derivation from the world of physical chemistry, and its mechanism of action, has awaited validation. There is a logical argument to be made that it continues to demonstrate the efficacy and safety established at Vanderbilt.
That logical argument is based on the fact that DMX announced the intention to buy the remaining 80% of Oxo Chemie, a year ago, affirmed at Xmas 2001, and completed recently. At the time of the initial announcement, was there a characteristic of the trails that would have given the result away? Yes. If you had an incomplete (but statistically valid) sample of the patient population data - one could predict, with a high degree of certainty, the trial's outcome.
Is that enough to prove that WF10 was a success?
No. But it is enough to make an acquisition decision, with a high probability of being right.
So why do I conclude that WF10 is a success?
Because as more data came in, DMX reaffirmed its intention to acquire.
Because, now that all the data is in, DMX has acquired Oxo Chemie.
That is, DMX became more and more certain, as the data came in. But the evidence was clear, even with only some of the data, once a statiscally reliable sample of the population was avilable.
Vanderbilt, repeated.Quod erat demonstratum. However, some investors won't believe it until they see the NR. Good luck, buying in then!
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A side note on WF10. If you read the posts by di7026, and the patent information I posted, and you investigate what WF10 does, you will find that Dr. Kuehne achieved what no one else has ever been able to do.
There are disagreements as to the implications and potential benefits of WF10. Initially, I was a member of the more skeptical crowd. However, in the last 2 months, I have become more like Mark in my thinking.
I believe that WF10 will have profound effects on both the thinking about, and practice of, immunology. However, that is just an opinion. Other knowledgeable sources are less optimistic in their assessment, limiting it to a more specific efficacy and success.
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What have the accomplishments of DMX (REK) been?
1 - From nothing she has created a young pharma, bought and equipped it with manufacturing facilities, which passed FDA inspection on the first try. No small accomplishments.
2 - She has recognized the potential in two controversial platform drugs, and taken them to R+D.
3 - She has taken them through Phase 3 trials, successfully.
4 - She has brought other drugs up, in the pipeline.
5 - She has obtained, and retained the backing of a major pharma, throughout the R+D process. It appears that the major will market Pennsaid to the USA, and partially, to the world, in the sense of "spillover". This is contingent on FDA approval.
6 - The evidence is clear: DMX has parented the success of two therapies whose efficacy and safety is almost a certainty. On approval: the major criteria on approval are safety and efficacy.
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On the failings of DMX (REK):
1 - Overly optimistic - with qualifications.
2 - Uncommunicative with shareholders - with qualifications.
3 - Idiosyncratic, possibly suspicious and demanding - with qualifications.
4 - Many disagree with the Acqua decision.
5 - There are questions about Provalis - with qualifications.
I'm sure there's a legion of SH posters who will add more.
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AZ, there ain't no sure thing: we know it. We all remember the shock, and horror of 9/11, and the tanking of the markets.
Perhaps a leading shareholder of DMX will die, and the estate will flood the market with shares.
Maybe this, maybe that. We invest on probabilities, not certainties. The big money is made on picking a winner that the average person hasn't got the marbles to see. The market is littered with them. They want the company to announce the facts to them.
The evidence and the probabilities strongly suggest that DMX is such a stock.
You have bought in at an outstanding price; your timing was impeccable.
Based on the evidence, and the probabilities, you are going to do very, very well.
Congratulations.
Jim |
