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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Pancho Villa who wrote (6468)	11/4/1997 8:58:00 AM
From: Hank	Respond to of 9285

To All: New short in the biotech sector- VPHM. I will attempt to short it today at 22. The reasons I will short are: 1) It's a one product company with recently completed phase II clinical trials for a drug against viral meningitis, ie the summer flu. This is NOT a big money making application and phase III clincical trials have not yet begun. They will probably not be started until next summer. The income from this potential drug in no way justifys the current stock price of $21 1/2. 2) Recent phase II studies on this same drug were initiated against rhino virus infections (the common cold) in asthmatics. This is not likely to a stellar study because there are over 100 different rhino viruses in circulation and this drug is only active against half of them and the study will probably not be competed until spring. The efficacy will undoubtedly be poor, hence their reasons for targeting emergency applications such as asthmatics. 3) Recent heavy selling in the stock along with a secondary offering completed back in July give this stock extremely weak support at these levels. The stock dove to $16 last week under weakened market conditions but returned to the low 20's under very low volume. Not a good sign. 4) The only major backer these guys have is Boehringer Ingelheim Pharmcaeuticals, an almost non-existant player in the drug market. They have failed to gain support from more major drug firms and their lead drug was out licensed to them by Sanofi-Winthrop. One must ask the question, if Sanofi didn't want this drug, them how profitable can it be? 5) They have other research projects underway but they haven't produced leads that I am aware of. Additionally, their R&D spending has nearly tripled in the last year. At the earliest, income from their viral meningitis drug is at least 2 years away. In a weak market like this, VPHM is treading on extremely thin ice. They should be trading in the $7-$10 IMHO. At the first hint of trouble, this one will nose dive. Hank