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Biotech / Medical : Zonagen (zona) - good buy? -- Ignore unavailable to you. Want to Upgrade?

To: mc who wrote (843)	11/20/1997 10:50:00 PM
From: Zebra 365	Read Replies (1) \| Respond to of 7041

Still short, and why..... I heard the conference call (800) 839-3311 and was very impressed with the CEO. He has a vision for the company and a strategy to implement it. I can see why SGP wanted to get in. They have seen the data and believe there will be a product and a patent. I haven't seen either so I really can't debate them. I will answer a clinical question put to me in an earlier post (I am a board certified internist), why are the studies not showing side effects? Well, unless you are inside on this deal, you don't know what the studies show and neither do I. But a trial, even as large as 3500 patients can easily miss a side effect that occurs once in 10,000 uses. Redux increased the risk of PPH (primary pulmonary hypertension) from 3/100,000 to 48/100,000 and carried dire warnings to that effect. Now, before you jump on me I am not saying Vasomax is like Redux. I'm making a point about the ability of clinical studies to discover infrequent, but serious side effects. Anyway, that is not why I'm short this stock. Zonagen sold the stock to raise capital, the brokers doing the secondary sold the stock for fees. They have the cash. The 8.5 million shares in the float (12.5 million outstanding) no longer have much effect on the company. The company doesn't need to raise more cash (85 million with a burn rate of 4 million a year). So, yes, the CEO said that what they will do to protect the current shareholders is to go on working as before, i.e. nothing. The long term shareholders may not want the company to spend capital in the market to support the price of the stock (i.e. a stock buyback) If they are seriously long term shareholders then they will take the oppportunity of a price decline to buy more. After all, the company has a book value of 7$ per share and that is rare among start up Pharm companies. The Traders who bought the stock because it was going up are the ones in trouble here. This is a News Driven Stock. The "best case" scenario says No Sales for at least 14-15 months. Next good news will be FDA application, and you can bet "Asensio" or someone like him will be waiting to sell if it peaks there. Honestly, I was waiting to short it right after the SGP announcement, too. Just because that was the last good news for a while. I learned my lesson being long on VVUS after the last quarterly earnings report (report was good and the stock lost 50% of it's value). The next bad news will be Viagra approval, and the 1998 quarterly Viagra sales reports while Vasomax is waiting on the FDA, those will be like pulling teeth for ZONA longs. I think the traders will be moving on long before that. So I'm not short the company, I'm just short the stock, for now. I will leave you with a verbatim quote from the CEO in the conference call, not out of context, it was a response to a question about the ineffectiveness of injected phentolamine. "Phentolamine alone without sexual stimulation produces very little effect......by the way, Pfizer's drug works much the same way." Does anyone really buy the proposal that it's good to be second in this game with a drug that works "much the same way" as Pfizer's? The market will let us know very soon. I AM sorry for those who took a bath on this, been there, done that. Zebra