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Microcap & Penny Stocks : Pharmos(PARS) -- Ignore unavailable to you. Want to Upgrade?

To: Gabe Fernandez who wrote (779)	5/7/1998 9:13:00 PM
From: arnie h	Read Replies (1) \| Respond to of 1491

Gabe et al; Wanted to note that the PARS thread is working beautifully. Knowledgeable and thoughtful people are giving their views on a broad range of issues facing the company; from raising money, to discussing possible outcomes of sales and trials, to investor relations. If there were a prize for thread quality, I think we'd be in the running. It's my pleasure to make a posting every so often. On the matter of the press release, my tendency is to think it doesn't much matter at this time except to day traders. At the end of the day, and that may be sometime this year, the price of the stock will depend on B&L's sales and the results of the HU211 trial. With enough good news, we won't have to worry much about the price of the stock. I thought Yosi made a good point that the current market puts us in a very favorable risk/reward position. Those of us who have confidence that things are going to go well can keep accumulating at a quite reasonable price. For the longer term investor, it doesn't really help to get the stock price up to say $5 or so before good news comes out. If you're a short term investor, it certainly does. Todays release was useful in the sense that we now know the strategy of the company is to unblock the Phase II HU211 trial. This seems like the right strategy if we think the lower dose levels are sufficient to show efficacy. Partnering is key to success and unblocking could lead to consummation of an arrangement sooner rather than later. With appreciation to all, Arnie

To: Gabe Fernandez who wrote (779)	5/8/1998 12:23:00 AM
From: Ariella	Read Replies (2) \| Respond to of 1491

To All -- excerpts from a '96 Evan Sturza article "Do Your Research Before Buying Back Into Biotech" that still seem relevant today, They are especially interesting since Sturza has recommended PARS in his investment newsletter. Full article is available at URL: researchmag.com Note: writing in parentheses at end of each number point is mine, not Sturza's. ---------------------------------------------------------- "Biotech investors should focus on specific characteristics when selecting companies to invest in. The following considerations can provide investors with a general framework for evaluating biotech companies: 1. "... seek out companies where the potential payoff is big....{those} where sales for a new treatment could reach at least $250 million. Examples of these areas include hormone replacement therapy and drugs for the treatment of chronic illnesses such as hepatitis and neuro-degenerative diseases." (HU-211 obviously fits here.) 2. "Invest in companies developing drugs for illnesses that are not adequately treated. For example, a new medication that treats debilitating illnesses such as Alzheimer's would be a significant achievement, whereas new drugs to treat high blood pressure or high cholesterol are not desperately needed." (Again, HU-211 fits here; tamoxifen does to a lesser degree because there will be competitors on the market.) "Drugs for illnesses that require chronic relief (asthma and rheumatoid arthritis, for example) are much more desirable investment opportunities than one-shot, no annuity fixes such as vaccines." (Alrex fits here.) 3. "Seek out companies that diversify around a specific therapeutic category or technology." (Lotemax and its derivatives fit here; HU-211 and tamoxifen may, as well.) 4. "Look for companies with proven "enabling technologies" that establish a platform for various applications. This feature sharply reduces risk and leaves open many avenues for profitability. " (Again, the Lotemax family fits here, as does HU-211 for its ability to cross the blood/brain barrier.) 5. "To reduce risk, companies should have at least two drugs in advanced clinical trials." (well, we have 2 past this stage, as well as HU-211 approaching 3rd stage.) "Investors should not pay much for pre-clinical data or, for that matter, positive Phase I data. The majority of a company's market value accrues as its drugs advance through Phase II and III clinical trials. Many drugs that generate positive preclinical results in testing do not work nearly as well in humans. Similarly, because Phase I studies are very small by design and are intended to certify safety, very little is learned about a drug's efficacy. The optimal time to purchase a biotech stock is immediately following the successful completion of Phase II or Phase III trials, when the drug's efficacy can be demonstrated." 6. "Make sure the company has a savvy management team. Many biotech CEOs are either from academia or have no background running a money-making venture. " (We have a CEO who has already gotten experience from BTGC, as well as a CFO with lots of time in the for-profit sector.) 7. "Funding by a marketing or research partner is a positive endorsement and validates a technology. It is also worth noting whether equity infusions are at market prices, a discount, or a premium; stay away from companies who sell stock below market prices. The dollar value of equity offerings is also significant; $25 million and up indicates conviction, less than $15 million indicates lukewarm support. Investors should also focus on the dilution table in the prospectus. For example, do not pay $10 in December if the last round of private financing in March was at $6. Mark-ups of 50 percent to 200 percent in less than a year occur more than one would expect." (OK, except for our relationship with BOL, we're a little weak in this area, but a good partner for HU-211 would alter the picture.) 8. "Cash balances and shares outstanding are interrelated and are the two key balance-sheet benchmarks. Companies with less than $20 million in cash are at financial risk and often heavily dilute existing shareholders in order to stay afloat. Avoid companies that issue options and warrants to complete equity deals. You can expect modest dilution -- no more than 5 percent -- but a 15 percent or greater annual increase in shares outstanding is too much. To avoid these dilutors, look for companies where the management team owns at least 10 percent of the outstanding shares. Lastly, something is usually wrong when the total number of shares outstanding exceeds 30 million and the company still does not have a single product on the market." (thank goodness, we have 2 products on the market; but this is also an area that needs improvement. Some insider buys now would boost investor confidence quite a lot.) 9. "A basic understanding of statistics is essential. Since FDA drug approval is based on statistically significant differences versus placebos, investors must be able to spot claims that are difficult to prove statistically. For example, avoid companies that are trying to reduce medical complications where the rate of occurrence is already low. This is always difficult to prove. Also be wary when drugs that previously failed are resurrected. " (no problems here for PARS) 10. "Be alert to early warning signs. By the time a company acknowledges its problems, it is often too late. Warning signs include insiders selling stock, delays in clinical trials or regulatory filings, an inability to obtain a marketing partner, the withdrawal of a research collaborator, and a steady stream of promotional statements made by the company. Also, be cautious when all of the available Wall Street research originates from the investment bankers' analysts." (well, we're not being deluged by promotional statements, are we! ) All in all, I think we score an 80 here, with hope that the "student" will pull up his grades as the semester unfolds. Comments? Ariella