Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Nancy McKinney who wrote (5299)	8/20/1998 7:00:00 AM
From: Linda Kaplan	Read Replies (1) \| Respond to of 7041

Nancy, I have a lot of dead stocks, too, and I wouldn't sell either, if I thought they were bottomed. I'm hoping they'll recover. ZONA is a special case. Current price isn't bottom. Figure bottom at 3, as someone mentioned, and if FDA doesn't approve it could go there. High was at 45 or so, so the price is close to the middle right now. It's hard to say where it will go if there is approval. Up, certainly, but how far? I own one biotech that went to 15 in expectations prior to FDA approval but only got back to 10 after approval and now is at 4. I have a lot of money in that one and I expect it will come back, but when and how high, I don't know. So taking that one as one possible scenario, you sometimes get a higher price in a stock in the excitement long in advance of approval, than you get after the approval occurs. If Viagra weren't around, and ZONA were approved, the stock price would go up much higher than it is likely to go, now. Viagra has the market sewn up, so any competing drug has to offer more, but ZONA offers less. So it may not be successful in the marketplace and that might be built into the stock price as early as after approval. So that might put a damper on how high the stock price would go after approval. Say it can go back to 40 upon approval, which I think is probably optimistic. then you have a situation where the risk reward ratio is almost the same. From 19 to 40 versus from 19 to 3. I don't think that's a great risk-reward ratio. It's always hard to discount purchase price, so if you bought at 40 you will hold to get back there, at least, even if the risk/reward ratio isn't so hot. Then you risk losing 16 more points but psychologically it's possibly worth points to get back to at least break-even, even though that may not be a very scientific approach. One thing you can do is hedge a long position with puts. So if you lose your bet on approval, you make money on your puts. This would reduce your losses, at least offset some of them. I just feel that approval is unlikely and that success in the marketplace if there is approval, is also unlikely. I'd prefer to bet on new drugs that offer something new that hasn't been done yet, will have the marketplace to themselves for a while, in a case where there's a big market, like ED. That's what Viagra got and it was a big home run. So I'd look for other companies that have that potential and ZONA doesn't have that potential, while it may have seemed to have that potential before Viagra was an issue and before the quality of Vasomax came into question. I hope you're not sorry you asked. Linda