Dear Ron
The answer to this decline is, in my view, very simple. As mentioned month before, there is no reason for investors to buy PARS at this time. And when nobody is buying, a little sell-off can do a lot, as other investors (small and big) are loosing patience.
It is nice to hear, how many are still sitting on gains, because they bought PARS well below $1,5. But they should think one moment about those investors, who bought in later. A loss of 40% or more is not the most uncommon. These investors cannot lean back and think: "Wow, the price is cheap and I have lost some of my gains. But who cares, I am just waiting a little longer and buy some more".
There are many participants on this thread who think PARS offers a good buying opportunity at these prices. But how often could you read this within the last 9 month? And how did the price react? Not everybody is able to buy additional shares every week. And as longer the price will stay down, as more !disappointed! investors are turning their back on PARS = additional pressure. And once disappointed, it will need a certain time before new interested and confidence is established.
This SI thread offers a lot of well thought and well informed insight. But this might cause a problem. In a way this thread consists of specialists, but not of common investors. I have tried to explain some reasons before, why investors will stay aside. And I will do so again now:
- no marketing partner for Alrex/Lotemax; even if this is caused by BOL, PARS management was or is unable to get BOL moving. And nobody knows, when the marketing partner will be named. Even if the marketing partner is known, it will take several month before the partner will support Alrex/Lotemax sales at full level.
- no clear hint, when Alrex//Lotemax is sold in Europe - I wouldn't expect anything before year end.
- no partner for HU211; even if most participants expect (again uncertain) news around April, I wouldn't expect anything before July and would not be surprised if the announcement won't be published before September. Partnering contracts are no standard work. It takes some time to work through all different steps, from right to cost sharing, royalties etc. Everybody who thinks this can be done in a few weeks misses reality.
- HU211 might become a blockbuster, but with TBI it is not. At least not as long as it is not sold outside the US. Second, till now every new drug for TBI failed. This leads to some concern about the possibility of a strong success for HU211.
- PARS has already over 40 million shares outstanding, the need for cash will increase this number in the future and so dilute future earnings even more.
- nobody knows, when LE-T hits the market.
- there is a lot of uncertainty about the future prospects of PARS. And investor dislike uncertainty.
- PARS is an illiquid stock. No one of the bigger investors does like illiquidity. Imagine one investor, who wants to invest $1 million in PARS. With an average turnover of 200'000 shares a day, it would take him 6 days, if he does not want to be responsible for more than half of the daily turnover. Even if he would like to buy as fast as possible, it would take him more than three days to cover the shares. Such an order would have a big impact on prices, so he would, by executing his order, destroy his own opportunities. And getting in is only one thing an investor is considering, getting out another one.
So why invest in PARS, if you could invest in IMNX, MEDI or AMGN. Here investors find what they are looking for. Liquidity, blockbuster products, increasing revenues and earnings. Again, why invest in PARS, where you have no clear idea, when something will happen, and when a steady cash flow will guarantee profits?
I still think that PARS is a good long term investment based on the scientific fundamentals, but we do not to get convinced, we all are already "in". But as long as their is no certainty about the future of PARS and a strong flow of cash out of product sales, I would not wait for new investors to step in and drive the price into new territory.
And the answer to the question, why I am still long, if I see things as I do, is: I can afford it, because I made some nice profits with other investments, that allow me just to sit and wait - as I do not know, when good news are hitting the street. But to be true, I am not investing any new dime right now. Before I am going to increase my investment, I want to see some good, new facts; and not any wild speculation of "if", "when" and "should".
Richard |
