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

To: Linda Kaplan who wrote (6443)	4/30/1999 12:25:00 AM
From: Bruce Rosen	Read Replies (1) \| Respond to of 7041

My 10 to 15 point estimate of the drop Zona would experience in the event of outright rejection would put the stock in the 7 to 12 area. I picked 12 since that is the old recent low. I used seven as the downside because the company still has a sizable cash position(now about $4 1/2 per share), and other drugs in the pipeline, albeit in early stages of development. There would also be short covering such as what you indicated you would do and some bottom fishing coming in. In view of the cash position alone, I don't think it would go to 2. If approved, I think you would be making a mistake to short at 40. I think it could gap past that right to its old high. I wouldn't be surprised to see it go well past 50 with the publicity approval would give to Zonagen. Who knows, Schering might then break its long silence and finally start talking up Vasomax. We got a small sneak preview of that with the BBC article of a few months ago. Within one or two quarters, the stock could be well north of 75. I have refrained from getting into details about my investments, Linda, but for you, I'll make an exception. I bought Zona in October of 1996 at 8 7/8. I sold half my position the following spring when it doubled, before results came in on their Phase III U.S. trials. I have held my remaining position through all the ups and downs since. I feel the company has come a long way since I first invested in it and has substantially reached every goal it set for itself. I believe they will get approval for Vasomax and I intend to own it when that happens. What will I do if it's not approved? Depends. If it is delayed or the FDA wants more info, I won't worry. Such a scenario would not surprise me in light of the deaths associated with Viagra. In the unlikely event of outright rejection, I'd probably get drunk. ;) If Vasomax is approved, as I think it will be, I'll probably hang on for the ride. I believe the risk reward is very favorable for the long position. The chances are substantially better than even for approval and the upside is far greater than the downside at this price. Good luck, Bruce