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ARRY and VCEL

By mell following x   2017 Aug 31, 9:41am 234 views   9 comments   watch   quote     share  

ARRY tripled since my first recommendation, VCEL close to doubled. Both have much more room to run, ARRY has an incredibly large (mostly oncology) pipeline and partnerships as it transitions from development stage to commercial biotech and VCEL is turning towards profitability on ramping up their best available knee cartilage stem cell treatment and another one for heart failure in the waiting. Check em out, both far from being done yet.

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1 Patrick   2017 Sep 14, 6:58am   ↑ like (0)   ↑ dislike (0)     quote        
Please post more like this!
2 BayArea   2017 Sep 14, 8:45am   ↑ like (0)   ↑ dislike (0)     quote        
Thanks for sharing, will check these out.
3 mell   2017 Sep 19, 2:18pm   ↑ like (0)   ↑ dislike (0)     quote        
Vcel broke out to 5.25 today to fall back all the way to where it started. This is a good sign of forming a base. It has run a lot so there could be significant fluctuations with profit taking. However LT this stock should reach $10, so you may want to buy on dips once you get interested in forming a position. It's become my largest holding over the past 2 years, followed by ARRY. ARRY has been going higher every day since the last offering a couple of days ago was at 10.75, almost $2 above the market close (!). This is very unusual to have a secondary priced higher than the market price and extremely bullish. Basically those LT investors just gave them 200MM at above market rate. The stock has a large float though, almost close to 200MM everything included, so every billion you add to the valuation is "only" a $5 increase in the pps. If they execute successfully on all of their programs I can see it going as high as $30 though within a few years, reaching potentially $50 on a buyout (note this stock was trading at $3 a year ago which shows you the incredible appreciation you can have in biotech for taking on risk). My price target for VCEL is anywhere between $10 on the low end and $100 on the (extreme) high end and I regard it as a safer bet between the two although for small (to mid) cap biotechs both are relatively low risk and they have seen big increases in inst. ownership (ARRY is around 100%, VCEL around 30%).
4 justme   2017 Sep 19, 2:59pm   ↑ like (0)   ↑ dislike (0)     quote        
Mell, for me, the single most important parameter that determines whether I should pay attention to a stock tip is HOW you first heard about the stock)s) in question.

How did ARRY come to your attention? what date?
How did VCEL come to your attention? what date?
5 mell   2017 Sep 19, 3:22pm   ↑ like (1)   ↑ dislike (1)     quote        
justme says
Mell, for me, the single most important parameter that determines whether I should pay attention to a stock tip is HOW you first heard about the stock)s) in question.

How did ARRY come to your attention? what date?
How did VCEL come to your attention? what date?


I research a lot of stocks, it's my 2nd job. Usually I find these mentioned by somebody else (on StockTwits for example), then I do some quick DD and if it checks out well I buy a starter position and do more DD. I came across both 2 years ago, ARRY was completely new to me and I saw it's huge oncology pipeline which reminded me of LGND, which had a similar business model (not oncology though) to get started: huge pipeline and many partnerships to spread the risk. These stocks initially trade low for a while as they don't fully own most of their drugs and the milestones do not fully cover expenses. However over time with 15 candidates purchased on the cheap you will have 5 winners, maybe you own one of them fully and the rest are partnered, and upon successful completion of first phase 3 drug the stock often jumps 2-3x to never look back as the valuation goes from like 200MM-300MM to a billion (1 bln is a very rough estimation for a valuation for 1 successful oncology drug close to approval).
VCEL I had been following loosely for almost 10 years, they had a reverse split due to a couple of failed drugs and modest sales on their commercialized products only and then name/ticker and management change and put it a solid turnaround plan. That is often a good time to jump in if you see biotechs finally focusing on 1-2 of their most successful technologies with a solid plan. In this case it was getting FDA approval for the best stem-cell knee cartilage surgery followed by a quick ramp-up in training for MDs. Previously they tried other countries with unfavorable reimbursement policies instead of focusing on the US where, when something is determined to be superior, it usually eventually will be paid for by insurances. Also they have another stem-cell product for heart failure with successful phase 2b and talk for accelerated approval with the FDA. When Trump won the election and Gottlieb was announced as head of FDA it was clear he would speed up approvals and not always require costly phase 3 trials, esp. when there is no alternative option for patients (there's no real treatment for CHF). Another AHA moment to jump in here. If they get this approved without costly phase 3 this will double to triple overnight and never look back, but the growing revenues from the MACI knee cartilage surgery guarantee a slowly rising price to $10. I don't see much risk here.
6 errc   2017 Sep 19, 3:39pm   ↑ like (1)   ↑ dislike (1)     quote        
Hey mell, not trying to rain on your parade, but I think it was you who frequently touted OXGN. Whatever happened with that one, it seems to have went bust.

I do like this model, though. We used to use it in handicapping, if you could average your plays @ +200, you only need to hit 35% to be profitable.

So if you're gunning for 2x-3x gains, you can afford two out of three to go bust, and still turn a profit.
7 mell   2017 Sep 19, 4:03pm   ↑ like (0)   ↑ dislike (0)     quote        
errc says
Hey mell, not trying to rain on your parade, but I think it was you who frequently touted OXGN. Whatever happened with that one, it seems to have went bust.

I do like this model, though. We used to use it in handicapping, if you could average your plays @ +200, you only need to hit 35% to be profitable.

So if you're gunning for 2x-3x gains, you can afford two out of three to go bust, and still turn a profit.


Yes, absolutely. With those 2 I am gunning for even more since I got in early, but I always scalp a little. OXGN is now MATN and on the OTC, yeah I touted it for a while after it made me glorious gains only to follow up with giving me the biggest loss I've ever eaten erasing all the gains and some, giving me a nice tax cushion though. This one was riskier though since it spiked after phase 2. Looking back it is always best to sell after successful phase 2s for these very early biotechs and keep a smaller core, ARRY and VCEL already have succeeded in phase 3 and and/or have commercialized. However MATN hasn't gone BK yet and I think their phase 3 will ultimately be successful. What we have at MATN is grossly incompetent management, in fact I have been to 2 shareholder meetings and bumped heads before realizing they were not going to throw retail a bone ever. I sensed the reverse split would fail and they would go to OTC so I sold for a loss at double the current price. After successful phase 2 the standard of care changed for their indication, which was the only thing that wasn't their fault (requiring a new phase 2/3). They bumbled for 2+ years with an incompetent CEO at the helm - after ousting the old competent one who was willing to sell the co. for a good profit (Roche was rumored to have attempted a buyout at $6+/sh). The 3rd and current CEO is better equipped in the field, but not a real business guy and he and mgmt were way too stubborn with insisting on going it alone. Instead they should have partnered on the cheap long ago and the stock would probably still be around $2. I've hardly ever invested in bad/failing drugs, but failing management is actually harder to detect, so that happened a couple of times and will continue to happen. I still think at current prices OXGN/MATN is a decent gamble and I am contemplating starting a small position here again (note their lead drug is a VDA which is non-toxic as opposed to chemo, only with transient side-effects, IMO a great addition for a combo). I'm impressed you kept track. Definitely a lesson learned with this one.
8 errc   2017 Sep 19, 4:31pm   ↑ like (0)   ↑ dislike (0)     quote        
I'm impressed you kept track. Definitely a lesson learned with this one.

--------------

I have the memory of a carrier pigeon ;)

You first mentioned it when I had interest in the sector. I almost bought it a couple times but could never pull the trigger.

Was oxgn the company with the diabetes drug, or something similar?
9 mell   2017 Sep 19, 5:12pm   ↑ like (0)   ↑ dislike (0)     quote        
errc says
Was oxgn the company with the diabetes drug, or something similar?


That was GNBT, they failed as well though still around after a large RS. They were in penny-land though which is always highest risk, few make it. Ironically I made decent money on them during those multiple 2x-3x runs on the OTC. Their buccal insulin made it to a few countries and it seemed to work well as some US citizens actually started importing it for a while. However without money to satisfy a costly FDA trial and poor, scammy mgmt it never got approved here. Sad because there is a real need and I have been toying with the idea of putting a little into MNKD, who are now the only company for inhaled insulin (Affreza goes into the lungs which I consider inferior to GNBTs buccal delivery due to more side-effect, but there are so many needle-phobes out there that they may have a decent market soon). If MNKD can ramp up Affreza sales and make it affordable/fully reimbursable, why would people choose the needle? If you pick 5 companies and end up with 2 winners and scalp the others to minimize your losses you'll do ok. Biotech land is littered with failures, but 2x-3x is conservative if you get in early. Hoping for an eventual 10x on ARRY and potentially 20x-40x on VCEL from my cost basis. I have sold many early and easily left 100K+ on the table. LGND was one of them, sold after 3x, missed out on 10x+.

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