Weekly thought on $DMRC, $AKAO, $IBIO, $BIOC, $AMRN, $ARTH

Wow!  What’s week!  Market finished the week up for the fourth time since a month ago.  With price closing over 2014 year-end close, the bull is back on the saddle (this doesn’t sound quite right here…) ready to run up to the horizon again.

SPY_Weekly

From the weekly chart above, the bull is clearly back on bull territory.  Although it still needs to work hard to maintain momentum, we may have a good possibility of making a new high before 2015 is over.

Digimarc Corporation ($DMRC)

$DMRC had a correction week after two strong weeks of up move.  Earning update is next Wednesday and I’m looking forward to find out the business progress of the Digimarc invisible barcode.  So far, we’ve witnessed positive developments in the build-up of technological infrastructure to accommodate the Digimarc barcode.  Below is a snapshot of Digimarc’s latest investors presentation (click here to open presentation) that laid out the current infrastructure already in place:

DMRC_infrastructure

Source: Digimarc September 2015 Investor Presentation

Sidebar: for those who hasn’t had a chance to go over the Digimarc latest investors presentation, you will be delighted to read thru the September 2015 investor presentation.

To see where we are going in the future direction of the retail industry, it helps to take a look at the evolution of computer-assisted shopping.  See below summary prepared by Digimarc:

DMRC evolution shopping

Source: Digimarc September 2015 Investor Presentation

Notice that back in 2009, Amazon has created an app called the Amazon Flow.  This app is similar to Digimarc Discovery except that once Flow identified the barcode, it provides a link directly to Amazon.com so you can buy with a click.  Now, how do you think the brick & mortar retailers are going to compete with that?  That’s right, brick & mortar retailers MUST evolve themselves into the digital world as well and beat the online competitors by leveraging the advantage that online retailers don’t have- brick & mortar storefronts.  By embracing the digital and social media technological into the brick & mortar ecosystem, the brick & mortar retailers turns their weakness (cost of maintaining physical storefronts) into strength.

How?

Well, Walmart already lays out plan to invest in technologies that will provide their customers a “fast and easy”  shopping experience.  By linking digital technologies, social media, and retailers’ stores together, customers can now shop with the convenience of using a mobile phone, online site, and still being able to pick up the items in their nearby Walmart store with fast check-out line without having to wait for 2+ days for online delivery.

Seeing the developments, I’m now convinced that Digimarc barcode is already at the proverbial tipping point.  Not only that, my 2 cents is that the fat lady has already sung and we are just waiting for the sound to travel thru time and space before we can hear it.  This Wednesday earnings update could be a pivotal moment for $DMRC.

DMRC_weekly

Despite the red bar this week, I believe a green bar is coming and it will be quite a bar as well.  Notice there are confluence in the Fib retracement level at the $34.60 level (notice the double dash-lines) and price bounced back near that level this week.  Stay tune for a possible short-squeeze alert.

Achaogen, Inc. ($AKAO)

The sell-off of $AKAO had finally tapered down and a weekly “almost” doji bar was formed.  Let’s call it a spinning top bar week which is just as effective as a doji bar as far as I’m concerned.  In the fundamental forefront, it is important that $AKAO antibiotic drug Plazomicin succeeds for mankind to put a check against CRE (Carbapenem-Resistant Enterobacteriaceae).  Per the data below provided by Achaogen, CRE are resistant to nearly all of the antibiotics we have; in short, CRE has high mortality risk .  The potential threat is that CRE can easily transfer their antibiotic resistance to other bacteria.

AKAO CRE

Source: Achaogen presentation from 2015 Wedbush PacGrow Healthcare Conference

Thus, the potential of a monopoly against CRE if Achaogen’s Plazomicin succeeded is exponential.  CRE is an emerging serious global health threat and shouldn’t be taken lightly.  Take a look at recent news below:

AKAO CRE news

Source: Achaogen presentation from 2015 Wedbush PacGrow Healthcare Conference

But how do you know Achaogen’s Plazomicin will succeed?  Why the big bet?

Well, take a look at existing data available below:

AKAO potency1

AKAO potency2

AKAO potency3

Source: Achaogen presentation from 2015 Wedbush PacGrow Healthcare Conference

While the above data doesn’t guarantee successful human trial, it did give me enough information to place a bet that Achaogen’s Plazomicin will succeed.  For mankind sake, it needs to succeed.

AKAO_weekly

With a spinning top near support at $5.30, I think $AKAO is ready to bounce.

iBio, Inc. ($IBIO)

$IBIO also had a down week (most biotech stocks had a down week).  From a fundamental perspective, I believe iBio is grossly underrated for the moment giving it has a license for a therapeutic product with the potential to reverse fibrosis using the discovery of Dr. Feghali-Bostwick who demonstrated that specific endostatin-derived peptides are useful for both in inhibition and reversal of fibrosis in preclinical mouse models of fibrosis as well as in human skin. See Dr. Feghali-Bostwick video presentation for more info by clicking here.

Take a look at IBIO’s pipelines below:

IBIO Pipelines

The market potential for Idiopathic pulmonary fibrosis (IPF) is greater than $1.5 billion.  To appreciate the seriousness of fibrosis, take a look at the current understanding of IPF below:

IBIO IPF

Source: http://www.nhlbi.nih.gov/health/health-topics/topics/ipf

In her video presentation, Dr. Feghali-Bostwick (click here to watch the video) explained how she discovered the science to reverse fibrosis.  I’m placing a bet that.Dr.Feghali-Bostwick’s discovery will succeed in the human trials simply because it has already been proven to work in human skin. (see video for better understanding).

In summary, it will be short-sighted to see IBIO as an ebola play only.  In due time, IBIO, a leader in the plant-made pharmaceutical field, will outshine other biotech stocks when its iBioLaunch platform proves itself with the pipelines shown above.

IBIO_weekly

I believe the support at $0.65 is going to hold.

Biocept, Inc. ($BIOC)

$BIOC, being a biotech stock, also had a down week. Again, all these ups and downs are simply market volatility created by daytraders and short-sellers.  But you can’t deny the market opportunity presented by J.P. Morgan Industry Report.  See the quote from J.P. Morgan in below chart:

BIOC market opportunity

Source: http://www.veracast.com/webcasts/bio/investorforum2015/18203124006.cfm

The year 2020 is only five years from here and today price gyration at the $2.xx level will be nothing compared to when liquid biopsy becomes the standard of cancer care in the near future.  From the chart above, you can see that liquid biopsy serves more than just screening for cancer, it is also used for Profiling, Companion diagnostics, and Monitoring.

Another advantage of Biocept is that they have a fully integrated operation that included manufacturing the technology that do the test. This is an advantage over all other competitors who rely on outside manufacturers.

BIOC vertical integration

Source: http://www.veracast.com/webcasts/bio/investorforum2015/18203124006.cfm

This combination of manufacturing and labs work provides flexibility for the future.  Needless to say, this flexibility allows Biocept to adapt their screening tests based on new discovery more quickly than their competitors.  Another advantage I see in Biocept’s fully integrated operation is that any potential BP looking to buy Biocept will also get the benefit of having 100% control over the whole process- from R&D to labs to manufacturing.

To date, there are quite a few recent clinical validation (see below):

BIOC clinical validation

Source: http://www.veracast.com/webcasts/bio/investorforum2015/18203124006.cfm

I’m sure we will continue to hear more clinical validation as Biocept continues to progress in real time.  Meanwhile, Biocept continues to build partnerships:

BIOC partnership

Source: http://www.veracast.com/webcasts/bio/investorforum2015/18203124006.cfm

Furthermore, Biocept is also very active in pursuing reimbursement from health insurances:

BIOC insurance reimb

Source: http://www.veracast.com/webcasts/bio/investorforum2015/18203124006.cfm

BIOC_weekly

Although a down weekly bar, there is still support from the uptrend line below.  I expect a bounce to happen soon once the political storm on biotech sector is blow over.  At this point, I’ve bought an optimal amount of Biocept that I can comfortably buy and hold for long-term investment.

Amarin Corporation plc ($AMRN)

Needless to say, $AMRN was no exception in the biotech sell-off.  This week red bar is now sitting on recent support at $1.89.  Fundamentally speaking, the main short-term catalyst is the settlement with FDA that is supposed to reveal next week (end of October).  Any hint of a “receptive” FDA on the settlement will provide a needed catalyst for $AMRN to bounce higher.  Meanwhile, let’s take a look again at the market opportunities for Amarin’s Vascepa when the Reduce-it trial is a success:

AMRN market opportunities

Source: http://files.shareholder.com/downloads/AMRN/723587183x0x799267/B882FB49-4910-4F4D-9534-301ED99C78ED/Amarin_Investor_Presentation_oct_2015.pdf

At this point, asides from the FDA settlement next week, the next intermediate catalyst is the mid-term review of the Reduce-it trial next year.

AMRN_weekly

I’m betting that the $1.89 support is going to hold; if not, then the next support is at 79 MA at $1.80.  I’m also holding a core $AMRN position so this is also a buy and hold at this point.

Arch Therapeutics, Inc. ($ARTH)

$ARTH was also down for the week for being a biotech.  But there was an additional investors’ jittery due to an SEC filings to keep certain information secret.  I don’t see what the jittery is all about ’cause the main theme at this point is the human trial.  Everything else is just noise.  Since we are coming to the end of October, Arch Therapeutics may be coming closer to getting a “go ahead” for the human trial if it is still scheduled to start in the 4th quarter of 2015.  At this point, there is no information to say that it isn’t.

Below is a highlight of Arch Therapeutics recent development:

ARTH highlight

Source: http://content.equisolve.net/archtherapeutics/media/a615ba3d0a9c00b0e77d846e84303000.pdf

ARTH_weekly

There are two strong supports below current closing price- the 79 MA and the recent June low at $0.22.  I expect these support will hold.  But once news of human trial begins, price will have a violent upswing to make up for lost time.

So far, my port had a bad week due to the biotech continued downdraft but I’m actually excited about the coming catalysts:

$DMRC- news of adoption from Walmart

$AKAO- success of Achaogen’s Plazomicin trial

$IBIO- success of its IBIO-CFB03 drug against fibrosis

$BIOC- announcement of more insurance coverage and the availability of prostrate diagnostic test

$AMRN- positive settlement with FDA that opens door for aggressive promotion for patients with 200-499 TG level.

$ARTH- approval to start the human trial in the 4th quarter of 2015.

Thus, in a way, asides from current setback, there are exciting times ahead.

Current holdings:

Main port: DMRC, AKAO, IBIO, BIOC, AMRN  Trading port: ARTH

My 2 cents

From my camera (click on photo to see image at 100%)

Red rose (2)



Categories: Daily trading Journal

Tags: , , , , , ,

3 replies

  1. thanks as always. Of interest to me will be the reaction to the short interest data on Tuesday… interestingly positioned immediately before the Q3CC.

    We’ve seen a few hard sell offs immediately following short interest data. I don’t think its any coincidence. I could see this ‘pressure’ delayed until following the news event on Wednesday.

    Finally, found this link to a nice chart of historical short interest as a percentage of float. Since the Walmart info became more public and the price spiked, the shorts have really fought this hard. And now even as the price has set up shop in the 30s, the short interest has continued its march higher.

    http://www.gurufocus.com/ownership/NAS:DMRC

    I agree with regards to Walmart being on board. So what is the short thesis left with then? I have to believe its that although Walmart is on board, becoming profitable will be the challenge. That’s a tough one given that Walmart is so pivotal in exerting influence on the whole supply chain echo system. And it will likely set off me too events with competitors.

    Then the leverage in the business model kicks in… Any hint or whiff of revenue turn in the upcoming 3 or 4 conference calls will send the shorts scurrying IMO. And until then, it appears they will fight. I believe that whiff of revenue will occur anytime between now and late 2016. Feels like a ticking bomb to me 🙂

    And then you’ve got non-traditional barcode revenue sources from partners like Shazam and newly added partner scanlife which will show even more leverage in the business model. And hint from them and again, the shorts are in a world of trouble.

    • Value investor, I wouldn’t put too much weight on the short’s thesis. Just because they had the muscle to keep price down by piling up the short interest doesn’t mean they can see the future better than the long. Amazon had been losing money for years and yet price kept on going up. And once they started producing positive earning no matter how small it was, investors rewarded the company by bidding up the price even more.

      Why?

      Amazon.com has a powerful brand that are in the consciousness of the majority of the online shoppers.

      Once Digimarc barcode is adopted by Walmart or any big box retailers, the “expected” future revenues streams will create demand for the stock. Forget lower revenues in the beginning stage after adoption. The stock market is a forward looking machine and all it cares is that more and more items are signing up for the Digimarc barcode system. Price will continue to climb when the rate of revenues growth are increasing in each quarterly earning update. Netflix is a perfect example. Growing subscription rate was the key driver for price appreciation. The more subscribers they signed up, the higher the stock price.

      My 2 cents is that it is to the benefit of the big box retailers who adopted the Digimarc barcode to “institute” a mandatory compliance deadline to all suppliers to use the Digimarc barcode. This is no difference than a mandatory deadline for converting all Analog TV to Digital TV. The analog to digital TV conversion was a great success. And I don’t see why it wouldn’t work with the Digimarc barcode system.

      Granted that those who could not afford a digital TV could request a “conversion” box that would work with the old analog TV. In the same token, the big box retailers could subsidize the smaller suppliers with some financial assistance to ensure all suppliers meet the mandatory deadline.

      If there is such a compliance deadline issued, you can bet that $DMRC will take off in a NY minute.

      GLTA!

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