Weekly thought on $AMRN, $CARA, $DSPG, $IBIO

Giving this week green bar albeit a small one, my take is that the odd of a double-top formation of the SP500 diminishes slightly in favor of a break out to the upside.

SP-500_weekly

We will know soon enough next week.

I’ve an “aha” moment this morning after I played a game of chess.

Interesting!  What is the aha moment. Let’s have it!

My trading activities are simply movements of chess pieces on the stock market board.  The chess pieces are the stocks I’ve studied, analyzed and chosen to monitor closely. The restriction of movement is governed by the availability of my cash.

Sidebar: Remember, the cash account (no margin) is my way of protecting myself from using leverage which is deadly if I’m not careful.  As human, we all have moment of weakness as a result of extreme emotions (greed and fear) that can devastate our trading accounts if leverage is abused.  Unless you’re born with clairvoyant ability to see the future in the stock market, we are all subjected to the guaranteed possibility of being wrong.  Yes, if anyone tell you they have never been wrong in the stock market or even in predicting the short-term movement of a single stock, you know they are lying. Now, you may be right about a long-term movement of a single stock but that only because you got lucky; yes, even for the most successful company in the world- $AAPL.  If Steve Jobs hadn’t been rehired by Apple chairman Gilbert F. Amelio back in 1996 by way of acquiring Steve’s company, NEXT, for its technology, we might still be holding our Blackberry mobile phone.  My point is that all trading decision MUST include the possibility of being wrong.  I could certainly use “time” to wait out the possibility that I may not be wrong but I certainly will NOT use leverage to do that.  And that is the main reason I don’t short stocks no matter how sure I am in my analysis ’cause the cost of being wrong can be devastating if the long odd of a take-over of what I think is a failed technology/business materialized. The unlimited losses against a limited gain in the short game don’t sit well with me. Recent bidding war to take over Straight Path Communications ($STRP) is a perfect example. About 42% of $STRP float was shorted before the take-over announcement. This tell you that shorts are not always right.  Retail shorts, even if they are successful to-date, are walking through the minefield that may one day blow them to pieces if they step on a big one.  To me, the short game belongs to those hedge funds with billions in their disposal ’cause they can take the hit without destroying themselves in the process.

Thus, due to the possibility of my cash being locked up by the three day cash settlement rule, I’ve to think like a chess player trying to decide which stocks I should deploy my cash to.  As in all chess games, blunder is a fact of life that we all try to avoid.  But sometimes blunder may become an unexpected sacrifice that turns the game in your favor if it opened a new tactical layout.  This week, with hindsight, the blunder was the decision to buy $AMRN last week based on my “gut feeling.”

Even though $AMRN went down after earnings, I actually thought the earnings update is quite positive with a new major development I highlighted in yellow from a page of Amarin’s earnings call slide below:

AMRN_1qtrUpdate

Giving that the previous successful Japanese pure Omega-3 EPA Jelis drug trial as shown in another Amarin’s earnings call slide below:

AMRN_1qtrUpdate2

I expect the coming China Omega EPA drug trial (patient population similar to the MARINE study in the United States) to be a “shoe-in” success.  This along will open the door to the massive population in China with TG>500 mg/dL.  Now, take a moment to think about that.

Another piece of information I believe is very valuable and may be the “icing on the cake” is the EPA pleiotrophic effects beyond improving lipid levels as reflected in another Amarin’s earnings call slide below:

AMRN_1qtrUpdate3

Once we find out what these pleiotropic effects are from the Reduce-it trial, it may open the door to other health markets beyond improving lipid levels.  Please take a moment to reflect on that as well.

Thus, I’m going to say that my blunder in purchasing $AMRN last week is a sacrifice that I took to bring my focus back on this stock.  Despite the downdraft for the last three days on decreasing volume, I managed to sell and buy back during the three days to reduce drawdown and lower my average cost.

While the current weekly script number represents about 26% of the total Omega-3 prescription drug as reflected below:

AMRN_1qtrUpdate4

IMHO, a success of the Reduce-it trial will render this total Omega-3 prescription drug weekly script number to a tiny fraction of total Vascepa sales.  This is the mind-blogging potential that I believe the market has not factored into the price yet.  If the shorts want to take this down even more, go ahead and I’ll sell and buy back even cheaper.  Or I will simply hold and add even more if the falling price momentum is decelerated provided that there is no major SP500 market correction.

In a nutshell, My 2 cents is that the fundamental development of Amarin couldn’t have been better and that any price below $3 is a bargain.  Giving that we are already finishing the first week of May, the time to third quarter interim data review could be sooner than we think.  Anyone notice how time flies!

$CARA has been a disappointment.  It was like making a chess move that got my chess piece stuck by market force.  All I had been doing was sell and buy back lower to reduce my drawdown. It’s like moving the chess piece back to home territory instead of participating in an assault to knock down the opposite King.  By the end of the week, I bought back core position and some trading shares looking for bounce next week.  There are still two irons in the fire to be released by end of 2nd quarter:

  1. A phase 3 trial of 450 patients for IV CR845 for post-operative pain
  2. A phase 2 trial of an oral formulation for arthritic pain

Let’s see how that goes.

I added to $DSPG this week ’cause I felt that their fundamental is gaining traction.  So I thought I better buy more now before the market begins to pay attention.  Because this is a low volume stock, it’s going to be a tough one for me to ride it out.  After seeing how I missed $PI and $OLED, I thought I will pick another chip company with great potential to tough it out.  Let’s see if my stomach can handle this one.

Finally, $IBIO provided Corporate Update at Annual Shareholders Meeting and I could not be more happier!  Below are some highlights I copy-pasted from the corporate update:

  1. Development and Manufacturing Operations
    1. Dr. Holtz reported, “We are now capable of operating under cGMP compliance and moving biopharmaceutical product candidates toward full-scale engineering batches to support clinical development activities. We completed construction of a new product/process development laboratory that tripled our capacity to provide proteins to current and potential clients who engage iBio CMO in early stage feasibility studies.”
    2. Multiple new proteins are under development for several clients.
  2. IBIO-CFB03 Fibrosis Therapeutic Product Candidate
    1. Dr. Ryan remarked, “We are working steadily towards filing an IND for IBIO-CFB03, and are encouraged by our progress. During this year, we obtained Orphan Drug Designation from the FDA. We also achieved key development milestones with regard to the Company’s lead candidate CFB03, including:
      1. development of an improved cGMP manufacturing process allowing iBio to move forward on completing the CMC (Chemistry, Manufacturing, and Controls) section for its upcoming Investigational New Drug (IND) application to the FDA;
      2. completion of initial preclinical pharmacokinetic and toxicology studies;
      3. expansion of preclinical research beyond previously announced systemic scleroderma and pulmonary fibrosis models to include liver, kidney, corneal, and cardiac fibrosis as potential additional clinical indications.”
  3. Collaboration with Bio-Manguinhos/Fiocruz
    1. The first project is expected to address development of a new Yellow Fever Vaccine based upon iBio’s recombinant, plant-based technologies. A prior agreement governing early-stage, pre-clinical work expired in March 2017. Bio-Manguinhos/Fiocruz and iBio intend to collaborate on further development of the antigen, production of vaccine material for clinical trials, supervision of execution of Phase I clinical trials in the United States and further activities based upon the results of such trials.

Blue highlights are my own emphasis

Of course, my main focus is on number 2 above, but number 1 is also critical because it allows Number 2 to move forward.  What I also like about number 2 is that the research is now expanded to include liver, kidney, corneal, and cardiac fibrosis as potential additional clinical indications.  What that means is that a successful trial will open the door to a large markets for fibrosis diseases from different organs.  Not only will a successful trial help extend life for patients suffered from fibrosis diseases of various organs; but it also provides a much cheaper solution from iBIO’s low cost peptides production that insurance companies LOVE.  To understand fibrosis disease better, watch the video below:

There you have it, I’ve staked my four positions- $IBIO, $AMRN, $DSPG, and $CARA.  Each has the potential to MORE than cover the possible failures of the other three in the long run.  Now, I just need to find the fortitude to hold them through the year.

As you noticed, this week I did not post any chart for the four stocks that I now own ’cause this post is about my belief in the fundamental stories of the stocks for the long run.

As a side note, I sold $SEED to buy $AMRN after the Amarin earnings update and it turned out to be a good move since $SEED collapsed later in the week.  I also sold the rest of $KGJI due to persistent falling gold price and I wanted to focus on the four stocks I bought.

Due to drawdown from $CARA and $AMRN for the week, my port gave back some for the week.

Current positions:

Main port (no margin): IBIO  AMRN  DSPG  CARA  and 27% cash. (up 3% YTD)

Trading port (with margin): MENXF IBIO

My 2 cents

From my camera:

010

 

 



Categories: Daily trading Journal, trading journal

Tags: , , , ,

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