Before you read on, please be aware that the analysis below is my opinion only and may include flawed assumptions and inaccuracy of logic; therefore, caveat emptor applies here. Furthermore, all emphasis (color-coded, boldness, and underlined) on the excerpts are my own.
The SP500 continued to move higher albeit a bit more restrained this week with a small green bar. I see a potential resistance at the red line above at 2816.94. This line was formed from two previous attempts (see the two blue down arrows above the red line to the left) at breaking the 2816.94 resistances and failed. So, I’ll be watching the SP500 more closely if it reaches the vicinity of 2816.94 next week.
This short week is another good week for my port thanks to $IBIO and $LRAD. I also bought back some $SOLOW this week to begin rebuilding my position on Electra Meccanica. $TRXC also rallied above $3 and brought my option position back to positive territory.
$AEMD – This is now a waiting game for update news regarding the trials of using the hemopurifier as a supplement to the standard of care cancer therapy to rekindle interest.
$IBIO – This uptrend is on the verge of breaking out of its narrow Bollinger bands. The four blue arrows on the chart are pointing to the narrow Bollinger bands. And coincidently, the uptrend is also on the verge of breaking out of the $1 resistance. It is possible that Monday may open over a buck and start to run. The next resistance is at $1.5x where the thick blue dash line is.
With so many circumstantial evidence pointing to more revenues coming into iBio, it is no surprise that the trend is continuing higher.
“What circumstantial evidence?” you may ask
Again, thanks to the contributor at Stocktwits (@Icculus479) who provided the link to the latest article “Divine Outsourcing Model For Biotechs” which appeared on Friday. Below is an excerpt that added to the circumstantial evidence mentioned above. Let’s break down the above into an outline format:
- Good Business Deals (B2B business arrangement)
- AzarGen has paid us well
- All our other clients in this model have also paid us well
- It’s likely to be the gift that keeps on giving
- As one product is introduced and move ahead, we help create other products
- The model is a godsend
- Traditional CDMO business
- we can manufacture products for them in small or large scale
Per my understanding, the B2B business arrangement is basically a technology transfer arrangement where the companies who have “licensed” the technology will build their own plant-based facilities in their own countries. As in all licensing agreements, there could be various payment terms such as profit-sharing, partnership, % ownership, annual fee, etc.
Giving that $57 billion in biologic sales per year is going off-patent by 2020 as mentioned in the article, “Future Trends in the CDMO Space,” this is a substantial broad-based circumstantial evidence that supports the thesis that more contracts may be coming into iBio CDMO. We could see orders from domestic (U.S.) biotech companies to manufacture biosimilar products at a much lower cost to compete, and from international biotech companies who wanted to build their own facilities to create biosimilars as much lower cost than those using mammalian cells system. In a manner of speaking, iBio’s plant-based technology allows biotech companies to manufacture the cheaper “generic” version of the biologic drugs that are going off-patent.
The CC-Pharming contract, in my opinion, is a PERFECT example of how biotech companies can take advantage of the biologic drugs that are going OFF-PATENT by using plant-based technology to create LOW-COST biosimilar to offer to their medical community.
In a nutshell, the most IMPORTANT circumstantial evidence calling for more revenues stream coming into iBio is the LOW MANUFACTURING COST that plant-based technology for protein expression has to offer as compared to the mammalian cells system used by BPs who created the original biologic drugs.
Another way to summarize the above statement is that the BPs’ stranglehold that kept plant-based technology off the market by strictly using the mammalian cells system is losing its grip when their biologic drugs are going off-patent. In other words, the plant-based technology offered by iBio may become the new “generic” (aka biosimilar) manufacturer in the biologic drug industry.
Having said all the above, here is a trick question, “How long do you think the BPs will continue to use the expensive mammalian cells system when low-cost biosimilars are proliferating in the coming future with plant-based protein expression technology?”
My fellow readers, I believe (aka my 2 cents/opinion) that the closed door that prevented the plant-based technology from proliferating is finally opened. Our patience is paying off. And there lies the next challenge.
The ability to hold on to our shares as price begins to appreciate! Sure, there are going to be the temptation to take a quick profit; but do you really want to take profit and then watch the price continues to go much higher afterward? It will be like taking profit on $FB at $40 from your $20 entry point and then watched on the sideline as the price climbed to $200!
In my humble opinion, the way I see it, we are at the BEGINNING of the plant-based protein expression mega-adoption. That means once the technology gains global awareness and adoption, this is going to go much much higher. Remember, the technology transfer (licensing) implies that the revenues stream will NOT be constrained by the production capability of the iBio facility in Bryan-College Station, Texas. It is an open-end revenues stream limited only by the number of facilities operating globally that licensed the iBio’s technology. Is this what Holtz means when he said: “It’s likely to be the gift that keeps on giving?”
In a nutshell, I DO NOT want to be like the guy who sold $FB at $40 and watched it go all the way to $200. Thus, I’ll be holding on to my shares for the potential long-term uptrend of $IBIO until a BO occurs.
$LRAD – It’s another solid green bar bouncing off the 79 & 89 MA support. I believe it’s possible that price may go back up above $3 soon giving the numerous irons in the fire I mentioned in previous weekly thought post.
$SOLOW – I bought back some $SOLOW this week when price approached the 50% Fib retracement level. The two blue arrows are pointing to the 50% Fib retracement level. Another potential charting pattern appearing in the daily chart above is the formation of the possible Cup & Handle (C&H) breakout pattern. Look like the trading pattern of the last five trading days is forming the “handle” of the C&H pattern. While there is no guarantee that the stock won’t correct even more next week, the fact that price is taking its time digesting the up move instead of dropping heavily like it did back in late October last year made me think twice about being out of a position over the weekend. I’m too much of a believer in the single-seat EV to be without $SOLOW for too long for fear of missing out (aka FOMO). Therefore, if $SOLO drops more next week, I’ll buy more $SOLOW. If it falls below $3, I’ll start picking some common shares $SOLO as well. Nevertheless, if it takes off next week, I will just hold on to my $SOLOW instead of trading with it.
Thanks to the rallies from $IBIO and $LRAD, it was more than enough to offset downdraft from $AEMD and $SOLOW.
Current positions (in alphabet order):
Stocks = AEMD IBIO LRAD
Call options and warrants = CARA TRXC SOLOW
Up 23.5% YTD
My 2 cents
From my camera: