What I've written in the past fairly captures my views. I don't try to promote my stocks. I try to be honest. I don't care if others buy, sell, or short my companies.
- Company management had a serious lapse of judgment in mis-designing their trials historically. They claim they were given informal support (not an SPA) from the FDA in 2018 but the 2023 FDA determined they did not provide adequate support for approval. They lost many people a lot of money including their biggest shareholder, who has a board presence. Another well-known board member bought significant stock in the open market above $1.00. So, clearly the people best positioned to judge, misjudged. It happens.
- I discussed this trial design concern with them historically and I accepted their explanation about feedback they received in 2018. That was a serious lapse of judgement on my part. Most retail investors would be surprised to know how often professional investors make mistakes. I've made lots of mistakes yet have become quite well off. We don't have perfect foresight, but we do know how to manage risk.
- The company now has an SPA, so the odds of approval are high. There's never been much debate regarding the efficacy and safety of the drug.
- Shortly, the debate will shift to what market share the company will achieve upon commercial launch. Longer lasting treatments are better, but insurance companies still utilize step-edit programs to hold down claim costs. These longer lasting treatments could push down pricing of biosimilars, which could pressure OTLK. Can I precisely predict all these effects? No. But I know what to look for and I know that OTLK doesn't need too much share of the total market to achieve meaningful revenue.
- After the recent raise, there are a lot of shares outstanding. About 750M. If you look up the share count from various sources, you'll see a much lower number but those are lagging. We go through the existing placement agreement and the note amendment and model out what the future share count will likely be.
- To forecast stock returns, we forecast peak returns, multiply by not too high a multiple (since this is a one -- not first in line -- product company), and then divide by 750M - 850M shares. This value is a lot lower than it used to be (due to the share count) but still a lot higher than it is now.
- So, even though I 've lost a good amount of money, I'm probably going to make a good amount of money before the fat lady sings. Unless, of course, she falls on me first.
