Biotech Values

[Preciouslife1]

Spartex and Daywalker,.,.,.,

Here is the link to the "INCOMPREHENSIBLE" article finally...
Now remember that I just turned *50*, so some latitude should be afforded for missing links, brain flatulence, moments of
selective visual and hearing loss and miniscule amounts of grumpiness, sarcasm, and memory lane moments..........NOT.

http://www.therapeuticsdaily.com/news/article.cfm?contenttype=sentryarticle&contentvalue=1317782....

Low-priced stocks, high-flying volatility : Biotech firms sometimes have wild weeks as speculators rush in, then out.

San Francisco Chronicle - Apr. 14, 2007

The temperature started going up for Nuvelo Inc. before the markets opened.

Early Monday, the struggling San Carlos biotechnology company's name came up on financial cable network CNBC in the same breath with Dendreon Corp., a high-flying cancer- vaccine developer.

That was enough to push Nuvelo's shares up, prompting heated speculation about the company's plans for an experimental clot-fighting drug on news wires and market watchers' Internet message boards. It took off from there and kept going. By the end of the day, Nuvelo shares had soared more than 50 percent, though the company insisted it had no major news to report.

Nuvelo's feverish rise shows how easily small biotechnology companies can take off based on the slightest hint of positive news. That is precisely what makes them so alluring to investors looking for quick returns. But if the increases aren't based on real value, it's what makes such stocks so dangerous for the amateurs, market experts say.

Nuvelo's huge spike was part of a fevered bout of trading that also lifted other small-cap biotech companies significantly in recent days.

The market boil-up started with a surge by Seattle's Dendreon on March 29 after unexpected good news for its experimental vaccine. The company's shares more than doubled in a day and continued to ascend, while other cancer vaccine developers such as Cell Genesys rose sharply on its coattails.

Investors sniffing the scent of quick profits spread the wealth wider, trading up other biotech companies. Stocks of Redwood City's Threshold Pharmaceuticals and Sunnyvale's Pharmacyclics Inc., both designers of experimental cancer drugs, leaped.

The fever passed and now the chills have set in.

Nuvelo's upward trajectory Monday reversed the next day, and its gains eroded through the week. Peaks reached by other companies are also dwindling.

"Often when something comes up fast, it can come down just as fast,' said Jeremy Hoover, a Charles Schwab & Co. financial consultant.

When individual investors ask him whether they should trade based on reports by influential CNBC market commentator Jim Cramer, Hoover tells them to use the show for "entertainment purposes only.'

Trying to make a quick buck off volatile biotech stock movements is a risky play for individuals in a field dominated by savvy institutional investors, Hoover said. Individuals who jump into a stock on hunches or tips should be just as ready to jump out before they lose all their money.

Retail investors probably drove the steep run-up in Nuvelo shares, Pacific Growth Equities analyst Liana Moussatos said.

"The institutional investors know better,' she said. The rumor feeding the Nuvelo frenzy Monday was that its experimental drug alfimeprase, which had failed in two trials as a clot-buster, might be revived as a possible stroke remedy in trials supported by Nuvelo's partner, Germany's Bayer AG.

Moussatos said her own conversations with investors that morning may have been the origin of the rumor, but she said she made it clear that she was speculating. "Maybe they told their friends,' she said.

Not all market experts agree that the jump in biotech stocks was driven by retail investors.

John McCamant, editor of the Medical Technology Stock Letter, said individuals were undoubtedly part of the Nuvelo wave. But he says he thinks the spikes in Nuvelo and other small-cap biotech stocks were propelled by professional money managers because huge volumes of shares changed hands. More than 64 million shares in Nuvelo traded Monday, 30 times the normal daily volume in the three prior months, and about 10 million more shares than the company has outstanding.

Traders stimulate rumors to drive up prices in an atmosphere of "psychology and gamesmanship,' McCamant said. Traders are at a greater advantage if they know the rumor is false, he said, because they can safely take their profits and sell without missing out on a bigger opportunity.

Small biotechnology companies are particularly vulnerable to market gamesmanship, McCamant noted. Such companies are less familiar to investors and less widely covered by analysts. Shares in companies that don't yet have an approved drug producing revenues or quarterly profits to report, such as Nuvelo, rise and fall on other developments. Favorable news from early stage clinical trials, partnership deals with larger life sciences companies, and other signs of progress toward commercial viability can move prices, even though they don't guarantee future earnings.

Added to that, shares in the low single-digits, such as Nuvelo's, can soar 50 percent or more just by gaining a dollar or so. Such volatile, low-price stocks tempt investors eager for quick profits. And heavy demand from buyers in a surge of trading volume can push up prices for companies that have fewer than 100 million shares outstanding.

Some of the sudden price spikes during last week involved Bay area companies that had suffered big setbacks recently that slammed their shares hard.

Threshold Pharmaceuticals, whose shares plunged to $1.52 in late February on disappointing results for an experimental pancreatic cancer drug, saw intraday highs 40 percent above the prior week's close on news that it had begun a trial in a different type of cancer. The market peaked Tuesday and faded.

Pharmacyclics rallied beginning April 5 after it announced that it would challenge the Food and Drug Administration's rejection of its experimental cancer drug, Xcytrin. Shares peaked at an intraday high of $3.99 Monday, a rise of more than 40 percent over the opening price on April 5.

Nuvelo, Threshold and Pharmacyclics all retained part of their gains, but those who bought shares around the peak of trading have lost money.

That's precisely the danger for individual investors who pile into a stock when good news reaches the financial press, after institutional insiders have already reacted, said Hoover at Charles Schwab.

"The small investor tends to chase things,' Hoover said. "By the time they get into it, (the run-up) is over.' Hoover urges clients to ignore message boards, where anonymous posters using cryptic pseudonyms predict dramatic price drops or increases.

"It could be an 8-year-old kid,' he said. "It could be some guy running a pump-and-dump scheme where they're trying to run the price of the stock up.'

As for Dendreon, which started the blood pumping in the biotech sector March 29 and whose shares had nearly quintupled to $25.25, its intraday high Tuesday, the company saw its biggest drop in two years Wednesday when the closing price sank 18 percent.

A significant part of Dendreon's meteoric rise was fueled by short sellers, who bet on a company's shares falling. They had not predicted the favorable vote given the company's experimental cancer vaccine Provenge by a Food and Drug Administration advisory panel March 29 and were forced to buy shares to cover their positions.

Now investors are left to guess whether the FDA will follow the panel's advice and approve Provenge -- a move that many are betting against because Dendreon's data did not meet certain FDA standards. Cramer, commenting Thursday on Wall Street Confidential at TheStreet.com, said Dendreon shares could settle to the $10 to $12 range.

That would be a decline of more than 50 percent for those who bought at the peak.

"You've got to find the next Dendreon,' Cramer said on the online program. "That's why I've been recommending Incyte for any sort of good news.'

Shares in Incyte Corp. of Wilmington, Del., have risen 12 percent since trading opened Monday, when Cramer praised the company's prospects and word of his positive comments started racing through stock pickers' sites online.

...and if you somehow find that to still be incomprehensible, please email the San Francisco Chronicle who authored the article and diatribe further with their editor please. .>)