dad [if I may call you that ;) ] reasonable assertions but there's a bit more color to pre-revenue biotech than many traditional investment types that always makes it more exciting or terrifying - depending on which end of the muzzle one is positioned at the time of the end game.
I think of it as a loaded spring that can either bust through the top (fly up) or crack through the floor (violent fall) holding itself in a balanced position, while still volatile, until equilibrium is heavily shifted in a permanent way.
While many PRs will result in some oscillation and eventual equilibrium (new or old position), one that signals a major shift in direction (even if it doesn't hit the coveted milestone yet) can violently change the base and quickly.
Example - if one Asian country (PH as example) officially grants EUA, the move is likely to be nonlinear and asymmetric relative to the immediate quantified results. Meaning - a signal of market acceptance by a foreign government and a modest amount of revenue can push a company's stock in this position way beyond an immediate representation of the value of the sales.
In the case of CytoDyn, and if that should happen, it would eliminate many psychological barriers that investors develop by internalizing messaging and claims by individuals who are negatively biased against the company.
So, if such milestone is reached, some real or perceived concerns are immediately vaporized and are no longer a consideration on the risk column for anyone performing a risk analysis on their investment.
So, just an example, should PH or another country grant EUA, what does it mean?
- Drug doesn't work? False - notion eliminated by association of approval with awareness of efficacy/value
- No one will ever use it unless the US FDA approves first? False - notion eliminated by having any first country grant EUA without dependency on the US
- Market is small and of negligible revenue? False as a first EUA will very likely result in a cascade of likewise decisions from other countries. Many Asian countries and especially in SE Asia work and unison and coordinate their activities, intentions, data sharing and more. It is entirely conceivable that with one EUA granted several more will opt in within days or weeks. Nothing is a given, but it is a realistic scenario especially given the limited supply and significant need for anything that works.
- This is a blip and will go away? HA (or AH AH AH). Nothing is going away anytime soon and if this drug works as many of us investors (and esteemed non-scientist doctors) believe, applying it to a greater population will just prove its worth faster and generate intense demand. My expectation, if it performs as it did in trials and eIND/OLE to date, is the effect will be immediate on hospital bed utilization, load and capacity. Within two to three weeks of broad use within any hospital one should see an immediate drop in mortality and bed utilization relative to previous weeks. It's that simple - no noticeable drop - it's not working. Noticeable drop - ultimate proof and demand will be asymptotic.
Many more elements that will fall off the 'concern' list can be added but we can stop here. The point being that a PR with a seemingly small step can have a profound effect while a combination of many others may not.
Here's to getting that low-intensity high-implications PR with urgency!
MH
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