Arnold – I remember that poll well. I do not feel dumb for what I posted, I only wish I had put as much thought into my trading as I did my analysis. I truly believed that the missteps were due to a lack of experience that would work itself out through learning on the job and guidance from the board. It’s now painfully clear this has not happened.
Below is a copy of my analysis at the time of the poll. Some items of the good scenario happened and some of the bad – unfortunately more of the bad and not surprisingly most things that did happen, happened later than expected – or worse still haven’t happened. I’m reposting it because much of it is still valid. They still need to get moving on the ssDNA INDs and they desperately need to sell synDNA. Key word is “sell”. Don’t wait for people to ask for it, get out and sell it. 2M shares allocated to peddle more stock – how much has been spent or is budgeted to market and sell synDNA? The path to riches for this company is so incredibly clear and yet mind boggling how it has eluded them. MS, you’ve had these business nuggets for two years and failed to act on them. Oh well. Looks like the next poll will be about whether cygx will be in business next year.
From post 23327 – emphasis added
Here’s another guess.
But first a disclaimer and then the reasoning behind the guess.
Disclaimer, the wording of the proposition is off. The issue is much more a matter of if cygx can capitalize on the synDNA rather than just getting it to “work”. From what I’ve read, the synDNA already works – for cygx anyway – it sounds like they’ve been fiddling with this stuff in small amounts for a while now. The next step of getting the prototype lab to crank out a modest supply of the stuff will probably happen without a lot of problems or fanfare. The real questions are around the overall DNA market, timing of production and manufacture of marketable quantities, and most importantly whether cygx can actually capitalize on the market. The last piece is where I have trouble for a few reasons.
First, this is a side business. In Malcolm’s last interview, he indicated that synDNA appeared to be the fastest path to revenue so they were pursuing it but he also indicated that this was primarily for their own clinical trial efforts. Building a lab for themselves makes sense. From one of the earlier PRs, cygx estimated the cost of the oldDNA for the HSV trials would be $2 - $3 million. If the synDNA is a tenth of the cost and the lab is $1 - $2 million, the lab has a one trial payback – easy decision – turning it into a moneymaker is another issue entirely. How many people here have hobbies that they have thought about turning into a business? How many have been successful at actually doing it? Enjoying cooking and running a restaurant are two very different things. If cygx does not put a full-blown product development effort into marketing the synDNA – it doesn’t matter if it works or not - they won't sell enough of it to matter. For this to be as successful as some people here believe, it cannot be a side business or afterthought. The challenge will be focus and priorities.
Second, cygx’s history of deal making. It would be nice to see one deal stay out of the courts. For the time being I’m even a little concerned about Aldevron. They are as much a possible competitor as they are a possible partner. The PR sounds good – but so did the Phanuel PRs. Aldevron may just be kicking the tires to see if this process is a threat to what they are already doing or worse if there is anything they could “borrow” from the process. As I mentioned before, car companies routinely buy each other’s products and tear them up to see what makes them tick. Not to be too cynical, but it would not surprise me if their test results show that the process is “OK” – a glowing endorsement would not do them any good unless they take the next step and license the process – and if they wait until the test are over – any hype would potentially raise the cost of the license .
Finally, as it relates to price predictions, is timing. If all everything else comes together – how soon will the money start coming in. The short term (as in over the next year) market appears to be pretty small and their excess production capacity is also small. Any quick appreciation in stock value will be related to the possibility or actual realization of license deals. I also think the initial deals will be relatively small as well because they will be for clinical trials – in the tens of grams each. The market will take some time to grow and I don’t think enough people will be able to put a NPV (Net Present Value) on that potential that will be reflected in the stock price - no historic basis and too much uncertainty.
So here is my look into the dark crystal ball. Malcolm said the lab is due to be completed in early December – because this is being done by an outside firm – and since dividing by the cygx projection completion factor would give an error – let’s put this out ‘til next January or February [Whoops – must have meant January or February ‘08]. Around that time the Aldevron test will show that synDNA – works OK – but not a whole lot better than their own existing methods – no reason to get excited – just keep buying your old style DNA. PR announcing IND submission delayed for another quarter [Another underly pessimistic prediction] . Phanuel suit goes badly – but will be appealed. First quarter of ’06 spent running the new lab making all kinds of stuff for the research team to play with – new discoveries each month – increased loss of focus. Stock drifts into the .20s. 2nd quarter additional competitive synDNA production capability announced at multiple biotech companies. DNA price projected to drop to where the economics favor large scale processing plants. Cygx announces that it is still in talks with potential partners. Vote for new options passed due to increased holdings by management. Stock drifts into the .10s. 3rd quarter, insufficient shares and share price to raise necessary capital. Employees start to leave. Rumors of potential buyouts fade since intellectual capital has left. cygx issue a press release indicating their intent to call the FDA regarding the lab certification process. Words on a stock bulletin board indicating that cygx’s “time is near” briefly puts the stock back into the .20s before drifting off into obscurity.
Here is the look into the bright crystal ball. Q4 ’05 Lab completed on time. Aldevron signs a license deal before the tests are complete – tries for an exclusive but the soon to be hired person in charge of licensing refuses - despite the grumblings of LW - and secures the future of the company by keeping the revenue options wide open. FDA certification process initiated. Phanuel suit dismissed. Stock moves in to the .70s. Q1 ’06 IND for Simplivar submitted and approved. Stock hits $1.50 on news. FDA Lab is certified and creates the material necessary for the clinical trials. Excess lab capacity synDNA sold at top dollar to eager customers. Stock settles back to $1.00. Q2 ’06 additional synDNA licensing deals. Revenue now sufficient to cover operating expenses and hire additional staff. IND submitted for anti-bacterial. Stock back to $1.50. Q3 ’06 early phase 1 study results indicated Simplivar is safe to use with humans. IND approved for anti-bacterial. One of cygx’s licensed partners announces a major sole supplier arrangement with a DNA vaccine producer. Stock breaks through $3.00.
The actual course of events will likely be somewhere in the middle.
After consulting with Swami’s brother Johni (Meck-alecka-hi-mecka-hi-ni-ho)
Here is my prediction
Put me down for $1.75 if they are able to sell or license the synDNA by next year and $.20 if they are still only announcing that they intend to sell the stuff and the HSV IND is still pending or was rejected. [Well, they did sell some - but not enough to really matter - and Simplivar is still just a glimmer in some test tube hoping one day to grow up and be a real cure. There is a reason the stock is closer to $.20 than $1.75 today and it has everything to do with measurable progress, or lack thereof, and nothing to do with critical posters.]
For those interested in more serious predictions, a couple years ago there were some good numbers kicked around to suggest that the NPV of the anti-sense products is about $5.00/product/share. I still think the real money is in the ssDNA products and with cygx’s pipeline it is not inconceivable that this company could double in value each year for the next 8 to 12 years. While that might not be as fast as some would like - it is possible, sustainable, and would put this stock over a $100/share in that time frame. To get there, management has to bring on the necessary talent to grow into a full-blown pharmaceutical – or large biotech research – company and they need to be ready to step aside if necessary. Time will tell.
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