Retiring SEC Lawyer Crucifies His Employer: "It's A Cancer" Working On Behalf Of The "Bankster Turnpike"

http://www.zerohedge.com/news/2014-04-08/retiring-sec-lawyer-crucifies-his-employer-its-cancer-collecting-pennies-bankster-tu

BDSI

My entry yesterday on FaceBook: "Someone BIG hit the ask hard on BDSI before the close. A few hundred shares trade here and there, and then a huge 176,000 share buy hits the tape. Someone wants in before Monday's FDA decision. Spiking up in after hours. Good thing I doubled down this am..."

A massive buy at $6.78 for 176,000 shares occurred at 15:38:37, just before market close, surrounded by normal closing out of positions on a scale of a few hundred shares. Clearly, a hedge or mutual fund wanted in before Monday's expected FDA decision on Onsolis, a pain medication for cancer patients. The FDA made a favorable assessment of the drug and delivery technology last October, but due to a change in policy on monitoring potential addiction, BDSI was required to re-format data to the new standards, REMS. The Complete Response Letter delayed the approval date until June 15, 2009, so the recent run up in share price is in anticipation of successful approval. To long investors, FDA approval is a slam dunk Monday. With the FDA, nothing is ever a slam dunk, so we'll have to wait and see.

Having said that, I doubled up my investment yesterday morning. So far, it is paying off as the big trade before yesterday's close drove up the shares to above $7.50 in after hours. BDSI is a conservatively run company, focusing on existing approved drugs delivered by innovative but effective technology. They have managed their finances well, securing a partnership with Meda, which includes milestone payments, so their cash position should be solid with little dilution to existing shareholders. The short interest is low (but climbing), so I don't expect a big short squeeze, but a steady increase after an initial spike up Monday. The breakthrough drug delivery technology and two other drugs in the pipeline should provide for a sustainable company going forward.

If for some reason, the FDA delays a decision again with the infamous "approveable" letter, BDSI shares drop back to $3. I would probably buy more at depressed levels, knowing approval is imminent, if not impending. If Onsolis is approved, BDSI should see the teens.

This is not a recommendation. Due your due diligence. Investing in biotech stocks is risky, and you can lose all or most of your investment. Good luck to all.

Disclosure: I am long BDSI.

The FDA drug approval process

Clarity and purpose are very important to me: it is tough to make money in manipulated markets, and I try my best to teach people how money works.

That's why I divorce myself from politics: what the government is doing is more important to me than what our elected officials claim they are doing.

A stock like Dendreon was trading at $3 for a reason--market makers, hedge funds, analysts, and even big pharma companies manipulate the share price down via short selling--one would think they would want a higher price per share. For reasons I've gone to at length, they use the media to rig the markets into suppressing the share price. One analyst--the night before Phase III clinical trial results announcement, reiterated a $1 price target, when it had closed at $7.30 the day before. The next morning, in pre-market trading, it spiked up to $26. The shorts got wiped out and are scrambling to cover in a short squeeze.

A buy out offer just got that much more expensive for any big pharma suitors. In fact, the company is going to go at it alone, manufacturing and marketing the drug themselves in the US, and partnering with another company to penetrate Europe. Valuations from analysts now range between $40 to $300, as this immunotherapy for prostate cancer could potentially extend to cancers of the breast, kidney, colecteral, lung, head and neck, etc. Chemotheraphy companies had a stake in suppressing this technology as well, as they will be wiped out when this treatment gains traction. Couple that with a corrupt FDA with members on the advisory panel with admittedly conflicting interests, and it is no wonder 80% of drugs are rejected by the FDA.

Once in a while, a blockbuster drug comes along. In other words, just because a stock is $3 doesn't mean it stays there, despite darker forces at work. The key is to uncover value when you see it, against a sea of skepticism. Most of the time, the skepticism is warranted. But when it's not, it's a gold mine. I researched DNDN in February, before pulling the trigger just days before their pivotal announcement last week. No textbook or classroom is going to teach me that. The Street (Wall Street and Main Street) is still mulling over an imminent GM bankruptcy, toxic bank assets, bailouts, stimulus bills, yada yada yada. These were discounted into the markets 9 months ago. The funny part is just as the market is getting complacent about real estate foreclosures, a 2nd wave is about to hit more neighborhoods. In order to succeed in investing, look ahead and anticipate what the markets will do. Don't invest based on current events alone--that is looking in the rearview mirror.

Today's entry, a year later...

Today's entry:

I've never made money following the crowds. I've always made money going against the masses. If I were to hire someone to manage my money, I'd rather them have a background in crowd psychology and mob theory, instead of degrees in econometrics. People tend to rely too much on numbers on things not necessarily controlled by numbers. It works for designing innovative technology; it does not work for predicting behavioral finance. In other words, when they win, it's because of their savviness and acumen, and when they lose, it's due to bad luck. It is analogous to a reknown physicist claiming he will find the next treatment for certain types of cancer, using stem cell research. The interviewer decried his attempts, asking how a physicist could solve a problem that was clearly a medical and a biotech one. He curtly replied that biologists and people who study medicine don't know numbers. Metastasis is a compounding problem, an uncontrollable geometric growth of malignant cells. The drug discovery process itself is a numbers game. He was spot on in his approach. OTOH, behavioral finance is more behavioral than economic models, and mere numbers. Market participants are human, not drones who predictably turn like electrons. I've had very long and interesting discussions with some of the brightest minds on and off Wall Street, and many of them think the number-crunchers are deluding themselves into thinking they can outsmart markets. And the road kill of some very smart people only confirms my suspicions. It's like a casino: the players keep playing as long as they win, but as soon as they lose, they get washed out for the next group of gold speculators to arrive. The key is to manage OPM, as the managers make money no matter what their performance is, and they last as long as they can get away with it (underperformance). The clients underperform the index averages 80% of the time. And the top 10% managers are so good that they can outlast their peers, and make a killing over their life times. I've reached a stage where my clients and I can't afford to take a hit like the tech bubble, and the recent subprime mortgage crisis. It's about capital preservation, efficient (i.e. low-cost) diversification, risk mitigation, asset optimization (all assets, not just investable liquid assets), and guaranteed floors (the last two are why I win). Lots of people can claim the first 3, but few can deliver the last 2.