What Types of News Are Possible? Since my post revealing GD's
calls to shareholders inviting them to a meeting with DrDR on Tuesday, I have received many emails, texts and calls, including one I answered just a few minutes ago, about what kind of news do I expect Bioasis to release.
Of course, I don't know, so let's look at the possibilities. I've mentioned some types of news, news that I wish to see (a cash-rich xB3-001 deal), bad news (selling the company for 25¢ and a cup of coffee), neutral news (borrowing more money from Lind) or even no news where "you gotta be there" to listen to DrDR preach, "Next year will be great!"
Some of the people who have reached out to me believe that Bioasis is at an inflection point, a do or die moment, and have expressed that if there isn't good news then they will begin offloading their shares, cutting their losses, as one put it. It might be wise to be a little more circumspect than that.
Bad news is bad news, and everybody will have to deal with it as they see fit. I don't see news so bad that we'll see a 5¢ stock. But no news will cause concern. Shareholders are not in the mood for a pep talk on Tuesday if there's no news.
Good news will cause a mixture of responses. I think there may be many shareholders who just want out and will turn good news, no matter what it is, into a liquidity event. If good news is based on a deal indicating confidence in xB3, then the sky is the limit for other xB3 deals. Shareholders should consider that.
Neutral news is different. The instinctive decision to sell may not be wise if the news is neutral. Take, for instance, news that Bioasis has entered a partnership with a pharma that involves the Cresence EGF program. Let's say the program is for $5 million up front and the pharma looks after the upcoming clinical trials. Although that's good news, it's nevertheless not news about xB3, and it's news that won't produce more news for 18 months to 2 years down the road. That news could also cause a liquidity event, the result of which could be a lower share price. That kind of news is somewhere between neutral and good, in my opinion. It's doesn't address the xB3 question.
But there is news about xB3 that could appear quite neutral. Let's say that Chiesi and Bioasis announce that an xB3 LSD enzyme is moving into FDA IND application phase. Even if there was an accompanying milestone payment, that news wouldn't mean much of anything to some shareholders, and may not trigger new investors, at all. But in reality, it's a sleeper.
The "IND Application" news means that whatever work Chiesi has done has shown positive results with xB3, good enough to initiate clinical rials. We've never had that kind of news, not once. It's important news, but the share price might drop. So rather than selling and locking in losses because it wasn't obviously good news, maybe it's a good time to buy because of the validation it gives to xB3. Remember, validate xB3 only once and it begins to open the doors for many more deals.
Similar news from Oxyrane, Aposense, Janssen or others could be very good news because none of these companies have paid anything yet. They would almost certainly require a deal to move an xB3 drug into IND phase. Not only would such deals be validating of xB3, but they would also bring money. These types of of deals also portend more xB3 deals.
Another neutral, probably "kiss-your-sister" kind of news, would be borrowing more money through the Lind LOC. It keeps the lights on, would be enough to pay me and less important people, but it would be a definite signal that the company believes it's months away, at least, from a significant deal. The market will take a big dump. I would expect.
I think the real lesson could be that it's wise to look at the news, especially news that looks rather neutral, and try to determine if it suggests that there's more to come. Certainly, any regulatory move with xB3 is good, as is any type of true business deal involving xB3.
But remember the investing rule of thumb, that a stock that has been essentially dormant with a low share price for a long time may need to have 25% or more of outstanding shares to be traded before the share price can double. If the news is good then the price may immediately rise and then shortly stall, or even drop.
Unbridled enthusiasm, Stoopid Dayz, are swell to watch while they're on, but not much fun if the shares you chased to 50¢ drop to 38¢ by closing time.
And if you sell at 38¢, don't get all depressed if it closes at 50¢, or a dollar the week after. You wanted out. You got your wish. You're not a victim. You acted on your own best judgement and you don't have to worry about those damn BTI shares ever again. Move on, like I'm not.
jd