RE:Interesting report from Leede Jones Gable
Good find Scott
I found this Portfolio Manager's note to be a very fair all around summary. He doesnt sugar coat the negative factors, nor put hyperbole on the positives.
I generally agree with his conclusion. .
In the short interim period, the fear about the balance sheet will no doubt dominate the narrative....as fear and doubt have been fully established by the short momentum....and fuelled by true long liquidation as the share price collapsed and fear escalated . But as the author of the paper pointed out. The negative momentum fuelled by the delays and some clear management mis steps..... the false insider sales reports, the Bloom Burton / Black Mamba / David Martin paid short promotion, along with the very real collapses of Valient and Concordia and the broader negative Cdn Biotech landscape..... virtually all of the worst case scenarios are priced in .... and then some.
I am inclined to believe there is ALOT of smart money sitting on the sidelines waiting patiently for the confrmation by the FDA of full PG approval... and the prospect of the actual Pediatric voucher issuance. There are certainly those accumulating in advance of approval.... but I suspect the biggest money will move in once that final risk-cog is removed. I agree with virtually all of the covering analysts, that PG approval is a question of when, not if... and will likely be much sooner than later. Layer in the Allstrom Data, and IND approval of the 4050 Phase 2/3 study... and everything is going to become alot clearer.
With that in mind, I agree that the risk reward at these levels significantly favours the longs. I think we got a small taste of how oversold and how broadly negative sentiment has become with the snap back on huge volume that came from the PD designation. This pullback from the snap back high on light volume is entirely normal.
I continue to believe there is huge unlocked value here. And I do think as the smart money and momentum traders jump back in.... there is going to be a violent re pricing higher.
Risk reduction is absolutely key, both in terms of the full commercialization of their PPPS product pipeline coming online, and with respect to the reduction of regulatory and clinical risk aspects of 4050 and analogues.... and many of those catalysts are imminent