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The Calandra Report: The virus that is making resources bearable, just

Thom Calandra Thom Calandra, www.thomcalandra.com
2 Comments| October 3, 2014

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How good it is to have a winning investment, albeit one attached to hemorrhagic fever and 50 percent mortality rates.

News reports about Africa's Ebola virus are lifting our prime biomedical holding at TCR: BioCryst Pharmaceuticals (NASDAQ: BCRX, Stock Forum).

Mixed bag of symptoms here: fiscally, those who support this leading company for treating Ebola (and not vaccinating against it) are enjoying rapid and steady gains. In addition, a strategy of holding a select few companies that thrive during times of epidemic, or possible pandemic, or computer-linked security lapses (Sysorex Global on that one), is worthy.

Yet the emotional toll weighs on health care professionals, on those who make their living in west Africa and on those who likely will lose their tourism livelihoods across the globe.

Most resources equities are getting clobbered -- historic lows. Silver companies are among the worst hit. Mag Silver (TSX: MAG, Stock Forum) probably gets the shining star for hanging in there.

Our favorite precious-industrial element, platinum, is pulverized, and with that the equities: Platinum Group Metals (TSX: PTM, Stock Forum), Ivanhoe Mines (TSX: IVN, Stock Forum), Wellgreen Platinum (TSX: V.WG, Stock Forum). What is working, or holding gains among natural resources and special situations, for our TCR subscribers: Sysorex (OTO: SYRX, Stock Forum), Angkor Gold (TSX: V.ANK, Stock Forum), Calibre Mining (TSX: V.CXB, Stock Forum), Mandalay Resources (TSX: MND, Stock Forum) and Abitibi Royalties (TSX: V.RZZ, Stock Forum). Each of those is what we call a special situation -- respectively: mobile cyber-security, United Nations attention for a Cambodia gold mine developer, Niacaragua gold-copper assays, a steady and growing dividend, and a possible settlement with one of the world's largest gold concerns.

On the Ebola front, this Scientific-American article out today | Friday will explain why the virus will keep killing at least half of all of the people it touches: see article. Once you take it in, you will have the fortitude to stick with the sharp movements of BioCryst's Nasdaq-traded stock. I own about 21,000 shares.

?BCRX's proposition is a treatment for Ebola, and not a vaccine. Vaccines require great care, great luck and a year or more of painstaking planning and intensely supervised production. Don't let vaccine companies tell you otherwise. Vaccines are a longer-stretch solution to epidemics. Even in first-world nations, large percentages of populations decline to participate, or cannot for various social, geographic, religious or economic reasons.

BioCryst is high risk. The company loses more money each and every year than -- say -- resource developers such as Canaco and East Africa Metals (see further down). That is a lot of money.

As I said, mixed emotions here. Several funds and venture capitalists have stockpiled the stock as health-care insurance against epidemics or pandemics, both viral and equity sprung.

I have been tracking the company and have owned it for at least eight years. My initial interest came during avian flu's H5N1 romp. The stock is a yo-yo, and the executives in the research triangle of North Carolina and in Alabama, USA, rarely respond to inquiries from media or shareholders. Its chief, Jon Stonehouse, is a former big-drug-company sales and marketing exec who wants to create the next $10 billion pharma-co using his shareholders' money and various health-care grants.

BioCryst is a multiple drug developer, mostly auto-immune treatments. Its peramivir is a treatment for severe influenza. BCRX also has compounds in development for leukemia, angioedema and gout, among others. On the influenza front, the current North America one is said to cover five different varieties of flu. This looks to be a busy flu season in the northern hemishphere.

Peramivir is a proven life-saver and in north America is given intravenously for severe influenza. The drug is in late-stage clinical trials in the USA and already is stockpiled or available in several nations. BioCryst receives federal grants and funding for both its peramivir and Ebola compounds.

BioCryst also is working on PNP enzyme inhibitors to treat gout and leukemia. Plus, it has an oral drug that is trying to prevent hereditary angioedema and another compound that might treat hepatitis C.

Apologies for making this sound like an ad for BioCryst, which has consumed well more than $100 million in government and shareholder monies during the many years I have owned it. I see few signs that the top executives there deserve the positive publicity, but the laboratory workers and medical officers deserve a salary raise for their excellent chemistry.

BCRX shares are a kind of epidemic insurance for human life and financial markets; they are tempering severe commodities losses for our audience. I have every confidence that the shares will return to their summer 2014 high of $14.60 USD. Perhaps today or next week. After that, I have to resize the company's market capitalization of $800 million and enterprise value of $625 million and its (investor) timetable for a best-selling FDA-approved drug that lessens human suffering. At present, the stock is at $12.50 (Friday midday).

Notes: I see that East Africa Metals in Ethiopia (TSX: V.EAM, Stock Forum) -- formerly Tigray via the deux EX-macchina of a $2 million forgiven Canaco/East Africa Mining loan -- and CEO Andy Smith are taking the same QUESTIONABLE and expensive path toward equity destruction that they took with Tanzania's Canaco. Don't let the mediocre gold assays in this company's reports lead you to invest in the stock. I own EAM by default but have been selling as I can -- after Canaco melted down amid the promise of a solid but poorly managed drill program at Magambazi in Tanzania. The Ethiopia program for 6,000 meters of drilling cited Friday in an assay report from northern Ethiopia, where I have been, almost surely is another East Africa Metals/Smithsonian way of stating, "Yes, we will continue to pay ourselves with the cash we have left over from the Canaco disaster."

You can read about all of this in an earlier TCR report, which is at thomcalandra.com and here at Stockhouse.com.

To repeat, every time I turn around, there is activity circling around Mr. Smith, a geologist, that has less to do with geology and more to do with the stock market and corporate salaries.

I am so far under water on my East Africa Metals, not even a SCUBA suit will help me. Luckily, as part of the mess of Canaco's unraveling, shareholders received what looks like a fine piece of another Africa prospector: Orca Gold (TSX: V.ORG, Stock Forum). Richard Clark, the former Red Back Mining (and now owned by Kinross) CEO, is chairman of Orca Gold (ORG in Canada). Alas, right now, Ebola is making Africa look like wasteland of worthy metals projects.

I will be moderating a session at the opening of New Orleans Investment Conference in three weeks. Please let me know if you WILL BE attending the show. This is where I go every year at this time -- for Brien Lundin's show; I scored there two years ago when I crossed paths with Ivan Bebek and Dan McCoy's Cayden Resources (TSX: V.CYD, Stock Forum), which is the target of a friendly corporate takeover. CYD shares rose 12x or so during this span.

Travel: I am looking at a return tour of [subscribers only] in Panama -- late October.

THE CALANDRA REPORT: Subscribe

Now $129 yearly! My ass is on the line, too.

See: A thomcalandra.com home for our expanding TCR family.



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Comments

High Holy Cardinal: You are missing some big scores with the subscriber TCR reports ... come back to the fold, Prodigal One -- thom www.thomcalandra.com
(0)
October 5, 2014

Thom? This is the capitulation catharsis that always marks the end of a resource bear.
(88)
October 4, 2014

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