Suggestions for a speculative punt?

BrockStoker

Cus said:

BrockStoker said:

Sailtheworld said:

Moe_The_Bartender said:

BrockStoker said:

Moe_The_Bartender said:

Personally, I would run a mile from a company that is burning through cash at a colossal rate and doesn’t have a product.

This is why it's important to understand what you are investing in..

In the case of Arrowhead, their cash burn is actually very conservative given their pipeline, and the pipeline is one of the big reasons to be invested here. What is more, they have plenty of cash to keep them going, especially with their recent partnership/deal with Takeda, which is (I believe) not yet taken fully into account, although there is no doubt (in my mind at least) that they will have it soon enough. The terms of deal they got with Takeda are unheard of in the sector, and that is because they have been bargaining from a position of relative strength. Why the strength? Well, simply put, their peers (Takeda et al) know and understand how powerful the science that Arrowhead wields is.

To understand why the science is so strong, you need to understand the basics of how it works. Our CEO gave some clues in Mondays conference call:

"First, we seek to choose only well-validated targets. These are gene targets, where consensus of experts agreed the reducing expression will likely have positive therapeutic benefits. By focusing on this, we believe we entered clinical studies with reduced biology and target risk relative to other candidates. Second, the RNAi mechanism and experience with the TRiM platform can provide additional wind at our back. As we continue to treat more patients with drug candidates built on the TRiM platform and see consistent activity and part of the safety profile, our confidence increases that other candidates targeting different genes will also be successful. RNAi doesn't care what gene has been silenced. Once we validate our ability to reduce expression of a given gene in a given cell type, we have confidence that we can replicate that in other gene targets. We believe this is a powerful and scalable concept that gives us confidence that a larger percentage of our candidates entering the clinic will ultimately become drugs compared to traditional -- compared to traditional small molecules."

You see, their business model is significantly different to that of other biotechs/pharma, and that is partly because of RNAi works/how easily they can find targets where this tech is highly likely to work. This is a very different modality to conventional small molecule biotechs, and gives ARWR a MASSIVE advantage over the competition.

The proof of the pudding is in the data, and the data is literally "off the charts". So while they don't have a commercial product, the data is showing extremely good efficiacy combined with a safety profile that (once again) small molecule companies simply can not match. ARWR's peers understand this (many others do not!), and this is why ARWR is now able to negotiate deals from a position of GREAT strength.

There is more to it than this, but I don't have the time right now to go into much more detail. Never the less, I think I have written enough here for others to get a flavor of why ARWR is such an undervalued gem of a company, and why I have effectively taken all my cash out of other individual companies and put it into ARWR!

Sure there is some risk, but ARWR is effectively running in a race where the competition has been nobbled! As a KOL cardiologist put it (just a week ago), paraphrased "We are entering a golden age of [RNAi] cardiovascular therapy".. and ARWR is the undisputed leader in that (RNAi) field right now. You only need to look what it did to Vertex's market cap just a few weeks back! There is even talk/rumors of "functional cures" in ARWR's HBV program that looks highly plausible given the reductions in harmful proteins - reductions that are unheard of previously. No one has managed to successfully treat HBV, let alone cure it. So, while it may not have a product, yet, IMHO it's just a matter of time. Did I mention how fast ARWR is?!

Edit to add:

If you consider that one successful/commercialized indication is (easily) worth the current market cap, and they plan to have 20-30 in clinical trials by 2023-2024. The risk/reward profile is truly amazing.

I just did a quick trawl through the Top 10 holdings of the biotech funds available in the UK and ARWR didn’t figure in any of them. Perhaps I'm missing something, but if it’s such a fantastic business, why do none of them hold it?

What does anyone making a punt know that the market doesn't - probably nothing. Do they have insider knowledge - probably not. Are they better at analysing data than the market - unlikely but perhaps.

That's the nature of a speculative punt - identifying a company that is undervalued by the market today but will be correctly valued tomorrow.

I really don't think that the models analysts use are capable of fully taking into account the implications of a disruptive company like Arrowhead that has a very different (and super-aggressive) business model the likes of which has never existed as far as I can tell.

From what I have seen, the models analyst uses even struggle with small molecule biotechs, where I have made significant gains (2-3x my investment in some cases), so what hope do they have when something like ARWR comes along? The models they use can take into account the finances, and give value to each indication in a pipeline (although from what I have seen the values allocated are often very conservative, and they don't take into account early stage indications), but they don't see the bigger picture, and take into account the disruptive effect a technology like RNAi is already having.

Arrowhead's unique "copy/paste" modality is unheard of - if it works in one indication, they can take that same drug, and make it work in another (that is how this tech works!). Simply by modifying the method of delivery (something that Arrowhead has become very clever at doing), they can take that same drug, and use it in a completely different tissue type to treat a different condition. This is a big part of what others are missing, and also why the other RNAi companies have struggled to see similar efficiacy (the delivery method is key here - and ARWR have perfected it/worked out all the bugs)!

This is why (IMHO) someone like me, who likes to see things from a completely different perspective compared to the rest of the heard, can get an advantage, leaving the rest of the world/Wall Street to play catch-up

Is this the same Arrowhead that used to be at a price of over 1700 back in the 90's before crashing? (Now at 58)

Yes. Back then it was a nanotech company. Since then it has been completely turned around and re-molded. Read a bit about the story here:

https://www.bioprocessonline.com/doc/does-rnai-have-a-future-beyond-liver-disease-0001

https://www.lifescienceleader.com/doc/the-story-of-arrowhead-pharmaceuticals-adversity-odyssey-0001

richtips86

Is anybody here looking at Zoetic International (ZOE) a UK listed but predominantly USA based CBD firm?! They just announced their first potentially company making RNS signing an agreement with AATAC.

Another_Saver

richtips86 said:

Is anybody here looking at Zoetic International (ZOE) a UK listed but predominantly USA based CBD firm?! They just announced their first potentially company making RNS signing an agreement with AATAC.

ABF are getting into that too (could see that as the speculative element) while being a consumer staple co (food, agri, sugar  and brands) and owning Primark,whichyou could see as a value recovery play - they'll do ok of a recession as people shop down, and well in a recovery, focused on a comprehensive fashion/home/lifestyle in-person retail offering.
Valuation is reasonable, in normal times the div yield was 2% with 3x cover (the UK average is about a 2/3 payout ratio or 1.5x cover, implying if ABF were paying out the same the yield would be an average 4% for a quality co) and majority owned  by a family and foundation which to me indicates good governance and management (though I haven't researched it well enough to buy it, it is a co I would buy if index funds weren't available).

adindas

Salesforce.com, inc. (CRM) to acquire Slack Technologies, Inc. (WORK)

https://uk.reuters.com/article/us-slack-tech-m-a-salesforce-com/salesforce-has-approached-slack-with-acquisition-offer-source-idUSKBN2852PA

With the M&A the direction of the stock price is very predictable. The stock price of the acquiring company (CRM) will dip temporarily, while the stock price of the target company (WORK) will spike.

Today my Slack jump +37.42% in just one day, crazy. As soon as the merger is completed, time to move to the next target or move the Salesforce.com, inc. (CRM). It is highly likely CRM will bounce back.

Apodemus

adindas said:

I think you are missing the point. ARWR is a US stock, the Top 10 holdings of the biotech funds available in the UK you are talking might be focusing the UK Biotech companies. Simple reasons, more familiar with them and it does not involve foreign currency exchange.

I'm surprised at this comment. I have some IBT in my SIPP and its UK percentage is 0.34%. BIOG's is about 2.5%. Polar Capital Healthcare, also about 2.5%. All have over 70% in US companies, so I'm not sure that a UK focus is an accurate description.

[Deleted User]

adindas said:

Salesforce.com, inc. (CRM) to acquire Slack Technologies, Inc. (WORK)

https://uk.reuters.com/article/us-slack-tech-m-a-salesforce-com/salesforce-has-approached-slack-with-acquisition-offer-source-idUSKBN2852PA

With the M&A the direction of the stock price is very predictable. The stock price of the acquiring company (CRM) will dip temporarily, while the stock price of the target company (WORK) will spike.

Today my Slack jump +37.42% in just one day, crazy. As soon as the merger is completed, time to move to the next target or move the Salesforce.com, inc. (CRM). It is highly likely CRM will bounce back.

That is interesting - especially as every project I have been on in the past few years has never paid for Slack
They all took the free version (which doesn't contain history of conversations) - those companies are mega caps
I also know Salesforce very well (been up in Saleforce towers in the City many times)
It's an interesting call as Slack users are now moving over to Teams - especially now that you can call Teams (one of the standard patterns is to have applications ping statuses via bots into Slack channels - ie user X has tried to access the customer data and then you delete the user etc)
So Slack was losing large users - who never paid for it in the first place.

adindas

Deleted_User said:

adindas said:

Salesforce.com, inc. (CRM) to acquire Slack Technologies, Inc. (WORK)

https://uk.reuters.com/article/us-slack-tech-m-a-salesforce-com/salesforce-has-approached-slack-with-acquisition-offer-source-idUSKBN2852PA

With the M&A the direction of the stock price is very predictable. The stock price of the acquiring company (CRM) will dip temporarily, while the stock price of the target company (WORK) will spike.

Today my Slack jump +37.42% in just one day, crazy. As soon as the merger is completed, time to move to the next target or move the Salesforce.com, inc. (CRM). It is highly likely CRM will bounce back.

That is interesting - especially as every project I have been on in the past few years has never paid for Slack
They all took the free version (which doesn't contain history of conversations) - those companies are mega caps
I also know Salesforce very well (been up in Saleforce towers in the City many times)
It's an interesting call as Slack users are now moving over to Teams - especially now that you can call Teams (one of the standard patterns is to have applications ping statuses via bots into Slack channels - ie user X has tried to access the customer data and then you delete the user etc)
So Slack was losing large users - who never paid for it in the first place.

Well, I am not here to defend Slack. I am here to make money.

But this site explain how they make money, Their business Model

https://fourweekmba.com/slack-business-model/

https://www.investopedia.com/articles/investing/012616/how-does-slack-work-and-make-money.asp

Many revenues come from enterprise.

Above all, salesforce is not going to acquire slack if they do not see any potential benefit, integration. The Same model when Facebook, Amazon, Google. Microsoft acquire companies many of them are loss making, but these companies could definitely see the benefit if other system is integrated into their Business Ecosystem.

ARK Invest has started their position in this companies since a while and keep topping up their position.  They probably could see that other ordinary people could not see such potential to be acquired by a large enterprise which has finally happened. ARK Invest has a reputation to spot the company in their infancy and have potential to become a monster.

If you could identify the small Technology companies to be acquired by the big players, that is where the big gain will come from.

richtips86

Another_Saver said:

richtips86 said:

Is anybody here looking at Zoetic International (ZOE) a UK listed but predominantly USA based CBD firm?! They just announced their first potentially company making RNS signing an agreement with AATAC.

ABF are getting into that too (could see that as the speculative element) while being a consumer staple co (food, agri, sugar  and brands) and owning Primark,whichyou could see as a value recovery play - they'll do ok of a recession as people shop down, and well in a recovery, focused on a comprehensive fashion/home/lifestyle in-person retail offering.
Valuation is reasonable, in normal times the div yield was 2% with 3x cover (the UK average is about a 2/3 payout ratio or 1.5x cover, implying if ABF were paying out the same the yield would be an average 4% for a quality co) and majority owned  by a family and foundation which to me indicates good governance and management (though I haven't researched it well enough to buy it, it is a co I would buy if index funds weren't available).

Yeah it’s definitely a hyped area. There’s a lot of governance stuff coming in over the next few months regarding novel foods and only those that have necessary licenses will be able to continue as a going concern.

My speculative punt is Kistos which was launched yesterday headed up by Andrew Austin of RRE fame!

BrockStoker

A few final points regarding Arrowhead, after which I will retreat back to my own thread.

Tad (on the Yahoo Finance MB) posted this (taken from Twitter):

"Always remember, Track Record counts, here you have few Twitter folks, one is a Biotech CEO and another a RNAi Phd Consultant both sold under $5. BOTH got it wrong."

So even highly knowledgeable/intelligent people are not always right. They obviously didn't get it!

While Arrowhead is still a relatively small company it's going to get manipulated and be volatile. The only way to play it IMHO is to buy the dips (if you want shares/more shares), stay long, and don't set a stop loss. Arrowhead is 90% about the science (which is as good as it gets) and 10% about the management and their strategy (which is again, as good as it gets IMHO). Everything else is just noise. The big gains will come if you hold on for years/decades.

You could invest in other small biotechs and potentially see greater rewards, but the risks are MUCH higher - Arrowhead's science effectively de-risks it on the other hand.

You could invest in (already) Big Pharma, but the risk has just gone up thanks to Arrowhead, which will eat into their profits. This is what happens when something as disruptive/revolutionary as RNAi comes along. Arrowhead is like a jaguar on steroids going for the elephants jugular. Nothing is safe any more in the bio-pharma sector IMHO!

Shocking_Blue

richtips86 said:

Another_Saver said:

richtips86 said:

Is anybody here looking at Zoetic International (ZOE) a UK listed but predominantly USA based CBD firm?! They just announced their first potentially company making RNS signing an agreement with AATAC.

ABF are getting into that too (could see that as the speculative element) while being a consumer staple co (food, agri, sugar  and brands) and owning Primark,whichyou could see as a value recovery play - they'll do ok of a recession as people shop down, and well in a recovery, focused on a comprehensive fashion/home/lifestyle in-person retail offering.
Valuation is reasonable, in normal times the div yield was 2% with 3x cover (the UK average is about a 2/3 payout ratio or 1.5x cover, implying if ABF were paying out the same the yield would be an average 4% for a quality co) and majority owned  by a family and foundation which to me indicates good governance and management (though I haven't researched it well enough to buy it, it is a co I would buy if index funds weren't available).

Yeah it’s definitely a hyped area. There’s a lot of governance stuff coming in over the next few months regarding novel foods and only those that have necessary licenses will be able to continue as a going concern.

My speculative punt is Kistos which was launched yesterday headed up by Andrew Austin of RRE fame!

How would you get hold of these? Don't seem to be on iWeb or Fidelity.
Thanks