Readers Respond: ONTY, OGXI, BIEL, NVD

In "Readers Respond" I do my best to answer readers' questions, but keep in mind that my responses to these questions are my opinions and personal speculation that I have based on my own research and DD.

Also, I will try to respond to a number of requests that I've received via email or comments to the board asking for 'VFC's Take' on stocks that readers have found. While I'll do my best to address as many as I can, please take a few things into into consideration while reading:

- I have not thoroughly researched all of the stocks that I'm about to comment on. I've done the initial DD but my opinions are mostly based on my first impressions of the stock. I'm merely providing VFC's Take, as requested. Use that as a starting point to do your own DD.

- Don't get testy if I don't like your stock. Remember, this is just my initial impression and I take into consideration some variables that other people don't, that's why 'VFC's Take' is not always the mainstream impression.

- I appreciate all the recent feedback, and keep the stock tips coming; this is a great forum for all investors of all levels to share tips and insights. There's a whole lot of stocks out there, but there's only a few gems. Let's keep trying to find those gems.



ONTY, OGXI: A comment from Muhammad regarding Oncothyreon and OncoGenex:

Dear VFC,
This is the third time a send to you and I am hoping I will be lucky this time and get some feedback from you. I know you are very busy, get a lot of emails and this blog is just hobby. I am an overseas investor and really need your help. In your opinion, which pick is better; ONTY or OGXI.
Thanks in advance,
Muhammad

VFC's Take: Sorry it has taken me so long to get back, sometimes it's tough to keep up for the reasons that I've mentioned before and Muhammad re-iterated in his comment.

As for ONTY and OGXI, I'll offer my opinion on the two stocks, but your own DD should be the deciding factor as to which stocks you invest in.

I think that a speculative investment into either one has the potential to pay off in the mid to long term, even after the humongous run enjoyed by OGXI already this year. However, I like ONTY just a bit better at this point and I'll explain my reasons why; however, also keep in mind that I am long ONTY and have no position in OGXI - although like anyone else out there I would have liked to have been along for the ride with other OGXI investors earlier this year.

The first reason I like ONTY just a bit better is because of the price. This is more of a psychological factor because market cap is what is really important, not price, but many small investors look at the quantity of shares that they hold vice considering the quality. The fact that you can buy 100 shares of ONTY for the same price as 15 shares of OGXI does come into play with the small investor because an investor may be inclined to spend more speculative money than they should in an attempt to boost their overall number of shares. For instance, a small investor using the Sharebuilder automatic investing plan may put five hundred dollars towards OGXI in order to see a nice boost in the number of shares when in reality that investor should only be putting two fifty in the plan.

I say this because I've made that mistake myself before I started to trade with a little bit more discipline. You can't ignore the psychological factor of a lower price, but all investors should keep in mind that it is market cap that matters, not price.

Another thing that I like about ONTY is that Stimuvax is on the back end of Phase III trials while the most advanced product candidate in the Oncogenex pipeline is still looking to commence Phase III. That tells me that ONTY has the more immediate chance to post the higher percentage gains. Since the Oncogenex pipeline - which I consider to be superior to the Oncothyreon pipeline when it's all said and done - is still awaiting a Phase III trial, I don't see a double or a triple in price from the current levels anytime soon while I do think that ONTY has the chance to double or triple in the short to mid term - based on any updates or interim Phase III data for Stimuvax.

As for overall pipelines, I think that Oncogenex has the better potential for a long term payoff because of the amount of product candidates in the pipeline and the number of indications for which they are being investigated, but that is not to say that Stimuvax and the small molecule pipeline of Oncothyreon is any slouch either.

ONTY is currently in my buy zone - below five bucks - while I'll need to keep OGXI on my watch list for a little while to see how it trades before coming up with my buy price.

After the huge run in OGXI this year, I think that from this point moving forward for the short to mid term, ONTY has the better potential to post the higher percentage gains, but I also think that OGXI is still trading at a market cap low enough that allows for a continued move to the upside, but don't expect the monumental gains of earlier in the year.

For those that rode OGXI up from three dollars - congrats.

Disclosure: Long ONTY, no position OGXI.



BIEL.pk: A comment from Scott regarding BioElectronics:

I've dipped my toe in with BIEL, but these shares are pricey. With 900 million shares outstanding, they will have to clear 7 mm in net income before they can justify today's price. That will take a top-line boost of probably 10 times or more.

Scott

VFC's Take: Nice strategy, "dip your toe in" and see what happens. If the stock starts to run on positive FDA news, then you won't miss out and if it continues down, then you can average down if that's your liking. I like that strategy for entering into a stock.

While the shares are "pricey" now, this is a buy on the future - not on today or tomorrow - in my opinion. If the imminent FDA news is positive, then the potential for a dramatic increase in sales should also increase the stock price and - similar to CSUH - an increase in sales will catch up to what appears to be a "pricey" stock in the 'now' term.

Thanks for the input.

Disclosure: VFC is long BIEL.



NVD: A comment from Noah regarding NovaDel:

Hi VFC,
What are your thoughts on the PR from Novadel this morning? Do you think their worth buying back into since their goal is to have licenses in place for the approved drugs by end of the 2009 Fiscal Year?

Thanks,
Noah

VFC's Take: The quote from Friday's press release regarding the progress of the licensing agreements follows, as copied directly from the PR:

Mr. Ratoff noted that NovaDel is actively engaged in licensing its two approved drugs, NitroMist™ and ZolpiMist™, and the Company’s goal is that licenses will be in place by the end of this 2009 fiscal year. Mr. Ratoff indicated that if that objective is achieved, these products could be launched by the licensee as early as the third quarter of 2010.

What I find interesting about this comment from Mr. Ratoff is the fact that he sounds like one of us small investors speculating on what is possible from the country rather than discussing a definitive plan from the company - most notably "if" that objective is achieved and "could" be launched.

NovaDel has done nothing in the past year to lead me to believe that they're finally getting their cards in order, but for twenty five cents I would support the idea of a speculative buy - but I wouldn't go crazy. That's just my opinion.

I'm also curious as to why, if the licenses will be in place by the end of FY2009 we won't see the products on the market until the second half of 2010. Leads me to believe that there are production issues.

On an additional note, the company has no money on hand to advance the remaining pipeline at this time - as stated in Friday's PR.

This is one speculative stock that is trading where it should - in my opinion - but there is a chance that the stock could move up later this year after the announcement of the licensing agreements (if they ever materialize). As to how much upside potential exists, I'm not willing to make a bet right now because I have to believe that NovaDel's products are not in high demand - due to the lapsed time between FDA approval and a licensing agreement. However, with a market cap of only sixteen million, I think that a spike to a buck could be in order if the licensing agreements materialize and the time to product launch draws nearer.

I will pass on buying back into this one, but I could understand a speculative buy based on the potential to have some licensing agreements in place sometime soon.

Disclosure: No position.