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Phil’s Stock World – Vegas Style

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Greetings members….and welcome back from a fabulous time in Vegas, and then a little time for a Thanksgiving filled with friends and family. 

PSW in Vegas had a great turn out, and lots of questions were asked and answered by Phil, Craigzooka, Ron and Pharm.  A very big thanks to Savi and LVModa for making the time spent efficient and productive!  Now, on to a summary of the presentations.

As always, for any new members, things started off with how to manage a portfolio.   The amount that the portfolio has in it is not important, it is how those funds are deployed.  When first joining PSW, many think that they should jump right in and start trading with Phil and the like, as every trade appears like a winner.  But, that is not what the board is about….it is about sustaining our funds, and letting it grow through time.

With that in mind, The Man Who Planted Trees is where to start the PSW experience.



Instead of writing a summary about the video, take the time to watch it.  Think about its message, and how it relates to your investing style.

Being in Vegas, Phil pointed out that the city was built on "being the house."  The stock market is nothing more than gambling.  One 'invests' in companies 'betting' that the value of that investment will grow with time.  If one invests in a stock, why not collect rent on that investment – selling calls and puts against the position.  If the company pays a dividend, then that is an added bonus.  By selling 'premium,' one is being the house.  When selling the puts, though, it is important to remember that one better 'damn' well want to own the stock at that price, or have a counter move to buffer any potential moves in the stock price.  Hence, the buy-write method, where one can own the stock for a 20% discount.

This is a simple way to invest (gamble), and it is good to re-evaluate every month or so if the positions are long term buy-writes – meaning out 3 mo or more.

A side note:  Apple (AAPL) was a mainstay of many conversations, and it is my personal belief that investors (gamblers) should stay away from this stock.  It causes way too many sleepless nights on counter-moves against a position…..just my opinion, as there are so many better ways to invest.

Take away advice:

  • be the house – sell premium
  • never invest over 50% of funds – leave cash around to deploy for better entries
  • start investing in companies with a 25% allocation.  If the goal is to own 400 shares of a company, buy 100 shares, and
  • implement the buy-write (catch the theme?)
  • re-evaluate every 3-6 mo. Don't fall in love with a company….
  • no more than 10 to 15 investments at any one time.  Larger numbers cloud judgement and become more time consuming to handle.

Craigzooka discussed a portfolio he started at the beginning of 2012 (discussed at PSW Las Vegas 2011) – The IRA Portfolio.  In essence, it is buying a stock and selling a call – selling premium.  The rules were (using Think or Swim Platform Scan Tab):

  • Start with a 1/4 or 1/5 allocation of a stock that one wants to own
  • Stock must have a 1% dividend yield
  • Options must trade in penny increments
  • Volatility must be 25%
  • Call sold must pay 2% of stock price in the proceeding month, otherwise roll out 2 months.
  • If the stock goes down, and the 1 or 2 months of call premium do not pay for the stock price, double down on the stock.

The example used was Arch Coal (ACI).  Over the past year, the stock has gone down 50%, but using the above methods, the stock is now within 5% of its total cost in the account. 

Pharmboy presented a few items, including his most recent pick to compete in the prostate cancer treatment field.  Some statistics about PC:

  • About 2M men are living with PC
  • About 241,740 new cases of PC will be diagnosed
  • About 28,170 men will die of PC
  • About 1 man in 6 will be diagnosed with PC during his lifetime.
  • PC occurs mainly in older men. Nearly two thirds are diagnosed in men aged 65 or older, and it is rare before age 40. The average age at the time of diagnosis is about 67.
  • PC is the second leading cause of cancer death in American men, behind only lung cancer. About 1 man in 36 will die of prostate cancer.
  • PC can be a serious disease, but most men diagnosed with prostate cancer do not die from it. In fact, more than 2.5 million men in the United States who have been diagnosed with prostate cancer at some point are still alive today
  • PC market is growing, and is expected to hit $7.8B by 2015.

There are many different treatments for PC, and they are noted here.  The more up and coming ones are:

  • JNJ has Zytiga, a testosterone synthesis inhibitor, that will soon compete with Medivation/Astellas Xtandi, and androgen receptor inhibitor.  These are projected to be $1B drugs.  A private company called Aragon also has a drug that is in competition with both of these and supposedly best in class (Medivation sued UCLA where both Aragon and Medivation's drugs were borne….but word is they are losing the battle).
  • High-intensity focused ultrasound (HIFU) where careful selection of tumors, as small as a grain of rice, within the prostate gland and targeting them with highly focused ultrasound to heat them and destroy them. More here
  • Other drugs, including SNY's Taxotere (docetaxel), an anti-mitotic chemotherapy, has been the first treatment choice for mCRPC patients. Before hitting the patent cliff in 2010, Taxotere accounted for 23% of the total sales of prostate cancer drugs. It was the first chemotherapy shown to extend survival rates of hormone refractory prostate cancer patients, with median overall survival of 18.9 months compared to 16.5 months for mitoxantrone (p<0.001) in a randomized, controlled trial.

Focusing on the tubulin treatments, this company is using the targeted prostate-specific membrane antigen (PSMA) monoclonal antibody (mAb) along with monomethyl-auristatin-E (MMAE).  The company is Progenics Pharmaceuticals (PGNX). 

Tubulin is a protein that allows cells to 'move' and take shape.  The protein in is in flux, as it forms and disassociates.  It also helps in cell division.  Many cancer drugs help either 'stabilize' (eg, Taxol) or inhibit tubulin from associating (e.g., vinca alkaloids).  The below cartoons show tubulin's basic structure and the second is a cell stained for tubulin (blue is nucleus, green is tubulin).  If this cell becomes frozen by treatment of an inhibitor (e.g. MMAE in this case), the cell will undergo programmed cell death (i.e., apoptosis).

PGNX's drug is targets PC using AMGN's technology for PSMA, and then the mAb is taken into the cell that then delivers its payload (i.e., MMAE) to destroy the cancer cell.  Think of it as a bunker buster bomb!

The researchers detected anti-tumour activity among the patients who were treated at the higher doses. About half of the patients who received doses of 1.8 mg/kg or more showed either a 50% or more reduction in PSA levels, or a fall in CTC in the blood to less than five cells per 7.5 ml of blood, or both.

The drug was generally well tolerated by patients, although levels of white blood cells were significantly reduced (neutropenia) at the highest dose of 2.8 mg/kg and one patient died. The researchers say the cause of the death is unclear.

Prof Petrylak said: "These results show that PSMA ADC has anti-tumour activity in patients who have failed up to two prior chemotherapies and hormone therapy. We have initiated a phase II trial of up to 75 patients in which the recommended dose will be 2.5 mg/kg. This new trial will evaluate responses in PSA and CTC; it will evaluate control of metastases in bone, internal organs and lymph nodes; and it will look at the effect on pain. Safety also will be assessed.

PGNX had a FDA Complete Response letter in July 2012 for Relistor, which caused the stock to plunge, but recently insiders are buying, and the Phase 2 studies have started for PSMA ADC, and there are good days ahead for the stock.

Other information presented by Pharm were:

  • Medical device companies to watch are VOLC and VAR.  It is my belief that this will be one of the hottest areas for 2013.
  • Some brief technical analysis data (game for playing is here).

PSW Las Vegas was a big hit, and it is our hope that everyone found it informative.  Let's see if we can do it all again next year!

-  Pharm

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  1. Thanks for the recap Pharm

  2. thanks Pharm.  

  3. thanks Pharm