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Why I’m not buying Biovest (BVTI) — yet
Topics: news and views, penny stocksEvery year about this time, the biotech and pharma world turns its focus to the annual American Society of Clinical Oncologist (ASCO). I’m told by a few readers who concentrate in these stocks that the hit from this year’s meeting was a tiny pink sheet stock called Biovest (BVTI.PK).
Biovest presented in the plenary session of ASCO last Sunday – a notable achievement in its own right for a penny stock. According to Biovest,
an eight year pivotal, randomized, multi-center, double-blind, controlled Phase III clinical study has shown that BiovaxID® (personalized therapeutic anti-cancer vaccine) significantly prolonged disease-free survival in follicular non-Hodgkin’s lymphoma. The study, which is being featured at today’s American Society of Clinical Oncology (ASCO) Annual Meeting Plenary Session, found that patients who received BiovaxID experienced a median disease-free survival of 44.2 months compared to 30.6 months for those who received a control vaccine – an increase of 47 percent. In the study, with a median follow-up of 4.7 years, patients receiving BiovaxID experienced a 38% lower risk of disease recurrence compared to patients receiving the control vaccine. BiovaxID is the first ever vaccine targeting lymphoma to demonstrate such a disease-free survival benefit.
Some question marks remain. The study apparently used an unorthodox method of computing survival time (per Adam Feuerstein of TheStreet.com), and even then the survival differential was just under the threshold of establishing statistical significance.
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But there’s no denying that the market viewed the presentation positively. BVTI opened up on Monday up nearly 200% and traded over 5 million shares. And then it dropped. BVTI gave up about half of its gains during that first trading day, and another chunk in the days that followed. Biovest settled the week substantially above its pre-ASCO levels, but without the follow-through anticipated by Monday’s buyers.
That may be a problem. All of the people who bought on the ASCO news are now underwater, creating an overhang of resistance that will be tough to penetrate. Even if the treatment holds potential — and for now lets assume that it does — what is the catalyst to force shares higher over the next several weeks?
Two other wildcards concern me. First, the parent company and majority owner of Biovest, Accentia Biopharmaceuticals (ABPIQ.PK), is in bankruptcy. I don’t have a good sense of what will happen to the Biovest holdings in that restructuring. Second, even if Accentia was doing fine, Biovest will still need to raise money. That means more dilution — par for the course with biotechs, but still a negative incremental factor.
Bottom line: There may be a good trade here, but I’m going to wait for a better entry. The chart looks like it is headed below $.50 before finding support, and may even fill that gap down to $.35. I like the risk-reward a lot better at those levels. Maybe I’ll take a shot if it gets there, but for now I’m content to watch this one from the sidelines.
DISCLOSURE: No position.
Sir/Madam – You have to be kidding me. Lets review the facts.Both Accentia and Biovest went into bankruptcy in Nov 2008. Both continue to trade.The majority holder (hopkins capital and CEO o’donnell) have provided DIP financing to continue operating. This vacine has a 10 yaer history and 95% of the people are still living vs 50% with current treatment. Disease free survival increased well over one year – name me another cancer vaccine that is even close to that.No toxicity, little side effects, increase in PCR negative vs standard of care. Come on do your home work.
@steve: I understand a lot of people think the vaccine is going to be a huge hit. From my lay reading the data seemed positive, and my discussions with others more knowledgeable in these areas also suggested the vaccine has potential — which is why I am considering investing at a better entry point.
But I’m a trader and I consider timing to be just as important as stockpicking. Buying directly after major positive news hits is generally not a high percentage play. Are you suggesting that the data is so positive that the stock is unlikely to go down at all from here? Did you feel that way Monday? wrt future financings, do you believe there will be substantial dilution?
Do your homework and do some simple math, you are pickinig the wrong horse. BVTI is 75% owned by ABPIQ. ABPIQ has 51M shares, and BVTI has 97M shares. ABPIQ now at .40 and BVTI now at .61????
ABPIQ owes $32M in secured debt and 30M unsecured. BVTI owes 33.5M secured and 15M unsecured. Both are operating under chapter 11 with plans to emerge intact this fall, current with filings and listed. Partnerships in the works, sales through the Named Patient Program in EU = money to satisfy court with repayment schedule. Also a different drug Revimmune for MS in Partnership discussion and planned Phase 3 trial.
The very unusual upside here is because of the “Q.PK”. If it was not for this it would be trading more like DNDN and nowhere near where it is now. Once listed and Bio Analyst (just now watching and waiting) are able to report, we should be trading somewhere between $10-20 a share for ABPIQ. Both stocks will do well, but simple math will tell you ABPIQ is the horse you should be riding.
I predict that this will be your largest % mover over next 6 months. The “Q.PK” spefically is presenting a 4,000% move to $16.
Bottom line- don’t wait too long for better entry point looking at a few cents when it’s the dollars you should be looking at.
Your welcome
[...] a lot of emails and comments on Biovest and Accentia. Some suggest that I need to do more homework on the bankruptcy proceedings for these two [...]