While most the companies in the Toshuo Portfolio have what I consider to be excellent business prospects, things have deteriorated for three companies– Panacos Pharmaceuticals, Flamel Technologies, and Panera Bread.
Biotechs are my Achilles
The biotech industry is now about where the web was in 1997. It’s exciting. It’s getting pretty big. Fortunes are there, just waiting to be made. It’s a field that no aggressive investor would feel entirely okay about ignoring. The problem is that my own understanding of the regulatory and research side of the industry isn’t as good as it should be. I’ve been learning and doing the best I can to remedy this, but I’ve gotten burned on every single bio-tech investment I’ve made thus far. In the future, I’ll be talking with my mother, an M.D. who actually has first-hand experience with the industry, before making any buy decisions.
The company is actually in decent shape. Their beta-blocker drug, Coreg CR is performing well, and they have a few things in the pipeline. They’re not making much money from it, though. The problem is that Flamel had to rely on GlaxoSmithKlein to market the drug for them. Coreg CR was supposed to be a priority for Glaxo, but their sales people were too preoccupied with handling the fall-out from their whole debacle with the diabetes drug, Avandia. Basically, poor Flamel wasn’t big enough or important enough to avoid getting screwed.
I did buy more FLML stock at 9.1, long after I knew about this news. However, now that generics have taken hold in the market, things will be all the tougher for FLML. At its current price, I think Flamel will beat the market by a bit. I don’t want an investment thesis hanging on such a thin hope, though. Au revoir!
This story is even uglier. Their drug, the first of a new class of anti-HIV therapies called maturation inhibitors, could have been a blockbuster. However, the Phase 2 clinical trials for it haven’t been all that compelling. It isn’t managing that great of a viral load reduction in most patients. Worse still, its effectiveness is varying wildly across trial groups and Panacos doesn’t know why. Unfortunately for current investors, the price already reflects the company’s diminished prospects.
Panera has actually been doing well. Their revenue, earnings and growth are all in the black, and things have been rolling along nicely. It’s already up 27% since I purchased it, however, and commodity prices will make it extremely difficult for them to grow earnings very quickly for at least the next year or so. It was good while it lasted, but now it’s a bit stale and crusty.
There are better investments than these three companies, so I’ll be selling them on Monday to make room for some (hopefully) better choices.
05/19/2008 Sold 280 FLML @ 10.01 2,792.79
05/19/2008 Sold 50 PNRA @ 51.98 2,588.99
05/19/2008 Sold 600 PANC @ 0.4951 287.06
Remember, you are responsible for your own investment decisions! I own shares in Flamel, Panacos, and Panera at the time of this writing. See the disclaimer.