Baltbear on Finance markets are like marshmallows

to complete the triple crown of pure stem stocks, let’s look at international stem cell stocks, isco.ob,
since the isco 10k was filed yesterday. the exact same metric used to give the most generous speculative value is in play on isco, actc and btx.

i note that i have been highly amused at the ever so expected reaction of actc true believers to the simple facts of the actc 10k. new or casual readers are invited to notice that i have never said to anyone “don’t buy actc.” i have said it’s a pure whore stock used to fund a cult. somehow, many people choose to be offended by that rather than deal with it, carry condoms, and get on with it.
prudent speculators use actual due diligence to learn the story behind the story, and keep those facts wrapped around their time with the whores.
de naturis, after a while any whore is worth her worth, julia roberts as pretty woman, or goldman sachs.
anyone wanting a quant for that can look at properly inflation adjusted charts for biotime, actc or isco.
“buy and hold” for biotime would be slightly less than flat. actc is a ski jump into nowhere. that has no effect on the millions of dollars made playing marbles, poker, craps or chicken poop bingo with the stock. in fact, the money made demonstrates that those games are exactly all that is going on.

but..whatever… the isco 10k:
sec issues: none. unlike btx.

isco tranched out enuff to run on for awhile, even as did the other 2.  isco is proud of its patents, just like the other 2. isco spent goodly $$ improving its plant, just as btx did.

book:
cash @ 1x
At December 31, 2010, our cash and cash equivalents totaled $5,782,027.
equipment @ 1x   the 10k shows ~185k. i’m rounding that up to $250k, since the 10k is discussing change, not total.
patents @ 3x
no royalties were received, i/p estate = 0.
i strongly note that i am bothered by that. and it has a a major effect on where i go from here.
specifically, i recall that isco put out a press release in 2010 talking about negotiating i/p leases into europe.
there was some serious “board” discussion about pricing the terms of that deal into the future value of isco. this was at the height of the “replace rabbits” chatter
there was never an 8k.
the 10k says there was never a deal.

in my pov that actuallly makes the isco i/p worth less than 0, and i am gonna price it that way: -$2mm.
sux for isco.  whatever.

sales x 50

:”We have recognized revenue from product sales of $1,121,164″
a necessary note on sales: “cost of sales for the year ended December 31, 2010 were $724,641 or 46% of sales, compared to $789,705 or 70% of sales for the year ended December 31, 2009. Cost of sales included, salaries related to manufacturing, third party manufacturing costs, raw materials, general laboratory supplies and an allocation of overhead.”
being old school, i prefer cost of goods be a separate item with cost of sales. can’t see it. on a positive side, this allows a certain kind of accuracy not visible when such costs are bloating g&a without any information about what generally is being admin’d.

book:
cash and physical ~ $6mm
i/p  = -$2mm x3 = -$6mm.
subtotal? $0.
sales @ 50x:  $56mm

o/s??
As of March 18, 2011, we had 75,689,728, shares of common stock outstanding,

74 cents. call it 3/4. that’s the “worth.”

can anybody trade isco into accumulation to a basis <3/4?

yup.
nibble, nibble, nibble.

is isco a rational choice for accumulation in the stem sector?
actc is much easier to accumulate @ worth.
as a multiple, btx trades farrrr higher than its worth,
making it somewhat easier.

which is least likely to implode from here?
isco.
which is most likely to have that 50x sales fantasy become dilution protection?
isco.
so, out of these 3 whores, which has the most teeth and the least std ?
isco.
my clients in isco have a basis @ ~1.
some have underwater trading positions averaging < 1 5/8.
my call for isco, made march 2010 was 2 1/2 by end of march 11.
it failed.
how come? the i/p is the answer.
can that change in a heartbeat?
u betcha.
could such a change take this puppy thru 3?
no problem. look at btx or actc.

a year from now, any rationality in these 3 stories will need tighter testing.
the one most likely to survive the stress testing?
isco.
how come? any change in its i/p status, combined with present rate of progress on skin care will expand the “worth” to close to mkt clearing price, and the whore chasers will thence explode the price.

Posted under business

the so-called pure plays in stem cells, “regenerative medicine” are biotime, on amex, and actc, on ob.

having taken a close look at btx lasat week, it seems only fair to look at actc. especiallly when actc is such a total rat.

i am going to use the same ridiculously optimistic metricks i used for btx: 1x cash and hard assets, plus 3x the rational book value of intellectual property, plus 50 times sales.

by way of comparison, gern trades for ~3x cash, or 170x sales. apple…hardly a trailing edge dinosaur trades at <3x sales, trades at 15x ebitda.

so to look at a “story stock”–where the question is what are the odds of there ever being ebitda–requires utterly irrational valuations at the present, as a way of speculating about the future.

here’s the highlight reel from the actc 10k:

intellectual property

:”Due to our current stage of development, our existing patent portfolio is not currently supporting a marketed product, so we will not suffer from any reduction in product revenue from patent expiration. Any actual products that we develop are expected to be supported by intellectual property covered by current patent applications that, if granted, would not expire for 20 years from the date first filed.”
plain english: not being amortised becuase there is nothing to amortised.
relationship with university of massachusets:
“We are currently behind on our payments of all UMass license fees, since 2008, and as such we are in breach of the license agreement. ”
:”We also agreed to make milestone payments to UMass of up to $1,630,000 upon the achievement of various development and commercialization milestones. Finally, we have agreed to pay UMass 18% of all sublicense income.”

incoming royaltys?
:”Exeter is required to pay an annual maintenance fee for the license, equal to $100,000 in 2005, increasing annually by $50,000 up to $500,000. Exeter’s obligation to pay the annual maintenance fee was suspended until certain intellectual property that is the subject of litigation, namely the matter styled University of Massachusetts v. James M. Robl and Phillipe Collas , Massachusetts Superior Court, Suffolk County, Docket No. 04-0445-BLS, was settled in dispute. Negotiations  are continuing ”

plain english? value 0.
:”We expect that Lifeline Exclusive License Agreement Number 1, as amended, will be further amended as a result of the Start Settlement and the settlement of University of Massachusetts and Advanced Cell Technology, Inc. v. Roslin Institute (Edinburgh), Geron Corporation and Exeter Life Sciences, Inc. , U.S. District Court for the District of Columbia (Case No. 1:05-cv-00706 RMU), and University of Massachusetts and Advanced Cell Technology, Inc. v. Roslin Institute (Edinburgh), Geron Corporation and Exeter Life Sciences, Inc. , U.S. District Court for the District of Columbia (Case No. 1:05-cv-00353 RMU).”
plain english? value 0..minus legal costs.
:”. Lifeline is required to pay us royalties equal to 6% of net sales of products and services covered by the license, and a minimum royalty fee of $25,000 in the first year, plus, commencing 12 months after the effective date of the agreement, additional minimum royalty fees in the amount of $7,500 at 12 months, $7,500 at 24 months, $6,875 at 36 months, and $15,000 annually thereafter. Lifeline also paid a license fee in the amount of $225,000 in cash on June 1, 2007.

:”We expect that Lifeline Exclusive License Agreement Number 3, as amended, will be further amended or terminated, as a result of the dissolution of Infigen and the acquisition by us of certain of the Infigen patent rights.”
plain  english? $750k worth of i/p…to be taken to bottom line @ 3x. as generous speculative value.

:”Start Licensing License - On August 30, 2006, we entered into a Settlement and License Agreement with UMass and Start Licensing, Inc. (indefinite license period). See description of this agreement above. Pursuant to this agreement, we granted Start Licensing a worldwide, exclusive, fully paid-up and royalty-free license, with the right to grant sublicenses, to certain patent rights for use in connection with all uses and applications in non-human animals. The agreement was reached in connection with the settlement of the patent interference actions. The terms of the agreement also includes an initial payment to us, which has been made, and certain milestone payments. In addition, under the agreement, Start, Geron Corporation and Roslin Institute (”Roslin”) each agree not to sue us under certain patent applications owned by Roslin.”
plain english? value 0. but, for the sake of absolute generosity based on future speculations by “start”..$100 k…3x to bottom line.

:”Terumo Agreement - Diacrin, Inc. and Terumo Corporation entered into a development and license agreement on September 4, 2002 (indefinite license period)”….”The milestone consisted of a Phase I clinical trial for the Myoblast Program in Japan and was extended for two years. This agreement is no longer in effect as of December 31, 2010. ”
value? 0.
:”Transition Holdings, Inc. - On December 18, 2008, we entered into a license agreement with an Ireland-based investor, Transition Holdings Inc. (“Transition”), for certain of our non-core technology (indefinite license period). This license was terminated effective February 9, 2011. ”
:”Stem Cell & Regenerative Medicine International, Inc. - On December 1, 2008, the Company and CHA Bio & Diostech Co., Ltd. (“CHA”), a leading Korean-based biotechnology company focused on the development of stem cell technologies, formed an international joint venture. The new company, Stem Cell & Regenerative Medicine International, Inc. (“SCRMI”), will develop human blood cells and other clinical therapies based on our Hemangioblast Program, one of our core technologies. SCRMI has agreed to pay the Company fee of $500,000 for an exclusive, worldwide, license to the Hemangioblast Program (indefinite license period). ”
plain english? discounted cash flow of $500k over 20years.
most generous analysis? $100k to bottom line.
:”CHA – On May 21, 2009, we have entered into a licensing agreement (indefinite license period) ”
most generous pov? $300k a year towards gross sales, 50x.

:”In 2008, we entered into a license agreement (indefinite license period) whereby we licensed to Embryome Sciences certain cell processing technologies, including the technology licensed from Kirin Beer.We received an up-front payment of $470,000 and will receive royalties from future sales of product that utilizes the technologies from the licenses. ”
so..does actc retain the strong “brain trust” factor that developed all this i/p?
:”In 2008, we entered into a new partnership (CHA) and as a result, we are subject to 3rd party interests (see RISKS RELATED TO THIRD PARTY RELIANCE) and control issues, not the least of which relates to certain of our employees no longer being exclusively managed by us. We therefore could be at risk for losing key employees. Additionally substantial operating and working capital will be required and there is no assurance that CHA Biotech Co. limited, partner in our joint venture, will be able to fund their requirements. ”

doe actc expect any changes?
to cover its liability to the sec, actc made sure it put this sentence into bold faced italics:
:”Over the last two years we have narrowed our potential product pool to focusing on our Retinal Program as well as the applications of our I.P.S. technology, which will limit our revenue sources. ”
fact: the retinal program was authorised by the fda under “orphan” status–which includes the fda’s accountants calculating the effort as being a money losing proposition.

so, what does actc actually think about the stability of its intellectual property?
:”Risks Related to Intellectual Property

Our business is highly dependent upon maintaining licenses with respect to key technology.

Several of the key patents we utilize are licensed to us by third parties. These licenses are subject to termination under certain circumstances (including, for example, our>>> failure to make minimum royalty payments or to timely achieve development and commercialization benchmarks<<<<). The loss of any of such licenses, or the conversion of such licenses to non-exclusive licenses, could harm our operations and/or enhance the prospects of our competitors.

Certain of these licenses also contain restrictions, such as limitations on our ability to grant sublicenses that could materially interfere with our ability to generate revenue through the licensing or sale to third parties of important and valuable technologies that we have, for strategic reasons, elected not to pursue directly. The possibility exists that in the future we will require further licenses to complete and/or commercialize our proposed products. We cannot assure you that we will be able to acquire any such licenses on a commercially viable basis. ”
s actc admits, it’s already falling behond, and states it has no plans for catching up.

what does actc actually have as the basis of its intellectual property estate??
:”Certain parts of our know-how and technology are not patentable. To protect our proprietary position in such know-how and technology, we intend to require all employees, consultants, advisors and collaborators to enter into confidentiality and invention ownership agreements with us. We cannot assure you, however, that these agreements will provide meaningful protection for our trade secrets, ”
plain english? value 0.
as actc itself says:
:”. Our success will depend, to a substantial degree, on our ability to obtain and enforce patent protection for our products, preserve any trade secrets and operate without infringing the proprietary rights of others. We cannot assure you that”
:”We are not in full compliance with some of our license agreements.

We are not in full compliance with some of our licenses (see Our Intellectual Property in the DESCRIPTION OF BUSINESS section of this prospectus) and due to limited financial resources we cannot guarantee that we will regain full compliance status. If we are unable to be in compliance with our license agreements, our business may be harmed.”

the california welfare checks, the cirm grants:
“For-profit entities may be prohibited from benefiting from grant funding .

There has been much publicity about grant resources for stem cell research, including Proposition 71 in California.  While the California Institute CIRM has provided grant funds to some for-profit entities, there is no guarantee that it will continue to do so, particularly given the state’s current budgetary conditions.”

yeah. crony capitalism may be reduced to the level of the good ole boys alma mater’s getting welfare…but not their landlords, suits, and cult members.
endless dilution???
:”As of December 31, 2010, on an aggregated basis our debt and preferred stock financings may result in being converted into 6,400,425 shares of our common stock, and warrants and options that may be converted into approximately 183,307,361 shares of our common stock. ”

how does this dawg plan on keeping the doors open??

:”We plan to fund our operations for the next twelve months primarily from the following financings:As of December 31, 2010, $1,581,834 is available to us upon the sale of our Series A-1 preferred stock for a maximum placement commitment of $5 million.
·

As of December 31, 2010, $21 million is available to us upon the sale of our Series C preferred stock for a maximum placement commitment of $25 million. We continue to repay our debt financings in shares of common stock, enabling us to use our cash resources to fund our operations.

so… with all the terrain discussed, now there can be motion towards valuation.

revenues? i’m calling it all sales @ 50x.
$725,044
cash @ 1x.
$400k  for property and future royalty..@ a wildly generous 3x    $1.2 mm

subtotal?  $2mm.

i/p listed above@3x??? $2.5mm.
i/p listed above as towards future sales @ 50x???
$1.5mm.
subtotal? $4mm

grand total?? $6,000,000. ….$6mm.
that’s all that is here.
what is the o/s??
1,218,190,921

price per share??
$0.005

that’s what actc is “worth.” no more. nada.
remove the corspicle cultists, the mikey cultists,
the manipulation, and the play value of actc sotck as a ticket for chickenpoop bingo, and that is what is there. tops.
can a chickenpoop bingo player win on trading actc.ob??
only so long as every rounds trip has a basis < $0.005 and adds whatever nut is required for risk premium.
a look at the actc.ob yhoo boards gives clear evidence over the years that this is exactly what the “actc” “longs” are doing….as the the daily tape.
the vol speaks for itself.

towards gaap?
as laffable as that is, it’s a factor.
:”  As of December 31, 2010, we have an accumulated deficit of $180,949,523 and a stockholders’ deficit of $23,653,090. ”

the f/a value of this whore will remain @ 0 forever.

it  is only the “wild speculation” value that reaches $0.005

everything above that is chicken poop bingo.

Posted under business

sec filings:
in the 10k biotime asserts its reasoning in methodology is “per sec guidelines”.
however, on aug3, 2010, biotime was forced to acknowledge in writing that this is an unwarranted assumption: “the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.”

http://sec.gov/Archives/edgar/data/876343/000087634311000014/filename1.htm

does biotime care?
from today’s 10k:
:”Critical Accounting Policies

Revenue recognition - We comply with SEC Staff Accounting Bulletin guidance on revenue recognition.”

my conclusion? the same sec that couldn’t be bothered to checck bernie madoff’s dtc records has reasons to look at how biotime keeps its books.

heading towards revenue..not achieving it:
:”In 2011, ReCyte Therapeutics intends to begin to build a near-term revenue business by offering a service to reverse the developmental aging of human cells, and to generate blood and vascular progenitors, for cell banking purposes.”

in other words, “recyte” which has been priced into the winner’s column for 2 years, a substantial part of the trip from 2 to 4+ and amex listing, has no actual business in place after 2 years.
instead, having pulled in enough $millions from stockholders, it “intends” to “begin” something or other.
not begin it.
biotime asia:
very positive information for btx longs.
:”NMMI may increase its percentage ownership interest in BioTime Asia to up to 39% if”….
6 years out there is a $100mm gross in asia, or an ind in 2 years.
so…6 years from now (assuming 30% towards ebitda) biotime asia might be sending $30mm a year
back to alameda, for maybe 40 cents a share to the top line.
that would price biotime ~$6 —6 years from now.
an excellent reason to accumulate <2 net now.

now:
since however, btx is trading now at some proce or another, 2010’s actual numbers are the ones that count:
:”During 2010 … we spent $7,892,024,” on r&d.
:”Our net losses for the fiscal year ended December 31, 2010, … $10,103,872.
:”Future clinical trials of new therapeutic products will be very expensive and will take years to complete. ”
of course btx may find partners, tho it has a serious history of not being able to keep them.
but, very directly, to the extend there is partnership, there is reduced revenue upon success.
what is left to measure is btx’s ability to succeed on its own.
in what environment?
:”
Competing products are being manufactured and marketed by established pharmaceutical companies
“is a risk that our competitors may succeed at developing safer or more effective products that could render our products and technologies obsolete or noncompetitive.”
yup. indeed.
while mikey “intends to begin”, others are >>doing <<, using far better presuppositions and ontologival models, and are as a result in the marketplace.
:”
so???
:”It is likely that additional sales of equity or debt securities will be required to meet our short-term capital needs, unless we receive substantial revenues from the sale of our new products “…which, as noted, will not be happening anytime near today.

so… how long…how long, til that old train be gone??
:”At December 31, 2010, we had $33,324,924 of cash and cash equivalents on hand. ”

so, what is biotime “worth”"??

using the model i built a couple of weeks ago,
1x tangible book, plus
3x intangible >plus<
8x hex sales, >>>plus<<
50x stem sales
(and i cheerfully note that ben graham is rolling in his grave, but this is after all, a “story stock”)

$35mm
$<1mm
$5mm
—–
$41 mm
shares??? 40mm.

$1 a share.

so: a price range… $1-2. that’s all there is.

those who like this puppy, who buy the story for whatever corpsicle, stem cell, transhumanist reasons,
whatever personal health problems that might lead them to want biotime to succeed, that’s what’s there.

the rest is whore stock gaming, betting on ball games for the sake of the bet, blue devils vs. whatever.
there’s $$$ to be accumulated playing that game.
but that is >>not<< prudent speculation.
this is perhaps made utterly clear by looking at hextend, which works. hextend is a great product.

however, btx stock traded in the amex is not hextend. what does hextend do to prevent trauma in a portfolio?
hextend:
:”This change was made due to the fact that too much of the product was being distributed to ground troops for inclusion in field packs and was going unused beyond the expiration date, so a different pattern of distribution was deemed advisable. ”
since the >>primary<< benefit of hextend, the unique hypercalcemic electrolytes’ effect of trauma cascade is being deemed to be not cost efficient,
hextend is in trouble.
how come? assuming a cost per unit of <$18, and a seriously optimistic 6/1 waste ratio, the military is saying it sees < $126 worth of improved survivability and los in the product.
are there other indicators??
:”A Phase III clinical trial using Hextend in surgery, funded by Maruishi, was conducted in Japan, but work on the trial has not been completed. Due to the withdrawal of Maruishi “…
if the trials were at all favourable would maruishi have quit???
:”Summit will need to find a replacement sublicensee or other source of funding”
and >>>why<<< isn’t biotime paying for it???
the olny business based rational reason is that betting on a favourable outcome would generate less revenue than would be spent.
given this  week in tokyo, if hextend worked in surgery, would the japanese be desperate for it?
does the damage tally from japan show that the japanese are always willing to spend to ensure a better outcome in a crisis? clearly yes. the damage from the events is far less than it would have been in the usa, specificallly becuase of preventative spending over 60 years.

hextend revenues total world wide for 2010?
$1.2mm.. with the patent life on the serious downside.

biotime stock prospects?? about like hextend’s.

Posted under business

the prudent speculator values seeing and prudence equally. the last thing he looks to see is whether “everybody’s getting in, act now.”
those ops may happen, as whore stocks, which can yield excellent results–or not–w/ play $.
given a choice between self-inducing good feelings with $1k on roulette at main street station, or $1k on a “miracle cure vaccine” at the .obb, the prudent speculator will split the bet.
the prudent speculator >never< chases a stock.
will many ops pass on by as a result? ubetchya.

so, to this update, i start by noting that i have been waiting since last sept to advise clients that it was time to go in like it matters. a massively large name–brk–was already there. it woulda been easy to say it’s good enuff for buffet, so it’s good enuff for my clients. but oddly enuff, none of my clients has a $38bb cash pad to help with the patience factor–even tho i advise being “more in cash” than brk, in order to avoid the real opportunity cost–reserves of firepower.
the play? byddy.pk.
buffet just announced he’s still comfortable. my dd suggests that byd is in fact about 3/4 year further along on the biz plan than it was a  1/2 year ago.
and my filtres/numbers line up @ this range.
who/what/why??
much easier to just give a link:

betting on green

2 ways to buy this puppy:
byddf is the “actual share adr”.
unless you think u are smarter than buffet, no reason to bother.
byddy is a citibank (sigh) adr. easily moveable, like any listed stock.
up/downside? the stronger renminbi will, in my pov, become additional up. the generic craziness of the chinese stock mkts induces volatiity, and i see a chinese “housing bubble” about 18mos out.

so…where..again?

clients in byddy.pk 20110228 @ 8 1/16.
goals and time frame? shoot for beating buffet, in the same time frame.
this will involve additional buying 2nd position, 3rd defensive, and most likely random chunks of trading positions to keep the net basis dropping, and 20% returns from recycling the dd.

o…hehe, additional fd: clients in byd (the main street station reference) as well.

Posted under business, markets