Common Cents Investment GroupMonday February 24th

Biotechnology & Trading the News

AgendaMarket UpdatesCCIG Leadership ElectionsBitCoin Update - WeiyiTrading the News - LindseyBiotechnology - Max

Market Update

Investopedia Simulator GameWill end March 31st, 2014Top 3 winners will receive book(s)

on investing

2014U.S. Equity Markets +2%Random Equity Picks +5%

Leadership ElectionsApply for 2014-2015 school yearApplications due March 17th (right

before Spring Break)Great resume boosterLearn more about investing

BitCoin Update

Weiyi Xie

Old News on BitCoins “Chase-ing Bitcoin: Is JPM Preparing To Unveil Its Own

Electronic Currency?”http://www.zerohedge.com/news/2013-12-10/chasing-bitcoin-jpm-preparing-unveil-its-own-electronic-currency

News: 7/11 Convenience Store in Mexico decided to accept BitCoin.  (But some of us are still talking about whether bitcoin is ponzi ...)

http://www.cryptocoinsnews.com/2014/02/01/bitcoin-accepted-7-eleven-mexico/

Wall Street's first ever Bitcoin report (December 2013) from Bank of America Merrill Lynch

http://cryptome.org/2013/12/boa-bitcoin.pdf

About BitCoin Investment Funds, earning 700% within 2013 http://

finance.yahoo.com/news/secondmarket-ceo-wall-street-put-203000747.html

“Recession-Plagued Nation Demands New Bubble To Invest In”

http://www.theonion.com/articles/recessionplagued-nation-demands-new-bubble-to-inve,2486/

Debates on Risks of BitCoinWhat if the government doesn’t

accept it?Ideology: Do you trust the

centralization / centralized government or not?

Risk on BitCoin: 51% attackRisk on bitcoins: price variability

Valuation of bitcoin

Functions of BitCoinThree Directions:1. Inflation protection2. e-business (PayPal, Visa, MasterCard, American Express)3. International money transfer(Western Union, MoneyGram, SWIFT, ACH)

Black Market?Regulation?

Trading on News

Lindsey Kathmann

Trading on the NewsAll is speculative

◦How much of a risk are you willing to take Make money on people reacting to bad

newsBetter for short term trades

◦Buy before estimated positive earning: speculative increase

◦Buy after bad earnings: “Sick puppy”Pay attention to:

◦Stocks near 52 week low◦Potential Earnings◦Up and coming industries/stocks

Where to look

Groupon (GRPN)Went down 22% in 1 dayWHY?

GRPN Coupon business deteriorating, so focusing on

physical goods Reorganizing the business can hurt their profit for an

extended period of time Groupon experienced high growth in 2013

◦ Investors question whether reorganization of the business will be successful

American Apparel (AAP)

Honda (HMC) News: Reported near 52 week low Why?

◦ Ford has become more competitive◦ Anti-Japanese sentiments in China

Why is it a good time to buy?◦ December 2013: able to grow its sales in China by 60%

Show acceptance of Honda globally

◦ Honda was in the negative column for January Only down 2% vs 7% industry average CR-V had a 2.4% sales increase

◦ Introduced an Accord in all electric and gas-electric hybrid model for 2015

◦ Priced at 91% book value

Potentially Massive Moving Stocks this Week

SandRidge Energy (SD)SandRidge Energy, an Oklahoma-based oil

and gas company. Some disappointment over the past year

◦ Paid to acquire land in the Gulf of Mexico Determined there wasn't enough available in the region

to continue drilling

SandRidge is now focusing intensely on its operations in the mid-continent: Mississippi, Kansas, Oklahoma, and North Dakota

Many believe this is where the real organic growth can come from for the company

2 Key Variables to make or break stock prices:◦ Underlying price of the commodities-

SandRidge is selling: gas and oil◦ How well the company did in predicting is

validated reserves

Biotechnology & Pharmaceuticals

Max Layman

iShares Nasdaq Biotechnology [IBB]: 88% (1-yr)

CharacteristicsHuge advances in medical

technology in recent yearsObama Care High Risk – High Reward IndustryFew companies are profitable319 Biotech companies143 Pharmaceutical companies

Size MattersSmall Companies

◦Make it or break it◦Operate without profit◦May issue shares to raise capital◦Acquisition target

Big Companies◦Not gaining FDA approval doesn’t

destroy company

3 Investment StrategiesFDA approval

◦Trade in anticipation of drug approval

Possible Acquisition Targets◦Invest in small company with

proven drug

Fundamental Investment◦Invest in large company with large

portfolio of drugs

Approval ProcessPhase I

◦Test on humans◦Determine if side effects are serious

Phase II◦Effectiveness at predetermined

dosesPhase III

◦Compared to existing drugs◦Blind tests◦Is it effective, safe, and better than

current treatments?

What Type of Drug is it?Cancer?Gastro-Intestinal?Headaches?Diabetes?Heart Disease?Ruconest for hereditary

angioedema?

FDA Drug Approval Decision CalendarMarch 21st 2014

◦Celgene (CELG) - Apremilast for psoriatic arthritis

April 15th 2014◦Mankind (MNKD) - Afrezza for Type 1 and

2 diabetes ◦Glaxo Smith Kline (GSK) - Abiglutide for

diabetesMay 5th 2014

◦AstraZeneca (AZN) - Epanova for hypercholesterolemia

Example 1 of Approval

Approval

Example 2 of Approval

ApprovalPre-Decision Run

Up

Approval Not Given

No Approval

Pre-Decision Run

Up

Oxygen Biotherapeutics [OXBT]

FDA granted fast track for Levosimendan ◦Drug reduces morbidity in patients

who have undergone cardiac surgery◦Already approved in 50 countries

Phase III trials start in June 2014◦Single successful trial needed for

apporoval◦Market Cap $65M

Oxygen Biotherapeutics [OXBT]

Acquisition TargetsSmall Cap companiesAlready have drug approval

Acquisition Targets – Example 1Galena Biopharma [GALE]◦FDA approved pain medicine ◦Partnership with Teva Pharmaceuticals ◦Pipeline of drugs

Acquisition Targets – Example 2Zogenix [ZGNX]◦FDA approved pain medicine

Looking for Good FundamentalsReturn on Assets > 0Return on Equity > 0Return on Investment > 0Debt/Equity <1Operating Margin > 15%Price/Earnings > 0Performance [ttm] > 0

Results

CELG – JAZZ – PRGO – QCOR – UTHR

Looking For Good Fundamentals