I agree that it’s disappointing we can’t get independent analyst coverage for RVX. I attribute this to the stock being held mostly by a few large shareholders and the rest by Canadian retail investors. As I mentioned in my first post, there are two main ways to change this and gain the much needed exposure outside of the retail investment and medical research communities. Doing either of these things will have the added benefit of closing the gap between our current market valuation and the actual value of the company.

1.    Find some institutional investors to take a position in the company. Having a few biotech funds accumulate just a small position (relatively speaking) will drive the price much higher and having the “smart” money accumulate positions lends credibility to the science and would lead to some of their research sources picking up coverage and issuing reports. Management should be making regular presentations to the people with money in the investment community, and perhaps a few less to rooms full of doctors.

2.    Get a major BP on board with a 5-10% investment at a much higher price. Obviously if one of the big boys will buy in at $10/share, we would be off to the races. As stated in earlier presentations by RVX, prior research by the big investment banks pegged PCSK9 candidates and such in Phase 3 trials in the $5-10 Billion US dollar range. And management has said that in talks with BP they have agreed with their multi-billion dollar valuation scenarios. So at $10 per share they should be thrilled to get a 10% position at less than a billion US dollar valuation.

While the latest research is a bit of a fluff piece, I do agree with part of their simplistic valuation method. Here is a simple exercise taken from a statistical standpoint:

If you have one chance to flip a coin and if its heads you receive $10 and if its tails you receive $100. How much should you be willing to pay for the chance to flip the coin? You should be willing to pay anything less that the NPV of the coin flip which is $55. If you can pay $25 you are getting an incredible bargain and if you pay $10 you are getting a free chance to win $90.
If you apply the same logic to RVX, and assume they have a 50% chance of having a blockbuster drug, what should the market price of RVX currently be? I’ll leave it out for other members to do their own math, but using any reasonable numbers, I come up with multiples of the $12.50 price target.

One last comment on the 50K trade on Friday. Most likely someone in the US got excited and put in a buy order for 50K on the pinks. As shares were sold by the market maker (arbitrage computer) in the US they were simultaneously bought in Canada so the seller in the US and buyer in Canada were the same entity, and making a few hundred bucks in the process. Nice to have a decent size buy order come in, imagine if a fund wanted to buy a million shares!!