ImmunoCellular Therapeutics

The current biotech industry is riveting. Lately, I'm reading about all kinds of cool breakthrough cancer technologies taking the industry by storm (do yourself a favor and Google $PCYC and $GHDX. Full disclosure: I own both of these). While I am by no means an expert in this area, I continue to study the industry and I find the science amazing. Recently, I read a Seeking Alpha article on a company called ImmunoCellular Therapeutics (IMUC.OB). They specialize in immunotherapy, which is basically stimulating or training a patient's own immune system to fight whatever horrible disease he or she is facing. The company's lead drug candidate is ICT-107. Recently, Phase I results were simply amazing in it's ability to extend the life of patients facing an extremely deadly brain cancer called Glioblastoma. According to Wikipedia, with the current standard of care (SOC), "the median survival time from the time of diagnosis without any treatment is 3 months, but with treatment survival of 1–2 years is common".

What is so interesting about ICT-107 is that, in Phase I trials, 100% of patients treated survived past the first year and 40% were disease free after three years. Without the drug, 6% of patients lived past 3 years.

This story, about a man suffering with Glioblastoma, brings these Phase I results to a personal and tangible level. The article quotes Dr. Joseph C. Landolfi, Director of Neuroncology at JFK Brain Tumor Center:

“The brain tumor trial is testing a vaccine that is developed from the patient’s own blood,” Landolfi said. “We attach proteins to the patient’s immune cells and then inject it back into the patient, which then directs the body to attack the proteins on the tumor. It essentially mounts his body’s immune system to attack the tumor.”

A disclaimer: by no means am I a regular buyer of over-the-counter companies. And I despise hypers and promoters. However, I will tell you that today I bought 1000 shares of IMUC, based mainly on Phase I results for ICT-107. This stock is very risky, so this is money I am willing to throw away for the potential gains it could bring. As of right now, the company has enough cash to fund operations through 2013. If Phase II results are as promising as the Phase I, obviously this will change. An excerpt from flyonthewall.com illustrates what is happening now with Phase II trials:

ImmunoCellular provides update on Phase II ICT-107 Clinical Trial

ImmunoCellular Therapeutics has provided an updaet on clinical trial site activity and patient enrollment for its Phase II clinical trial of ICT-107, the Company's dendritic cell based cancer vaccine candidate targeting multiple tumor antigens for the treatment of glioblastoma multiforme. The Company has initiated the trial in 23 centers and has received Institutional Review Board approval from a total of 24 trial sites. The trial is expected to enroll approximately 160-200 patients to treat 102 patients with HLA-A1/A2 immunological subtypes. There are 115 patients enrolled in the study to date, ahead of the Company’s schedule. Enrollment for the trial is expected to be completed by the second quarter of 2012 and an interim analysis is expected when 50% of events have been observed. The Phase II trial of ICT-107 is a double-blind, placebo-controlled, 2:1 randomized study designed to evaluate the safety and efficacy of ICT-107 in patients with newly diagnosed GBM.

Technically, volume on the stock has exploded since early January. Also note that the stock seems to be holding above its 200 day moving average. Again, with stocks of this nature I am always very suspicious of manipulation and hype. So, it's definitely buyer beware. However, I feel that the trial results show that ImmunoCellular Therapeutics offers an exceptional risk to reward ratio *if* properly balanced in your overall portfolio.

UPDATE: Check out this interview with Dr. John S. Yu, the Chief Science Officer at ImmunoCellular.

Notable Insider Buys include the following:

Socius Capital Group - 2/13/2012
Terren S. Peizer

Ayer Capital Management - 1/20/2012
Jay Venkatesan

Information on the Phase II Clinical Trial for ICT-107 is available from ClinicalTrials.gov here.

The Case For Buying CLF Before Earnings

Proof That Valuation Metrics Matter

A Valuation Scoring System for S&P 5 Star Stocks

How much do valuation metrics matter in stock picking? It is a very important question considering how far the S&P 500 has come since the October 2011 lows. When scouting trades, my bread and butter has always been identifying high probability chart patterns and reviewing fundamentals to make sure a value component exists. However, at these lofty S&P levels, juicy chart patterns seem to be few and far between. Once a market begins trending in a stable low range environment (usually after a period of high volatility), a trader can easily get left behind simply because traditional setup patterns cease to exist.

So, to address the "lack of traditional chart patterns" in the market, I created a simple system that pushes fundamental analysis to the forefront of my stock selection criteria. I'm writing this blog entry because, along the way, I discovered something pretty cool which hopefully you can use. Let's get to it!

Via my Ameritrade stock screener, I created a list of 75 stocks rated "5 Stars" by Standard and Poors. This is S&P's highest rating and will serve as "safety filter" on my universe of stocks. Next, I loaded the stocks into Finviz here. My objective was to find the cheapest 5 star S&P stocks using various valuation metrics. I selected my metrics within Finviz, ran the screen, and downloaded the following spreadsheet (screenshot):

Using a simple ranking and scoring system, I gave each stock a rank/score for each valuation metric. For example, $HFC had the lowest Price/Earnings Growth (PEG) metric so I gave that stock a "1". The stock with the highest PEG was $CBL, so I gave it a "75". In other words, I computed a score for each stock across these 7 different valuation metrics:

• Price/Earnings
• Forward P/E
• PEG (price to earnings growth)
• Price/Sales
• Price/Book
• Price/Cash
• Price/Free Cash Flow

Then, I added up the total scores for each stock to get a "Composite Valuation Score" (see screenshot):

Finally, I sorted the stocks by my Composite Valuation Score. The lower the score, the cheaper the stock. I decided to add Year to Date performance to my spreadsheet and do a correlation between composite valuation and performance. And guess what I found? Yep, valuation does matter! The stocks that had a lower composite valuation score have *significantly* higher year to date performance. In other words, it pays to search for value.

Here are the top 20 cheapest 5 star S&P stocks:

Please feel free to ping me on StockTwits at PTSD_Trader if you would like a copy of the spreadsheet. I can't seem to figure out how to upload it via Blogger.com :)