Year: 2005

DRUGS

Walter Kirn, guest-blogging for Andrew Sullivan, nails it:

SURE I INHALED. This morning on C-SPAN a caller asked me, after I’d told my seeing-Ted-Kennedy-soused tale, if it bothered me that George W. did cocaine once, or has been alleged to, or whatever. And I said it did, to the caller’s apparent surprise. It also bothers me that Al Gore could admit to marijuana use the way he did while running for president. My problem has nothing to do with the drugs themselves, though, or the use of them, but by the hypocrisy. How come candidates get to admit to crimes that, when they’re elected, they put others in jail for but have not been punished for themselves? The idea of guys who’ve slipped the noose, and are willing to publicly admit it, putting others in the noose — by the thousands and thousands — turns my stomach. To my mind, there’s no more vivid demonstration that the drug laws are a cruel farce.

The next time a presidential candidate makes his ritual drug confession, I think they should be given a choice: serve out the prison term or pay the fine that applied when they offended or recuse themselves and their administration from enforcing the same laws. Better yet, let them commit to changing the laws that they were fortunate enough not to have been caught breaking. Fair? I think so.

GENERIC DRUGS

So I’m brushing my teeth listening to WCBS and hear an ad from the Food and Drug Administration touting generics and urging us to visit the FDA website and learn more. E.g.:

A generic drug is identical, or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price. According to the Congressional Budget Office, generic drugs save consumers an estimated $8 to $10 billion a year at retail pharmacies. Even more billions are saved when hospitals use generics.

Which brings us, of course, to . . .

NTMD

The stock slipped to $19.06 Friday, giving it a market cap of ‘only’ $590 million.

Big-name full-service brokerage firms still like it. For example, it is recommended by UBS Securities, whose research department issued an assessment Thursday with a target price of $28. In part:

We are beginning daily tracking of BiDil IMS prescriptions: While we recognize the shortfalls of daily prescription monitoring, we believe this research may offer some visibility into BiDil’s initial uptake. That said, NTMD expects to distribute 350,000 samples and 20,000 vouchers for BiDil, which we believe may cloud early IMS data. We believe a more accurate picture of BiDil’s prescription run-rate could develop in late 3Q or early 4Q.

Current 7-day rolling TRx and NRx Averages: As of 8/15, the 7-day rolling averages for BiDil total and new prescriptions (TRx/NRx) are 16.7 and 15.9, respectively. Assuming 180 pills per TRx and $1.80 per pill, this equates to an annual sales run-rate of $1.98 MM. BiDil was launched on 7/1.

So six weeks after launch, doctors nationwide are prescribing BiDil for an average of about 16 new patients a day. (Not 16 new patients per doctor, mind you, which would be staggeringly good – 16 new patients for the whole country.)

What we don’t know is how many of those 16 prescriptions are going to low-income, uninsured patients, to whom Nitromed has promised the drug free; nor how many may ultimately be switched by insurers from BiDil to its generic equivalent.

The stock’s proponents are unconcerned about the generic alternative for three reasons:

First, they note rightly that people are more likely to ‘comply’ with their doctors’ orders if they have to take only one pill rather than two. And because we are talking about a potentially fatal disease like congestive heart failure, where it’s important to have the best possible compliance, they believe money will be no object.

But I read the other day that General Motors is the nation’s largest health care provider, covering 1.1 million employees and retirees – and that GM is in rough financial shape largely because of the cost of health care. Are they – to take this one example – going to say, ‘Sure, we’ll cover the $2,000 a year combo pill instead of the $300 a year generic alternative?’ Or might they say, ‘Sorry. Times are tough. You need to take two pills instead of one.’

I don’t profess to know, but I think it’s a fair question.

Second, bulls point out that only one of the two generics is currently available in exactly the same dosage as contained in the combo pill. For the other, your doctor might either have to settle for a slightly higher or lower dosage, or tell you something like, ‘take a whole one in the morning and evening, but at mid-day, take just half.’

But might the generic drug manufacturers not simply start offering this drug in the same dosage as BiDil?

I don’t profess to know, but I think it, too, is a fair question.

Finally, they believe that the company’s patent will prevent people from being switched from BiDil to the generic alternative.

I know almost as little about law as I do about medicine, but my guess is that this may be a stretch.

Yes, the patent might hold up against a generic drug manufacturer that itself started combining these two pills into one. I can imagine how NTMD’s patent could deter that.

But it’s hard for me to see that doctors will have any practical liability for patent infringement if they choose to prescribe the combo. Or that health insurers will balk at substituting perfectly legal generics that are already on the market and have been widely prescribed in combination for quite a while now.

UBS seems to assume there is zero risk of widespread generic substitution. All 16 new patients a day will be paying full price.

And maybe they will. And maybe there will one day be enough patients on BiDil for the company to break even – or make a profit sufficient to justify the $590 million market cap. But I’m holding on to my puts.

AND IT’S ONE, TWO, THREE, WHAT ARE WE FIGHTING FOR?

It seems women and others may be worse off under the new Iraqi Constitution than they were under Saddam. We appear to be creating a fundamentalist Islamic state. Doug Ireland writes:

If the Bush administration brokered a deal in Occupied Iraq to enshrine Islamic law as the guiding principle of the new Iraqi Constitution, you’d think it would be headline news in the U.S. media, wouldn’t you? Well, that’s what has happened — yet you can search the Sunday papers in vain to find this sell-out to the Islamists clearly portrayed — or, in some cases, even mentioned. . . .

Tomorrow: A Great New TV Gadget

Finally! Back to politics. But first . . .

GARGLE

Harmless fun. Click here to make your own Google logo. (Takes 3 seconds.) Or here to see the one Brooks Hilliard kindly made for me. Or here for more about Google logos.

NTMD

Correction: Those who read yesterday’s column early saw a longer version where I carried on about how 33 other drugs were named in the report, but not BiDil. Turns out, no brand-name drugs were named – those 33 other drugs are generics as well. Proving that I am not a doctor and shouldn’t even try to play one on TV. But also that these august medical authorities seem awfully comfortable touting generics rather than far more expensive alternatives.

Gray Chang: ‘I bought a single NTMD put option, which has doubled in value during the past week. But I’m not counting my chickens before they hatch. Sure, there’s a generic alternative to BiDil at one-sixth the cost. But doctors, as a general rule, are not very concerned about costs. They tend to prescribe the best medicine, irrespective of cost. It’s happened to me before with other medicines, so now I always do a little research before I fill a prescription. If I find a less expensive alternative, I ask my doctor about it. BiDil is one pill per dose, and the cheaper alternative is two pills. So they might prescribe the more convenient single pill.’

☞ They might – and they have! According to IMS, several hundred prescriptions for BiDil have been written in its first several weeks of introduction. The questions are: will they get to the many tens of thousands of prescriptions they need to cover their $100 million marketing budget and then make a profit? And how many of those prescriptions will be switched to the generic by insurers loath to pay $2,000 a year instead of $300? Remember, it’s not some expensive antibiotic for a week and then you’re cured. It’s an extra $1,700 per year forever.

DON’T SELL YOUR OIL STOCKS II

‘I sold half of my oil stocks several weeks ago, before the peak. I thought that at the current high prices, OPEC would ultimately increase production to cash in on the demand, and oil prices were bound to drop. What would you recommend now? Buy some back, hold on, or sell some more?’

☞ Not knowing your situation, my gut would be – enjoy your gains, hold the rest, and if oil stocks continue to climb, be glad you held half. If they plunge, be glad you sold half. (And maybe then buy back the first half.)

My old pal Matt Simmons has a new book out on this topic, and you can read a terrific interview with him here. I’ll post this again Monday – if you read it now, you may never get to the Smelly Cheese. But my guess is that it will strengthen your resolve not to sell more shares. OPEC may not be able to increase production.

BOREF AND FUNNY HATS

Mike Myler: ‘Write about Borealis all you want; I find it very interesting. I am thinking of buying more and putting it in my Roth IRA. I think this is a good idea since if it does go up I won’t be taxed on profits and if it doesn’t go up I won’t be able to ever retire anyway. I get the daily and weekly updates from Borealis and in a spare few minutes I decided, ‘OK, I will order a hat since they have plenty left.’ I sent an email and requested one. A few hours later I got an e-mail back from Rodney Cox saying, ‘done.’ I have a picture in my mind of the CEO of the company in which I have invested my hopes and dreams and money, sitting in his office with boxes of hats piled up all around him and personally boxing up and addressing one to me. I both like and dislike this thought. I don’t understand why these motors aren’t flying off the shelves. I wish he would hire a businessman. I have a feeling these companies will come through but that real businesses will then steal the patents or some such thing. If you see a picture in the paper of a guy in Chicago on the ledge of a building with a Wheel Tug hat on his head, that would be me.’

☞ I don’t know which makes me more nervous, the CEO responding to requests for hats or one of my readers putting some of his retirement money into a risky stock. (Normally, you want risky investments outside your retirement funds, so losses can be used to reduce income tax, while long-term gains, if they materialize, would be lightly taxed anyway.) But you can be sure of this much: I’ll be rooting for you.

And now . . .

POLITICS AND SMELLY CHEESE

Mike W: ‘While I greatly prefer your writings of stocks in companies I never heard of to your misguided political ramblings, can you get back to writing financial things that affect the lives of real people, not just your brie-eating limo-riding liberal friends? ☺’

☞ I appreciate the smile and the good-natured tone of your ribbing. But really what we’re talking about, when we talk politics in this space, are things that affect the lives of, for example, millions of real people with real kids living below the poverty line . . . and your aversion to thinking about that. Republicans think – ‘not my problem.’ Democrats think – ‘we all have a responsibility to each other to try to make a better world.’

Not to say that all things are possible (or that all Republicans are as callous as the leadership they vote into office). But it’s worth thinking about what is possible, not just about cutting taxes for the rich and attacking Iraq, which were clearly this Administration’s top priorities from Day One, even before the 2001 Inauguration, let alone 9/11.

REPUBICAN QUOTES YOU MAY HAVE MISSED

If you missed these, from a Lyn Davis Lear column on the Huffington Post . . . meet me at the bottom:

“Victory means exit strategy, and it’s important for the President to explain to us what the exit strategy is.” — George W. Bush

“You can support the troops but not the president.” — Rep Tom Delay (R-TX)

“Well, I just think it’s a bad idea. What’s going to happen is they’re going to be over there for 10, 15, maybe 20 years.” – Rep Joe Scarborough (R-FL)

“Explain to the mothers and fathers of American servicemen that may come home in body bags why their son or daughter have to give up their life?” — Sean Hannity, Fox News

“[The] President . . . is once again releasing American military might on a foreign country with an ill-defined objective and no exit strategy. “ — Sen. Rick Santorum (R-PA)

“I had doubts about the bombing campaign from the beginning . . . I didn’t think we had done enough in the diplomatic area.” — Senator Trent Lott (R-MS)

“I cannot support a failed foreign policy. History teaches us that it is often easier to make war than peace. This administration is just learning that lesson right now.“ — Rep Tom Delay (R-TX)

OK? These are quotes she found about President Clinton’s committing U.S. troops to Bosnia. (Which – perhaps because it was well thought through and pursued with a reasonable level of buy-in from the rest of the world – worked out very well.)

And I don’t recall any bullying from our side to say these critics were unpatriotic or to mock their concerns.

These are quotes from the same Republican leadership that provided not one single vote for the 1993 Clinton budget that broke the Bush economic malaise and started a virtuous cycle that led us to unparalleled prosperity.

The same Republican leadership that has plunged us back into giant deficits by its ‘taxcuts-for-the-rich-no-matter-the-cost-or-the-circumstances’ core principle.

Speaking of which . . .

THE DEFICIT

Did you hear the great news from all the media outlets earlier this week, that the federal budget is expected to be only $331 billion this year? As usual, I’ve heard no one challenge the White House spin on this.

The TRUE deficit is nearly $200 billion higher. That’s because the White House always forgets to include the money we are borrowing from the Social Security Trust Fund.

As discussed here previously, this borrowing is no fiction, it is starkly real.

It is as if you were spending the baby-sitting money that your daughter has been handing you each week to hold in safekeeping for her college tuition. Instead of putting it in the bank for her, you have been spending it on gifts for your wealthiest relatives, putting your IOU’s into a file you call, Daughter’s College Fund. Only here it is nearly $200 billion of IOU’s. Bad enough that we’re doing it – at least we should acknowledge it.

And, yes, the Clinton Administration issued its numbers the same way, but there are several points to make about that:

• The Social Security surplus was smaller and less significant in the Clinton years, and also a relatively new phenomenon.  Until fairly recently, this didn’t make much difference.

• The Clinton mantra was to “Save Social Security First” – specifically NOT to squander the surplus on tax cuts for the wealthy.

• Under Clinton, the massive Republican budget deficits were finally turned around.  The goal was to reduce deficits, not hide them.

• And anyway, are the Republicans suddenly saying that anything President Clinton did was OK?  That would certainly be a new tune!

In short:  It’s a half-trillion-dollar deficit.  Not $331 billion.  We are adding about $1.5 billion a day to our collective debt.  And the news media should report it that way.

Have a great weekend.

Before you skip to the politics part, let me say that there are three reasons I spend so much time writing about BOREF and NTMD.

1. I am hoping that some of you might be in a position to risk a little money on these bets and in so doing – if we get lucky – cover the cost of your subscription.

2. Even if you are only following these sagas vicariously, it may conceivably help in assessing other investments and speculations that you encounter, not just these.

3. I am obsessed. (Let’s be frank.)

BOREF

You know about ‘bid and ask.’ If you’re asking $275,000 for your house and someone offers (bids) $259,000 for it, your house is ‘259 bid, 275 asked.’

Or go to a pawn shop with a $1,500 watch. The dealer may bid $300 for it and then, if you fail to redeem it, ask $900 for it. It is $300 bid, $900 asked at that dealer.

With actively traded stocks, the spread between bid and ask ranges from tiny to teensy – in part because dealers are not involved, most trades are matched all but instantly by computer. The spread may be two or three cents on an actively traded stock – one guy is bidding $16.85 (others are bidding less, but his shows up as the best bid, at $16.85) and another is asking $16.87 (others are asking more, but his shows up as the best asking price) . . . and then along comes someone who puts in a ‘market’ order to buy or sell 200 shares ‘at the market’ – and he will get $16.85 if he’s selling or pay $16.87 if he’s buying . . . unless the market has moved in the last few seconds, as it may have (and certainly will if he’s putting in to buy or sell 200,000 shares instead of 200).

OK? That’s more or less how the modern stock market works. The New York Stock Exchange, NASDAQ . . . billions of shares traded every day . . . no need to go into the details.

Borealis doesn’t trade in the modern market, it trades in ‘the Pink Sheets,’ a throwback to merchants with camels in bazaars, only now they have computers, too.

Because the last reported sale Tuesday was someone buying from a dealer (who was asking $17.50) and the last reported trade Wednesday was someone selling to a dealer (who was bidding $14.50), the reported price dropped from $17.50 to $14.50, down $3, on volume of 6,006 shares. (If that was you with the 6 shares, it’s adorable. I assume you were buying your daughter a $100 lottery ticket? Very sweet.)

There will presumably be people who – mistaking BOREF for a real stock – take fright at this $3 overnight drop (just as they may be excited if tomorrow the last trade is a buy instead of a sell and the stock goes up). In fact, of course, nothing happened.

Nothing has changed from Monday’s column. Moses is still up on the mountain – and may be there for a long time.

Meanwhile, stock of the company’s Chorus Motors subsidiary – which was $10 bid, $16 asked much of the day, and trades even more thinly than Borealis – closed with a last reported trade, coincidentally, of $14.50, also.

As there are 5 million shares of BOREF outstanding . . . it is a pie, that is, divided into 5 million tiny slices, of which your daughter now owns 6 . . . and as BOREF itself owns 5.2 million shares of Chorus Motors (itself a pie divided into about 8 million slices) – each BOREF share owns a little more than one share of Chorus Motors stock.

(Right? In each slice of your Borealis pie there are 5 raisins, an apple chunk, a share of Chorus Motors, some sugar, a share of Power Chips, some cinnamon, a share of Cool Chips, a share of Avto Metals, a share of Roche Bay Mining, and a couple of secret ingredients that, well, who knows what they are.)

So if there were any sense to these prices (and there is very little), it would mean that BOREF closed last night at a value roughly equal to its stake in one of its several subsidiaries, with the rest thrown in for free.

Not to say Chorus Motors is actually worth $14.50 – it will ultimately be worth either much less or much more, I should think. This is only to note that people don’t always make rational decisions in valuing stocks. Because whatever a share of Chorus Motors is worth, a share of Borealis that owns a share of Chorus Motors must be worth more.

And speaking of rational decisions . . .

NTMD

Forget this ‘six thousand and six shares’ silliness – 1,326,184 Nitromed shares traded hands yesterday.

What roiled the waters was a company press release that began this way [emphasis added]:

LEXINGTON, Mass. (August 17, 2005) – Updated heart failure guidelines released on Tuesday by the American College of Cardiology (ACC) and the American Heart Association (AHA) support the combined use of isosorbide dinitrate and hydralazine, now available as a proprietary fixed-dose formulation known as BiDil® (isosorbide dinitrate/hydralazinehydrochloride), as an adjunct to current standard heart failure therapy for black patients. BiDil was recently approved by the U.S. Food and Drug Administration (FDA) and launched by NitroMed, Inc. (NASDAQ:NTMD) in July 2005.

“NitroMed is pleased that these most prestigious groups in the heart failure community – the ACC and the AHA – have recognized the important role that BiDil therapy can play in treating heart failure in self-identified black patients,” said Manuel Worcel, M.D., Chief Medical Officer of NitroMed [who sold 60,000 shares last week].

It went on at some length (and didn’t include my snide bracketed comment), but let me ask you this: would you not conclude from this press release that the just-released report was very good news for BiDil and Nitromed?

There I was on the ledge of my window (from, albeit, a low floor), when it occurred to me to take a look at the actual report.

(In telling the story this way, I am making myself out to be very, very smart.  Actually, I have a very, very smart friend who – spying me on the ledge from his penthouse – rang my cell with the URL for the report.)

It is a dense 28-page report in a language I do not understand, and you won’t either, but I know how to use Ctrl-F.  Would it surprise you to know, based on your reading of the NTMD press release, that BiDil is nowhere mentioned in the report?  Not once?  Anywhere?  Only the generic combo, available for one sixth the price, is mentioned.

Readers of the press release – which seems to include all the buyers of NTMD on the Yahoo Finance message board – would have taken this report as a reason to hold their shares or buy more.

The stock closed down 48 cents at $19.42, giving the company a market cap of $589 million.

COMPARE

So the market, which gives you endless choices every day, gives you this one:

You can pay $589 million for a company that has a single product it sells for six times as much as the generic alternative.

Or . . .

You can pay $88 million for a company that owns several subsidiaries it claims to be hugely valuable, including one that claims to have an electric motor so powerful and revolutionary that – the size of a watermelon – it can drive a jumbo jet around the tarmac like a golf cart . . . a capability now vouched for by both Boeing and the chief pilot of Air Canada.

Anything can happen.  (Truly!)  But if I were allowed just one tiny change to make more sense of those two paragraphs, I would switch the $589 and the $88.  It remains to be seen whether, in time, the market will do that for us.

Tomorrow (I hope): Back to Politics!

NTMD

I’m told that IMS, the service everyone uses to track prescriptions and new drug launches, is estimating that the weekly prescriptions for BiDil have been as follows:

4
49
103
147 (last week)

The business builds! With a sales force of 200 and a revolutionary drug (for which a generic equivalent is available at one-sixth the cost), it would now appear that 303 patients are on the pill (4+49+103+147). What we don’t know yet is how many of them will have those prescriptions honored by their insurers, and how many will be switched to the generic alternative.

Priced at $20.48 last night, the company is valued at over $600 million . . . or $2 million per prescription so far, though it’s only been a month.

Don’t sell your puts just yet.

DON’T SELL YOUR OIL STOCKS, EITHER

Click here. ‘There’s no spare capacity left,’ opines Kevin Drum, ‘and there never will be again. This means that we’re now living in a different world. I’m not sure what all the ramifications of this are, but one thing is pretty certain: the next oil shock – and there will be one eventually – is going to be worse than any previous shock. Fasten your seat belts.’

And here. In part:

Now – if we make the assumption that the higher end estimates of Iraqi oil reserves are correct, how does Daniel Yergin’s statement that Iraq is the “Greatest Prize of All” look?

With over 25% of the world’s remaining oil, and a much lower depletion rate than that of Saudi Arabia (thanks to 15 years of sanctions and war following the historical efforts to keep Iraqi production low), I guess its not such a far-fetched statement.

If we assign an average value of US$100 a barrel to this oil, you could say that this treasure is worth around $30 trillion dollars – which makes the hundreds of billions of dollars being spent by the US occupying the country a little more understandable. And of course, as we follow the path down Hubbert’s Peak the strategic value of this oil is immense.

One of the problems with Iraq’s (and Kuwait’s, and Saudi Arabia’s for that matter) oil is that it mostly gets shipped out through the Persian Gulf, from where it is easier and cheaper for it to head onwards to India or China than the West. This presents something of a problem as depletion proceeds and the world becomes ever more dependent on this oil (assuming we don’t make the much wiser choice of moving on to renewables and other alternatives as rapidly as possible, of course).

☞ Could that $30 trillion prize be the reason we ignored Bin Laden when the oilmen took over the White House . . . despite urgent CIA warnings direct to Bush and Cheney at Blair House thirteen days before the Inauguration that Bin Laden represented a ‘tremendous’ ‘immediate’ threat to the United States?

Could it be why – instead – we concentrated on Iraq . . . as can be seen from the agenda items of the first National Security Council meeting February 1, ten days after the Inauguration?

Tomorrow: Don’t sell your oil stocks. But today . . .

DON’T SELL YOUR BOREALIS

People keep asking me what to do about Borealis and I keep coming back to this: The plane moved.

I grant you, it would have been more dramatic if it had levitated.

Or dematerialized and then rematerialized on the White House lawn.

But just pushing the plane around the runway . . . well, here’s what I think it’s like. Did you ever see The Ten Commandments (amazingly, omitted from Vanity Fair‘s just-published top 50 list)? Moses has Joseph cast down his staff and it turns into a snake. Pharaoh is not impressed. Moses pours a little wine into the Nile and the river turns red. Pharaoh figures it’s a fluke. But even Moses’ own people stay impressed only so long. It rains toads . . . the first-born of Egypt are stricken yet their own first-born passed over . . . the Red Sea parts . . . (!!!!!) – but pretty soon the people of Israel . . . well, when Moses is too long on the mountain getting those tablets, they forget all this and fall prey to the temptations of Edward G. Robinson.

My point: people lose faith real fast. And therein may lay an opportunity for those able to take the longer view.

This is not to say we will ultimately win with Borealis. It’s risky! Things may not pan out.

But however you believe the Red Sea parted, all indications are that Air Canada’s jumbo jet moved because it was driven by an 11 1/2-by-16 inch Chorus motor. And so here’s the pattern I expect:

Something good will happen, like that August 1 Boeing press release, and the stock will jump. Then days, weeks or months will pass with no news and people will begin to lose faith. Some who bought at $3 will sell at least enough to get their money back or, having quintupled their bet, may sell it all. That selling will cause the stock to slip back and, seeing the drop, others will get nervous, not wanting to lose the rest of their nice gain, if they bought at $3, or fearful they will lose even more, if they bought at $21. So more selling.

But then there will be some other news, and up the stock will go again, perhaps to an even higher level.

Not forever, of course. And certainly not guaranteed.

But think about it. If you had to make a list of all the bad news that could pop up over the next few months, you’d have to be pretty creative. Revenues dip compared with last year? Not possible – the company had no revenues last year. Profits disappoint? Not possible – the company has no profits and I doubt anyone expects any soon. Company delisted? It’s not listed now. Banks call their debt? Company has no debt. Company runs out of cash? Well, that’s certainly a risk – but if investors have been willing to front this nutty company for years before any dramatic proof its technology could work, why would funding suddenly dry up now?

I suppose it’s possible Boeing could announce that the whole thing was a fraud somehow – mass hypnosis. Or that technical issues could not be resolved – the motor was just too sensitive to perform reliably after repeated hard landings, or the FAA had irresolvable safety concerns, or whatever.

But I would imagine bad news like that would be a year or more off, not weeks or months. And even if it came, why would that rule out the motor’s use with fork lifts, cranes, elevators, locomotives, golf carts, or even perhaps, someday, cars? And why would FAA safety concerns invalidate all the other patented technology the company has come up with – or, for that matter, the valuable iron ore deposit it claims to own?

I am absolutely not saying this company or stock is a sure winner. Maybe GE has a ten times better motor in development that it’s about to unveil. Maybe all the company’s other technologies will be leapfrogged as well or prove impossible to commercialize.

But what a good lottery ticket (in my view) it remains at these prices. Because what if you had to make a list of all the good news that could pop up over the next few months? To my mind, that would be an easier list to make. The headlines could range from the superficial to the technological to the commercial to the financial.

• Superficial: The story makes it into the pages of Business Week or the science pages of the New York Timesand then gets picked up on NBC Nightly News. (“Travelers and environmentalists alike are intrigued by the possibilities of what some are calling The Little Motor That Could. It’s only about the size of a watermelon, but in tests on a secret desert airstrip, it managed to tug a jumbo jet around the tarmac like a golf cart. That could one day mean fewer airport delays, say airline experts, and savings on fuel, noise, and fumes. NBC’s Anne Thompson reports . . .”)

(It made NPR last week.)

• Technological: More patents, further progress on the company’s several technologies.

• Commercial:Boeing announces that progress has been made on design for an integrated WheelTug system – a testing protocol has been negotiated with the FAA. Or Rolls Royce or Semikron, with whom the company seems to have relationships based on previous press releases, announce some kind of deal. Or the world’s leading golf cart maker (whoever that is) announces that it is going to offer a cart powered by “the same motor that drives a jumbo jet.”

(And speaking of golf, note that the Callaway Golf company – which makes golf clubs and lost money last year – has a market valuation more than 10 times that of Borealis. If Borealis, which we hope will one day be licensing all kinds of amazing things, ever sported a market cap one half that of Callaway Golf, you would have a fivefold gain on the stock from here. If it ever sported a market cap one third that of Wrigley Gum, you would have a fiftyfold gain. I am absolutely and definitely not saying this will ever happen; just trying to illustrate why I believe we hold an attractive lottery ticket.)

• Financial: What if Honda announced it will buy 10% of the company for $100 million? Honda had more than $7 billion in cash on its most recent balance sheet, so this would be trivial – but might give them a technological leg up with Toyota. Or what if China made this deal? China had more than $240 billion sitting in US Treasury securities as of May and their trade surplus for June alone was more than $9 billion.

Of course, I’d prefer to see an American partner. But Ford and GM never seem to be out front. Maybe someone like Intel or Microsoft? MSFT has so much more cash than it knows how to profitably invest that it paid out a special $30 billion dividend a few months ago. Or Boeing? Or an oil company that sees how the Power Chips technology just might, conceivably, keep it in the energy business after its oil reserves run out?

Or let’s let our imaginations run really wild: What if the company someday went through the regulatory hurdles to get listed on NASDAQ or some reputable stock exchange?

At the end of the day, this saga might drag on forever with nothing ever coming of it. Remember Cool Chips? It was almost four years ago that Boeing issued its positive review, and still no hint of a commercial product on the horizon.

And didn’t it take more than 20 years for television, invented in 1926, to make anybody a dime?

So don’t put any money into this stock that you can’t truly afford to lose. Just as with my brilliant Google puts idea, you truly might. But I bought more at $16.

. . . will appear tomorrow. (To compensate for the inconvenience I am extending your subscription by a full week.)

OUT OF THE WOODS

Maine was beautiful, the Red Team won by 30 points (unlike 1956, when Red won by just one-twelfth of a point!), but Grey won soccer and their original song brought down the house.

The Hertz Lady and I drove back in record time. (‘Recalculating route! Recalculating route!’ I love blowing her mind. Sometimes I’ll drive in a circle just to make her crazy.)

How did anyone ever live before NeverLost®?

I’M JUST SAYING

Back in our Managing Your Money days, we had users who took the old 5¼-inch floppy disks it came on and trimmed them with a pair of scissors to fit the new 3½-inch drives.  I don’t know what color their hair was – and you must know I mean absolutely nothing by this (it is a little known fact that Einstein, whose hair was famous but black-and-white, was actually blond, as were Madame Curie, Pythagoras, Newton and Shakespeare . . . Stephen Hawking is platinum blond) – but a friend writes:

Dear Diary,

Last year I replaced all the windows in my house with those expensive double-pane energy-efficient kind, but this week I got a call from the contractor complaining his work had been completed a year ago and I had yet to pay for them.

Boy oh boy, did we go around and around! Just because I’m a blonde does not mean I’m automatically stupid. So, I proceeded to tell him just what his fast-talking sales guy told me last year – namely, that in one year, the windows would pay for themselves. There was silence on the other end of the line, so I just hung up. I have not heard anything since.

Guess I won that stupid argument!

BOREALIS

Much of this from Flight International just rehashes Boeing’s press release.  But as someone who has no idea how our little motor works, I liked the box at the end.  (I still have no idea how our little motor works; but I do understand, vaguely, what “the motor drive is capable of achieving five times the torque speed of a similarly sized unit and is therefore much smaller and lighter” means.)

Richard Factor: “Just got the 08 August issue of Aviation Week.  On page 40 there’s an article about the Chorus motor.  It’s a lot more detailed than the material I’ve seen so far, although not detailed enough for a real analysis.  One quote:

Carman says the test motor on the 767 measured about 11.5 inches in diameter and 16 inches long but he describes the installation as “clumsy” because so much data collection instrumentation was needed.

☞ You mean to tell me that a little electric motor the size of a watermelon can tug a Boeing 767?  Could one the size of a peach tug a Honda?

NTMD

So how is the BiDil selling?  It’s still very early, but one service that surveys pharmacies is apparently estimating that the weekly scrips (prescriptions) have been as follows:

4
49
103 (last week)

If this is right – and I hope any of you who know different or better will chime in – 156 patients are now “on the pill,” as it were.  With thousands more, no doubt, to follow.  What we don’t know yet is how many of them will have those prescriptions honored by their insurers, and how many will be switched to the generic alternative that costs roughly 85% less.

Closing at $21.60 last night, the company is valued at $653 million.

THE BUBBLE

If your house is in Manhattan, Kansas, you could be okay.  In the other Manhattan – maybe not.  Paul Krugman explains.

YOUR CHANCE TO GET QUOTED

Elizabeth Harris: ‘I am writing a piece for the New York Times on financial blogs. I’m especially interested in your interaction with your readers – do you think any of them would be willing to talk/e-mail with me about what keeps them coming back?’

☞ You never know.

FUNDAMENTALISM

Doug Jones: ‘I was involved with the Shepherding Movement eons ago. I was also involved with the Religious Right in its early days. (Have I ever changed!) The biggest argument I have against religious fundamentalism, whatever the flavor, is simple and historic. Circa 1100 A.D., the most advanced culture in the Western world was Islam. Math, medicine, science, etc., were all advanced and continuing to improve. The Greek philosophers’ writings were rescued by and copied by Islam scholars. The society was flourishing. Then the Islamic fundamentalists took power. ‘Nuff said.’

A DIFFERENT APPROACH

Ralph Sierra: ‘I was wondering when someone would ask whether Britain’s relative success with their recent bombings was due to their handling it as a civil rather than a military matter. Here it is from The Guardian.’

Almost every significant aspect of the investigation to bring the London terrorists to justice is the opposite of Bush’s “war on terrorism”. From the leading role of Scotland Yard to the close cooperation with police, the British effort is at odds with the US operation directed by the Pentagon.

Just months before the London bombings, upon visiting the Guantánamo prison, British counter-terrorism officials were startled that they did not meet with legal authorities, but only military personnel; they were also disturbed to learn that the information they gathered from the CIA was unknown to the FBI counter-terrorism team and that the British were the only channel between them. The British discovered that the New York City Police Department’s counter-terrorism unit was more synchronised with its methods and aims than the US government was.

BOREF

Matt Ball: “I know it is lightly traded and nothing is ‘logical,’ but, following Yahoo’s ticker, why would it be down 6 in one day, sans news?”

Joseph P. Sermonsky: “Please explain – on the Pink Sheets there are enormous spreads. For example, one market maker bids $14.50 and asks at the same time $55!  How can he think he gets shares for $14.50 if the customer sees that he wants to sell them for 55?”

☞ BOREF was quoted at 15 “bid,” 21 “asked” Friday afternoon.  That means the most any of the dealers was willing to pay for shares was $15, while the most any dealer was willing to part with them for was $21.  The last transaction was someone selling – perhaps someone who had bought shares at $3 and was cashing out entirely with a nice gain (or selling just enough to recoup his initial investment) – so that was the reported closing price.

If a dealer has no shares in inventory, he may ask $55 as his way of saying “sorry – look elsewhere” (rather than “go short” by selling you shares he doesn’t own).  He doesn’t actually expect anyone to pay it.

The place to watch Borealis stock is the Pink Sheets.  But the smart thing to do is NOT to watch it.  (As with so much else in life, I fail to do the smart thing.)  A year or two from now, it will either be:

• Sort of zero – although I’d be surprised, now that its motor has pulled the jumbo jet.I doubt the market would conclude definitively after just a year or two that there is zero potential in this.  Though it’s certainly possible.

• Sort of where it is now – if nothing much happens but an equilibrium is reached between existing investors losing patience, selling out, on the one hand, and others, newly intrigued by this bizarre story, taking a flier.

• Much higher – if there are further positive developments.

If you bought your shares with money you can truly afford to lose without pain, hang on.  That’s what I’m doing.

If you ignored the cautions and gambled money you shouldn’t have, sell at least enough shares to get that money back.  (And give yourself a stern talking to.)

ARC

Marc Goldberger: “I’m surprised you’re forgetting about ARC.  Stock took a hit.”

☞ Oops.  Not a great suggestion on my part, down about 15%.  I’m holding mine, albeit without a great deal of enthusiasm.

NO COLUMN TUESDAY

I’m going deep into the Maine woods (well, South Waterford, “population six in the wintuh, hundred and fawtee in the summah”) and probably won’t have broadband.  You deserve a day off anyway.