BOREF and DCTH July 5, 2010March 18, 2017 Hope you had a great Fourth. Today is a holiday, so there is no column – just a couple of stock updates. WHEELTUG Artie: “Picking up on Friday’s Prague press release, do you know what it means for an airport to be WheelTug compatible? It would be nice if they had an infrastructure that would support such planes if and when they were to take off and land there, but I must be missing something.” ☞ I think adjustments will be minimal – things like new procedures for communicating with pilots rather than tow operators (as the pilots, not the tow operators, will maneuver the planes). And “good” problems, like deciding how much less they will need to worry about the blast of the jet engines near the terminal (since WT-equipped aircraft won’t have blast near the terminal, and there will be less worry of a stray suitcase getting sucked into the engine, or the blast from one plane interfering with another that may now not have to be spaced as far apart). This agreement is more about helping to give both the Prague Airport and WT some validation, and making clear that some forward-thinking folks will be helping WT when it comes to making tarmac available for testing and demonstrations, working out best practices for ground operations procedures, and so on. In other words, I think it’s largely symbolic – but symbols matter when you’re trying to persuade a very conservative industry to accept something new. Imagine the pressure from “green” European airports for airlines to adopt the WT system if it means less noise and pollution, saves jet fuel, and allows planes to maneuver more adroitly, with fewer support vehicles and delays. It may never happen, or someone else may come out of left field and beat WT to the punch. But game-changing technology, once it’s accepted, can be adopted relatively fast. Within a decade of the first plane’s being able to back up and tool around without starting its main engines, might not virtually all commercial jets (and some private and military jets) not have been retrofitted with this capability. So, as always: a lottery ticket. We absolutely may lose every penny, as normally happens with a lottery ticket. But if there’s now a 50/50 chance of success – or even just one chance in five – it’s a bet worth taking (in my view), albeit only with money you can truly afford to lose. And unlike a lottery ticket, the winnings of which are taxed at ordinary income rates, any success we may eventually have here will give new definition to the phrase “long-term capital gains.” Most of my shares are now almost old enough to vote! Or to bat mitvahed, anyway. JK: “One might think that an electric motor capable of moving a plane a mile or so would be capable of moving an automobile several miles.” ☞ Auto companies may be even slower to adopt radical change than airplane makers. DCTH Kevin B. Knopf MD, MPH: “I think your guru is optimistic on this one. Neuroendocrine cancer that metastasizes to the liver does happen, but it’s a rare cancer. It also can have a very long natural history – sometimes as long as 10 years without requiring treatment. We can do standard chemoembolization instead of Del Cath which is cheaper and less arduous. In addition there are some newer medicines that work in neuroendocrine carcinoma (avastin, sutent, everolimus which was FDA approved). But your guru is clearly a smart guy. The Del Cath apparatus is very time intensive and labor intensive and not every hospital will be able to buy and use one. Lastly there is always my hope that eventually insurers and Medicare will start to regulate the cost of these devices (and drugs) so that we can have universal health care. But your guru is very smart, so I may be totally wrong.” ☞ Or you may be totally right. Another interesting way of playing this is to work with the January, 2012 calls. For example, one of your fellow readers reports he “was just able to put on 23 contracts of the long the Jan 2012 5 call / short the Jan 2012 10 call for $1.10.” Which, unpacked, means he bought one set of calls (the ones that give you the right to buy the stock at $5) for $1.10 a share more than he get for selling another set (the ones that give you the right to buyh the stock at $10). So if the stock if under $5 in January of 2012, he’s lost his $1.10 (2300 times over = $2,530 plus commissions). Oh, no! But if the stock is $6.10, he breaks even. And if it should be $10 or more – as guru thinks it will be – he turns his $1.10 into $5 (less commissions and taxes on the $3.90 profit) – $11,500. So it’s – sort of, vaguely – heads you lose $1.10, tails you win $3.90. (Sort of vaguely, because who knows what the odds really are on the stock being under $5 or over $10 on January 21, 2012? And unlike a coin, which rarely lands on something between heads and tales, the stock might be $6 or $8 or $9.13, so the outcome is not necessarily all or nothing. And because, finally, unlike a coin, you can exit this bet in mid-air, as it were. Let’s say the stock went back to $16 this fall. Chances are that the 5 calls you had bought and the 10 calls you had sold would now be not $1.10 apart in price, but more like $4.50 apart. (The 5’s would be about $11 and the $10’s would be maybe $6.50.) One last thought for the three of you still with me and interested: this s not the only “spread” that could be of interest. In my own account, I was able to do a similar spread between the January 2012 10’s and 17.5’s, paying $1.30 or so for the privilege. Heads I lose $1.30, tails I turn that $1.30 into $7.50. Dr. Knopf may be right that Guru is being too optimistic on this one, but Guru respectfully disagrees, responding . . . “Well, I’m not more experienced than an oncologist with a masters in public health! He’s on the front line. Nonetheless: Neuroendocrine tumors do grow more slowly and are not the immediate death sentence that melanoma is. Some portion of them will metastasize to the liver – it’s the most common site. Eventually after 10 years, they will progress to the point where real therapy is needed. And of course, there may be some patients who want to get the treatment early and not wait the 10 years. The Delcath system takes about 2 hours, so really no more challenging than chemoablation. Avastin, etc. all carry significant side-effects: Delcath relatively few because little of chemotherapy gets outside the liver. There is a cost savings because of fewer complications. And if there are an estimated 6800 patients per year and they live 10 years without needing therapy, then the number extant now = 6800 x (10+9+8+etc.) means there are many, many more than I am estimating who really will need the Delcath procedure. As one doctor at Moffitt put it, the patients are driving demand. They all have internet access and they come asking for the treatment. I can assure you that anyone who DOES have a melanoma or neuroendocrine metastasized to the liver will want this. Wouldn’t you? Meanwhile, the hospitals will buy the equipment to meet patient demand. Is there precedent? Yes. ISRG – the robotic surgery. Not proven to be better than laparoscopic. Demand is coming entirely from the patients. And this equipment costs millions. What IS true, and where Dr. Knopf is certainly right, is that at $20,000 a treatment, the reimbursement agencies will make sure this is applied strictly on the label [and not for unapproved uses, even though they will be legal]. Still, Delcath will be expanding the label every year as more and more tumors are added. Again this is drug delivery, not one specific agent. You can put anything through the system. Here is a presentation that shows some of the data for neuroendocrine and notes the other trials ongoing. One by the National Cancer Institute in liver cancer should be nearing completion soon.” We’ll just have to wait to see whether guru’s optimism is justified.