BEST VIDEO OF THE YEAR

Whatever you may think of dogs that play the piano – or national ID cards – your day will be brighter if, broadband enabled, you watch this. (Thanks, Jackie!)

MY OLD BOOK

Jack Nettleton: ‘When I read your book 20 years ago, there was some good advice to forget about commodities since 90% of commodities speculators lose money. I noticed that the 2005 edition has the same advice. I wonder whether the availability of PCRIX changes the situation. The fund invests in indexed commodity futures and puts the collateral in TIPS. The institutional class shares are available to anyone who pays $35 – through Vanguard Discount Brokerage in my case.’

☞ Good question. The risks are obviously much smaller, because instead of your competing with giant market pros like Pimco (or General Foods or whatever example I used in the book), you have the advantages of their expertise and the diversification that $3.75 billion under management can bring. Also, the expense ratios for this fund are way below average for comparable funds. So it’s somewhat risky, but by no means suicidal the way individual commodities speculation is.

MY NEW BOOK

Before the investment guide I wrote Fire and Ice, a biography of Charles Revson, who founded Revlon. I was so lucky with it, I often thought of turning it into a series: Firewater and Icecubes would be the Samuel Bronfman/Seagrams story, and Fire and Life was what I wanted to call my insurance industry book. (I was overruled.) All this, long ago. The memories came flooding back with this suggestion from Rene: ‘Why don’t you write a new book about the Bush gang and Mr. Rove called Fire (Him) and Rice ?

BOREF

You’ve read about Borealis; now you can hear an interview with the head of Power Chips, one of its subsidiaries. Does he sound credible? Beats me. Click here. (Often, companies pay to be interviewed on this site. A representative of Borealis told me that, in this case, no compensation was involved.)

NTMD’s 2 CENTS

So I listened to the nearly three-hour conference call Friday morning. The company’s drug, BiDil, all seem to agree, will save lives and shorten hospital stays. Indeed, by that standard, it will have a negative cost – the $2,000 annual cost of the drug is less than the estimated $3,800 average annual savings on hospitalization.

The only thing not addressed at much length: why would people – or insurers – pay $2,000 a year for this combo pill when the generic version of the same two drugs is available separately for about $350? (And what would keep a generic pill maker from one day bringing out its own generic combo pill?)

To me, the people from the company sounded well-meaning and well-motivated. They have confirmed a life-saving therapy that almost surely has highly positive results among African-Americans. They are making it available free, or almost free, to anyone without insurance. They have 195 sales people now out selling 10,000, soon to be 30,000, docs on the benefits of this therapy. How can this not be good?

The analogy that comes to mind is a study that shows that a combination of a 225 milligrams of aspirin and 1000 milligrams of vitamin E – when ingested with an artichoke heart – cuts the duration (and mortality!) of influenza in half. What a boon to the world such a discovery would be!

But how would the drug company that had done the hard work to discover this, and the far harder work of getting FDA approval of the claim, make money from this discovery?

And, I asked my guru genius doctor guy who got me started on this in the first place, how come the people at the company and the analysts on the conference call don’t see this?

He e-mailed back in a language I only partly understand (like gangsta): ‘KOSP was at $40 in front of their launch of long-acting niacin for cholesterol. Six months later it is at 6. EYET was at 45 on Dec 31 as it launched a new drug for macular degeneration with partner Pfizer. It is now 13. NTMD has (1) no partner, (2) a tiny sales force, (3) a drug that is identical to existing generics. And so it goes.’

I should stress that buying NTMD puts (let alone shorting the stock) is – clearly – risky. Maybe insurers will decide to reimburse for BiDil after all. Maybe the company lawyers will be able to defend their intellectual property rights and keep insurers from substituting generics for BiDil. Maybe a Chinese pharmaceutical company will swoop in and acquire NTMD at 50. Maybe a short squeeze will develop and the stock will rocket to 90 before eventually falling to 3.

At the peak of the conference call, with a very rosy picture being painted, the stock briefly broke 23. It closed the day up 2 cents, at $22.82 – a $690 million valuation for a company with no sales or profits, but on the cusp of what they hope will be large ones.

In the next few months, prescriptions will be written for BiDil – or not. (For sure, a lot will be given away free.) So it’s not quite as dramatic as waiting by the side of an oil rig to see if anything comes gushing out. And not nearly as dramatic as watching Geraldo open Al Capone’s vault. But it could be a dramatic fall for Nitromed bulls and bears nonetheless.

KRUGMAN ON ROVE

Here.

Tomorrow (or soon): Notes from a Former Cultist
(Yes, One of Our Readers Helped Lead a Cult!)

 

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