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HELP FIGURING OUT WHICH DRUG PLAN TO SIGN UP FOR

Lisa Doggett, in yesterday’s New York Times, makes a good case for your helping your folks or granparents figure this out. You may find this helpful.

And speaking of overpriced drugs . . .

NTMD

The company is cutting back its sales force from 195 to 150 and cutting back its estimated expenditures for 2006 to around $100 million. That’s the OUTgo.

As of January 8, the 7-day rolling average for BiDil prescriptions (the company’s only product) was 145, or about the same rate as for December, when, in the course of the month, an estimated 4,600 prescriptions were written. That works out to an annual sales rate just under $9 million. That’s the INcome.

Hmmm . . . $100 million going out, $9 million coming in. Why is this good?

UBS Securities remains bullish on NTMD, even though sales for 2005 came in at about one-tenth their initial estimates. It has now cut its price target on the stock from $32 a share to $24, but that’s still up from yesterday’s closing price of $13.90. And it still works out to a market valuation of $732 million for the whole company (30.5 million shares at $24 each).

If prescriptions continue to rise and quadruple by the end of this year, the company will have lost about $80 million in 2006. (That would be a blend of today’s $9 million sales rate and perhaps a $36 million rate by the end of the year, for maybe $20 million for the full year, less $100 million in expenses.)

UBS is wildly more optimistic, expecting sales not just to quadruple but to positively explode, with a loss of only $38 million for 2006 (double the loss they’d previously estimated).

For 2007, UBS now projects a $3 million profit (about one-tenth what they had previously projected).

Looking out to 2008 and 2009, they see profits of $36 million and $68 million, respectively. They believe a great many people will want to buy BiDil at six times the cost of its two generic ingredients. And they could be right.

Even so, don’t sell your puts.

SYSTEMS

Hans Hecht: ‘I love the Super Bowl indicator for two reasons. It was discovered/invented by Len Koppett and it seems to have worked better than random chance since it was discovered. Obviously, God is a traditionalist and feels better when an old NFL team wins the Super Bowl. So, contrary to what you think, the Super Bowl indicator is PROOF of intelligent design.

‘Meanwhile, I was one of the people who wasted far too much time ‘proving’ that the Foolish Four had no basis at all except back testing. The Dogs of the Dow basically pick up on the statistical quirk that the high dividend stocks on January 1 did well during the next 12 months. The Motley Fool kept tinkering with the indicator until they came up with the ultimate tweak. They used the dividend divided by the square root of the price and then excluded the highest stock and purchased the next 4. [Got that? – A.T.]

‘They had people who backtested the indicator for months other than January. It showed a weakening of the indicator as the months progressed until it got better again in the fall as it approached January again. No one has ever been able to come up with ANY logical reason why it works better in January than any other month or why it seems to work best for holding the stocks for exactly one year.

‘What I showed is that if you look through the backtested data on stocks that appeared in the Foolish Four (or any of the Dogs of the Dow) for stocks that appeared during any month other than January AND did not appear on either the previous or future January list then you would have identified a stock that was selected as a Foolish Four stock and was not tainted by backtesting.

‘Amazingly, those Foolish Four stocks that were not tainted by backtesting, obviously including all Foolish Four stocks since the publication of Motley Fool’s book, have performed randomly and have not outperformed the other Dow stocks. The Foolish Four didn’t stop working because people started bidding up the stocks, it never worked to begin with.’

 

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