Prometic Life Sciences Inc. (PLI-T)

The key is their ability to take a bag of plasma and extract a bunch of proteins. They can sell as much as they can produce. The market is concerned about their spending in R&D. It appears to be a long way away from payday.

They have patents on plasma protein drugs that are interesting. The company had significant success pushing these through the FDA stages but they recently ran into a delay and the stock dropped precipitously. He has been short for a while thinking the market cap was overvalued for the ultimate end market they were pursuing. Now that the stock has dropped so much, his short position is smaller. This is a highly speculative position.

He is short this company presently. The market cap is quite high compared to his estimate of value. The company appears to be quite promotional compared to others. Their plasma protein product is easy to get through the FDA and subject to hype at each easy approval stage. He does not see revenues and earnings to back it up.

He believes this has been very volatile due to an overhang and the potential need for more financing. It is stabilizing now and they have received an investment from the Thompson family. He thinks they should begin to receive approval soon with sales later this year. They do not own it presently, although they have held it in the past.

Prometic has two parts to its business. They can buy a bag of plasma for $200US and extract 11-13 high profile proteins. They have already applied to do 4 of those. There is an almost unlimited market for one of those, plasminogen, because there is no other supply of it. They’re also working on another drug that targets fibrosis. The studies for this drug are very costly, so PLI has had to raise a lot of capital. This will take a long time, is very risky, but will pay off well if successful. They are expected to break even next year based on their protein extraction.

The near to intermediate term is a bit of a challenge. They have technology to extract proteins from a bag of plasma. Their specialty is that they require a lot less CapX and operating costs to do it, and can end up getting much higher yields. The current process, which is over 40 years old, is maximized and optimized for something totally different in the proteins they were getting. They have approval to get plasminogen. Spending a ton of money to go through the formal drug testing process. It’s not expected to earn any money in 2018, but a loss of $.13 a share. Expected to break even in 2019.

Doing interesting drug trials, with a near-term opportunity for their orphan drug Placminogen, a specialty protein. With Placminogen they can basically sell almost everything they can produce. Earnings estimates for 2019 is basically zero. You are buying this for 2 reasons. 1.) The manufacturing process; buying a bag of plasma for $120, breaking out a large number of proteins, and selling it over time for about $1000. 2.) their drug PBI4050 which is targeted towards fibrosis, where early results are quite positive. To develop a drug and go through phase 2 and 3 drug trials, is extremely expensive. If your time frame is 3 years, he thinks you will be happy. A speculative company working with some very interesting drug opportunities.

This does blood plasma protein. It is something that has been very easy for them to get FDA approval for their treatments. However, revenues and cash flow just haven’t come as they promised in the past. Did a pretty dilutive equity raise recently, which didn’t go that well. He is Short this, and probably will stay Short until the stock from the equity deal gets cleaned up.

They are going to have a lot of catalysts between now and Q1 2018 on their drugs and some of their trials. He sold it higher up for technical reasons. He would hold onto it because of the catalysts.