Isolagen: The Company with Nine Lives
Posted on August 6, 2008
The beauty about stock investing on the long side is that the game is never really over, unless a company declares bankruptcy. No matter how bleak the outlook is and how large the paper losses, a few slight changes can so positively alter the prospects of a firm that the biggest losing investment can turn into a winner almost overnight. As such, it never really pays to lose hope, since any company, as ILE so aptly shows, can have nine lives.
Back in October 2006, I recommended the purchase of Isolagen (ILE) shares. It was a decision that I have at times regretted, given the plunge in the stock price over the last year, especially following the departure of CEO Nicholas L. Teti. Interestingly, my basic thesis for the long-term potential value in the stock, was never really challenged, so even with the prospect of bankruptcy looming I’ve held out hope for some sort of positive news.
Amazingly, yesterday, Isolagen finally got a new lease on life when it released positive phase III results in its wrinkle study. It was the type of results the company has been looking forward to for many years. The study seems to prove that the Isolagen Therapy, a novel therapy using a person’s own cells for the treatment of wrinkles, works for wrinkle applications. The results should generate renewed interest in Isolagen’s Therapy for all types of skin treatments, including the treatment of acne scars, where there is another significant market opportunity.
Of course the question now is: What’s next for ILE the stock? Even with these positive results, the company still needs to raise a significant amount of capital to get the therapy to market and continue research on additional applications. Alternatively, the company may decide to sell itself to a larger competitor who already has the capital to commercialize the Isolagen Therapy and commit to further research on its applications. It’s difficult to say what strategic direction the company will pursue, and what the ultimate effects on the share price will be. For today, at least, the stock price is surely reacting well and allowing long-term investors to recover some major losses. However, if the past is any guide, the stock will continue to be volatile and provide some interesting trading opportunities.
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