Quickster: The Long Case for Ignyta ($RXDX)

By DrKSSMDPhD, May 20, 2016

[Ed. Note: Dr. KSS writes about medicine and biotech stocks for the Irregulars. He choses his own topics, has agreed to our trading restrictions, and his words and opinions are his own. You can see his past columns and most recent comments on his Stock Gumshoe page.]

 

“Come on baby light my fire.”

—- The Doors

 

With this column, we inaugurate “Quickster,” a lean, synoptic format for presenting long biotech ideas to you in executive summary form. We realize our biggest task is getting information to you in timely fashion, and given that many readers are no longer neophytes in biotech investing, we feel a time has come when not every presentation to you requires a full long-form column. And don’t worry, we have drafts for our longer, in-depth, swashbuckling columns queued up out to the horizon!

When we Googled “Quickster” to see if the term is in use elsewhere, we learned that it’s a now-discarded term that Netflix was intending to use for a future post-fission version of itself: Netflix would be the online service, and Quickster the mailed DVD service. We’ve not purloined the term, but we are benignly filching it. We are constantly, silently tracking many biotech stocks for readers, and when the stars line up and seem to be making for a good entry point in a company whose science you may already grasp, we’ll cast it in Quickster format for a synoptic presentation so you can easily get about the process of your own due diligence before buying, and get in expeditiously.

(1) We recently took a long position, a starter one, in Ignyta after following it for about six months and watching it establish a bottom formation. While no one can guarantee, given the present biotech market, that $RXDX will bounce off its bottom, the stock appears undervalued to us.

(2) $RXDX is a $250M San Diego oncology biotech firm. Of 41.6M outstanding shares, 85 percent are held by institutions or large block owners. Short interest is limited. Major holders are a veritable Who’s Who of investing entities we respect and like: Teva-owned ($TEVA) Cephalon (11 percent), Eli Lilly ($LLY) (15 percent), Broadfin Capital (6 percent), Perceptive Advisors (3.5 percent). The aggressive Tang Capital Management owns more than 10 percent.

(3) Company insiders are impressively well-vested in $RXDX stock. Director Alexander Casdin recently purchased 232,000 shares on the open market. Casdin now ...

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