Something's UP with Cortex (COR) ... interested?

Discussion in 'Stocks' started by BioBottomFeed, Feb 25, 2007.

  1. Greetings:

    An off-topic discussion about another stock here at ET
    has veered OT to talk about COR, which had a high-volume upside breakout last Thursday because of the news they announced Wednesday at the Roth conference: .

    It seems unusual for a conference call or investor presentation to have the company CEO announce in their introduction, *before* the Safe Harbor Statement: "I think I can say, in an unqualified way, that we have some good news coming."

    If you look at the 1-year chart of COR, you will see a sickening slide which will scare trend-followers away from it, forever. But, as a contrarian Bottom Feeder, charts like that are things of beauty, because if a stock declines like that for no good reason, there's a potential for huge gains on the reversal.

    Last April, the FDA put a clinical study on hold because of evidence of tissue damage in autopsied rats. But Mr. Stoll said that the tissue damage was not caused by their drug after all. It appears that this stock's fall from $5 to $1 (which cost the company $3.5 M in expenses to evaluate/redo, etc.) was the result of a "false alarm" for tissue damage in rats. They redid that study and concluded that the earlier (bad) results were spurious, and the damage seen in the first round of rat toxicology studies post-mortem--it's at the 15 and 22 minute marks of the Roth presentation--was not seen when they analyzed the tissue immediately. The "tissue damage" that caused the stock to decline from $5.00 to a low of $1.02 was, apparently, caused by the formaldehyde that was supposed to preserve the tissue, but instead, the formaldehyde seemingly damaged it.

    The stock (apparently) collapsed because of the "false alarm" post-mortem rat-tissue data, but they now have very positive clinical data for their drugs, and they also have good news on the scheduling front because, at minute 27 of the Roth talk, even the "bad news" of not meeting DARPA's hope of an amphetamine-like effect is actually a positive in terms of favorable scheduling of a new ADHD drug which works by a novel and unique mechanism of action: BNDF. DARPA wanted something with more of an amphetamine rush. Those pilots need to feel INVINCIBLE! Oh well. What's wrong with good old Dexedrine besides the elevated heart rate and BP?

    There's a lot to digest there, but everything Mr. Stoll mentions at Roth is backed up with info on their corporate web site. It will probably take the analysts on Wall Street some time to figure out what to say about them. A lot of big investors lost a bundle on the slide, and if it turns out that it was all due to formaldehyde causing unexpected tissue damage taken from dead rats, well, someone screwed up. But one person's loss can be another's gain.

    Before the clinical hold that was triggered by the erroneous rat histopathology, COR was being valued at $5 per share. Since they've made good progress on other fronts since then, well, think about the potential. What if those people who bought it at $5 (and saw 80% of it evaporated at the low) now see a company with a better pipeline than it had before, selling for $2 per share, with the new rat tissue data being submitted to FDA next month? Will they want back in? How much will they pay?

    The shorts covered a long time ago. December short interest was what the specialists/MMs could easily be carrying. People gave up on this stock and bailed out, at great pain.

    I think that if this stock went from $5 to $1 for no real good reason except a lab mistake, and selling leading to more and more selling with everyone just giving up on it, there's a good chance of seeing a good retrace of that decline. Eventually there is regression to the mean. The question here is: how long will it take? And if they can raise the cash to keep going until they either get a drug approved or get more partnerships ... or dilute by issuing shares ...