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Message: Constellation Pharma

Hi Tada:

Thank you for your post.   You sound like a fair guy and a smart guy.  And I enjoy reading your posts and appreciate them.  Including this one.  

That being said, I think a few of your points are begging a polite reply, so here goes.

I think a better question is why was Constellation's (CNST) market cap $2.5 billion in Nov last year and now it's only half of that? From their inception in Aug 2018 until now they have increased about 1 and a half times more than where they started. From their peak in Dec last year until today they are less than half. What kind of an investment is that?

I consider it a much better investment than Resverlogix.  I'd be happy with their current market cap - or even half that.   What's the market cap of the pioneer and self-styled leader in the space again?   I think that says it all my friend!

Let's look at another hot-rod biotech, Intercept (ICPT). It started in Aug 2012 at around $18 and shot up to over $480 in late 2013/early 2014. It currently sits around $47, less than 1/10th of its high. Again timing of your investment was all to important. With ICPT over the last 8 or so years if you sold today you would have about 2 & 1/2 times your investment from inception back.

Another hot-rod biotech?   Comparing Intercept to what biotech???  I don't consider Resverlogix to be a hot rod.  Unless you are referring to a red hot poker being impailed in retail investors.  That I would agree with....  It truly is a hot rod in that regard!

I think you're proving my case that Resverlogix has been a horrible investment for anyone who has gotten into it at any time since I did in 2006.  That's 14 years of new lows being reached periodically.  One of my points recently was that the world is absolutely full of opporunity right now.  Of course, Resverlogix is not one of those companies in my opinion for a wide variety of reasons, not all of which I have discussed or disclosed here.  I had not heard of Intercept, but it sounds better than RVX.TO my friend!

Now with RVX, if I'm not mistaken they started as a Junior Capital Pool at $.20 a share in late 2001 or early 2002. They have been as high as $28 or $29 and currently sit at $.81 or about 4 times the original investment.

Going back almost 20 years now!   Twenty years to a non-traded share price of peanuts that was (I assume) offered to insiders.  That doesn't seem a good comparison to make.  How many investors were there then?   Let's talk about the company's experience on the stock exchange, where retail shareholders bought in (not insiders).  Were you around in 2006?  Did you read the hype and hear the statements that were made over the years?  I did!  The impression to me was that a pot of gold was just around the corner... three, six months away.  Maybe at the time of the end of the next trial.  All those roads led to nowhere for retail investors.  I think my quite honestly offered posts provide a warning to other investors... people who didn't hear it all before.  I'm not bitter.  I'm just doing what people on boards like this are supposed to do:  Offer commentary to the best of their knowledge and with a sense of being honest.   That's all.   Buyer beware!

In addition to this 4 fold increase in the RVX share price, that original investor has just as many shares of a spin-off company, Zenith Capital Corp that just finished raising money at US$ 1.50 per share or about $2 of the currency of origin. In total over that time the shareholders have $.81 + $2 or $2.81, 14 X's their original investment. What a terrible return on investment that is!!!

Again, your 4x increase in RVX shares is (I am guessing) a comparison of how the insiders who bought at 20 cents did prior to the stock ever being traded on the Toronto exchange.  Correct me if I am wrong.  Hence, the comparison is worth nothing.  Yes... insiders always get cut a deal and win... as they have here.

Zenith shareholders have pretty much dead money.  The funds have been locked up tight by management with no fair way for shareholders to get it back.  It's totally out of our control and we don't see whatever money new shares are sold at.  So, I'm not pleased with this investment at all.   The return is basically nothing for us, since we can't get at our funds.

There have been many thoughts regarding Zenith shared with retail investors over the years.  Never was it implied that our money be locked up for years and years.  Instead, they dangled the possibility of a NASDAQ listing or other listing.  Well, that was more hot air.  Nothing happened.

And suggested actual values of Zenith were much, much higher than $1, $2 or what have you.  There were lots of inuendos that it was worth much more.  Same with Resverlogix.   Again, it was just a lot of smoke.  Poof!

The evolution of any comanies story is always interesting. Timing of our investments is always crucial. The bottom line is we, as shareholders of RVX have made a concious decision to invest in a company in the highest risk category of any area of common stock investing. Our company and the 2 mentioned above have gone from rags to riches to rags to richs depending on how the science works out and is disseminated.

Timing since $29 many years ago (gosh when was that.....) has been down, down, down, down, down.  Good, lucky timing hasn't provided any relief for the beleagured, ignored retail investors.... generally speaking.

The $29 was all based upon rumours.  One in particular, as has been discussed here:   A Letter of Intent signed between the company and Roche.  I've read that some investors were appently shown a copy of a letter at a distance by certain persons.  Or one person.   Lots of smoke then and little fire.  Actually no fire.  The stock has been like a ships anchor pretty much since then.  I wish we had transcripts of the old webcasts, etc.   I think there was lots of smoke being created and that smoke created irrational exhuberance that blew up at $29 and fell pretty much consistently ever since.

Your comments around news dissemination in the past have a lot of validity. The science being developed within the company is still playing out. Brand new science is always going to be met with a healthy amount of sceptisism. We have talked about that a lot on this board. The FDA seems to be wrapping their heads around this new science now with the issuing of a BTD in Feb this year. What is challenging to except at this point is that the company is attempting to rectify exactly what you say they have as a major shortcoming, news dissemination, and you don't seem to be able to accept their printed words.

Yes, I agree:  My comments around news dissemination in the past have a lot of validity.  So do my comments around news dissemination today!   Now the I have to admit one of the statements you made above is a bit of a "trigger" for me because I find it so funny:  

What is challenging to except at this point is that the company is attempting to rectify exactly what you say they have as a major shortcoming, news dissemination, and you don't seem to be able to accept their printed words.

First of all its "accept" not "except."   Small point... I know... I'm actually being humourous here.  But apart from that, news dissemination has always, always, always been a shortcoming.  And... they have very repeatedly in the past told us they were fixing it.  Remember how they hired a VP of Communications (or something like that).  That guy left after a period of months, perhaps a year and half at most.  He was supposed to be a solution to the issue.  Nope... that didn't happen.  He actually irritated a number of people on this board... as reported here.  Didn't help at all in my view.   Then he was gone.

I also remember another company statement (in reponse to our complaints around 8 years ago) that they were promising to try and do a webcast for each company every 3 months.  That's exactly the time period they gave - every 3 months.  When did they ever live up to that:  As far as I recall never.  Not once.  Empty words, really. 

Communcations in the form of blue sky inuendos and lack of communication and follow-up items is the norm.  It's the only norm.  And another norm is promises to improve the situation.  I guess in 14 years as a retail investor in this group of companies, I ought to know.

And I'm not mentioning here what I would call company mis-information!   Meaning many many exciting things touted over the years that were never follow-up on and never happened. 

14 X's the original investment looks to me like an increase in shareholder value.

I think you might be smoking something, kiddo!   First of all, the Zenith money is dead.  Locked up long term with no current reasonable hope of ever seeing it again.  So that can't be called a return on investment since there is no "return."  The return is nada.

And using almost 20 year old figures on Resverlogix is also unfair, as the stock wasn't traded publically at 20 cents.  It was all insider share sales I'm guessing.  And so yes, there is little surprise that insiders did well.  Don't they always??? 

I'm talking for myself and other retail investors here.  We got a lot of exciting talk and little delivery of that.  We got a string of failed trials that didn't meet their primary endpoint.  We got a hugely touted partnership with Medtronics that went nowhere.  We got zero follow-up on many past items being touted by management (how about the deal in Israel... why no update there?). 

I think if you bought in anywhere after 2005 or 2006 (and maybe before... maybe as long as the Resverlogix stock has been traded or near so), you got shafted by a generally falling share price.  Forget about the spike at $29.  That was ages ago and seems to have been based upon sky high talk of an LOI and other exciting developments concerning the Holy Grail.

Finally, I'm not bitter.  I'm a happy guy each day.  I retired in my 30s, so I have little to complain about.  I have no debt, except a little on my car that I should pay off.  But I do know many many older people who invested and were excited about all the things they heard from The Source.  Some died waiting for the promise to be realized.   And on a regular basis I see their widows and drive them to doctor's appointments, etc.  I know what the hype did to real people, and it's not nice.  The Emperor can think he did everyone a favor here.  But I don't think he did for long term retail holders of this stock.  I know many examples.

They could have invested in pigmy pork bellies and done better.  Or just about any mutual fund they randomly picked out of a list.   Instead, they believed the stuff they heard and kept holding this stock based upon a future pot of gold.  It never came.  And communication and follow-up on past items discussed by management was sparse.

Is it going to come now?   I don't see it.   I wish I did, but I don't.  I see the stock as being about the only major stupid investment decision I have made!   I'm a lucky guy and have no mortgage.  I live well and within my means.   But there is a real price that has been paid by some investors here.

The past is the past.  But it has a strong correlation when it comes to predicting the future.

I'm not going to compliment the Emperor's clothing unless I actually see it....  What they have proffered doesn't come close at this time in my view. 





















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