ZIOP - Institutional ownership drops, Univ of Texas opts to sell remaining shares

For the period up to March 31st institutional ownership for Ziopharm is reported at 56,804,195 shares or 43% of the 132,000,000 outstanding.  That's as per Nasdaq's site using the most recent 13F filings.

75 institutions reported selling 9,478,065 shares, and 78 reported buying 5,399,666 shares for a net decrease of 4,078,399.  31 institutions reported selling out completely a total of 4,959,092 shares while there were 23 new positions reported for 2,116,425 shares.  That's a net difference of 2,842,667 shares favoring those selling out.

http://www.nasdaq.com/symbol/ziop/institutional-holdings

The biggest seller was the University of Texas Investment Management Co, or UTIMCO for short. They chose to sell their remaining 2,503,575 shares, all that was left from the 11.7 million shares they received for "choosing" to partner with Ziopharm.

I know there are some who probably think UTIMCO had no choice but to sell, thanks to some false information posted to Seeking Alpha by a blogger with the User Name Options2Wealth.  In a SA instablog this writer said that UTIMCO was obligated to sell the shares because of a charter mandate.  

Allow me to set the record straight on that score.

This error of thinking that UTIMCO was mandated to dispose of their shares in ZIOP comes from this link:

https://www.utimco.org/extranet/WebData/INVESTMENT/DistributedStockPolicy.pdf

Therein it deals with securities distributed to certain endowment funds, the PUF and GEF funds, standing for Permanent University Fund and General Endowment Fund respectively.  Ziopharm however filed their own 8K dated May 5th 2015 explaining how and when the shares might be sold. The 8K states:

• Pursuant to an Investment Management Services Agreement with MD Anderson, the University of Texas Investment Management Co., or UTIMCO, an institutional investment advisor, holds the License Shares and the Incentive Shares on behalf of MD Anderson and *is authorized to exercise investment discretion and voting power with respect to such shares on behalf of MD Anderson. Accordingly, Dr. Cooper has no voting power, investment power or control over *if or when the License Shares or the Incentive Shares will be sold, if ever, or the timing of the receipt of the proceeds, if any, from the sale of such shares. (*all bolding is mine)

Discretion, for those unaware, means an option or choice.  In other words there was no mandate to sell the shares because they weren't distributed to the PUF or GEF funds.  UTIMCO excercised their discretionary power and "decided" to sell out of their holdings in Ziopharm.  

Why?  UTIMCO represents itself as having an "Equity Bias".  That means they prefer holding equities to other investment vehicles.  Why they decided they didn't want to continue holding their Ziopharm shares though, I don't know.

I would strongly recommend reading the entire filing for those who mistakenly thought UTIMCO had no choice but to sell.  And to those who told UTIMCO "had" to sell, if you want to apologise for your error when I posted about this previously, the comment field is open.

Perhaps Options2Wealth will post a correction on Seeking Alpha.  That would be the right thing to do in my opinion, unless of course he willingly misrepresented the facts in the hopes of pumping up the share price, in which case I won't hold my breath.

The PR Ziopharm should put out in my opinion, refuting false claims

Does outright fraud bother you?

Some people learned about the fraud that was Bre-X and rather than being disgusted, they wish they could have profited from it.  Bre-X soared to unbelievable highs because soil samples were seeded with gold shavings from a wedding ring, it made investors, (even institutions) think this company had uncovered a massive gold strike.

Prolific ZIOP pumper RobCos has gone all over social media sites like Twitter with an equally false claim.  He's not putting shavings from a gold ring into a core soil sample, instead he's putting out false information about a person who is bravely fighting a battle with cancer, all in an effort to boost the PPS of Ziopharm in my opinion.

What is he claiming?  Here's what he put on Twitter:

 

rc

‏@pharmamaven

$ZIOP patient #1 stage 4 failed all other therapies MRI clean almost 1 yr out vs 3-5 mos expected OS. http://www.investorvillage.com/smbd.asp?@intercooleronli …

• RETWEET
  1
• LIKES
  4
• 

10:41 AM - 24 May 2016

And here is what he put up at Investorvillage: (click on the text to visit the actual post)

• Lets all remember what this is about - giving these poor people with mostly stage 4 GBM who failed previous surgeries and treatments including some with chemo and surgeries who are expected to live 3 to 5 months hope. Charles previous treatments all failed and he is off them now - his tumor always grew back faster than it has this time on the IL-12+V treatment and he is in a few weeks going to be one yr on the new therapy after everything else failed with no tumor regrowth on this therapy. God bless him. Lets all stop the negative posts for a day and say a prayer for all of the patients on this trial and everyone with cancer. Amen.

It would be incredible news, if any of it were true, and frankly I wish it was true.  But the facts say otherwise.

RobCos aka pharmamaven sourced his information from a website written by a Mr. Peacock called ''The Brain Chancery''.  RobCos claims that patient #1 failed all other therapies, which again I wish was true.  Here is what Mr. Peacock says on his website:

• I’m going to start taking Temodar again, which is the same exact stuff that I took at the beginning, for an entire year.  One great thing is that this time, I’m going to take a much lower dosage, and I have so much less tumor in there now that this makes sense.  It has a good chance of working.  And here’s a big reason why we think so:
• Temodar doesn’t always work for everybody, and sometimes it doesn’t work at all.  But as Dr. Hu pointed out: for that year that I was taking Temodar, my cancer did not spread or grow at all.  It only shrunk.

Obviously if a treatment resulted in a tumor shrinking, then it didn't fail.  There is still no cure for cancer, treatments heretofore have been geared toward increasing life span and improving quality of life.  Yes there are individuals who have been treated by various means who remain cancer free, the patient at Duke, cancer free for four years and profiled on 60 Minutes springs immediately to mind. But even her doctors are hesitant to use the word cure.

As for RobCos claim of a ''clean'' MRI almost 1 year out.  That is another fabrication, I wish Mr. Peacock did have a cancer free ''clean'' MRI, but thankfully at least his latest MRI showed no growth according to his blog, so that is positive.  A clean, cancer free MRI is my most sincere wish for him.

Does any of this really matter though?  I mean its just one shameless Internet poster, obviously the guy behind it is morally bankrupt.  But who is RobCos or Pharmaven anyway?  I mean if people are dumb enough to believe some internet pumper, then they get what they deserve....right?  Sure, and I guess shaving a wedding ring down to falsify core samples is fair game, and defrauding people out of their money à la Bernie Madoff is okay too.

RobCos has something of a following.  He moderates the investor forum for Ziopharm at InvestorVillage, with his posts regularily being recommended 30, 40 sometimes 50+ times by users. On twitter his account boasts over 1,500 followers.

I have little doubt that there are some sad individuals out there who have seen this bogus information, and have gotten quite excited and either took out a position in Ziopharm, or added to an existing one.

''Wow!!!  This company has treated a guy and his MRI is clean after almost a year after he failed every other treatment".

Now maybe Ziopharm doesn't care that there is an individual spreading false information about their company?  I don't know.  Their CEO reportedly made something like $15 million last year, with much of that compensation being stock based.  I know in the past Ziopharm put out a press release to confront false information on their company written on a blog, but in that instance the information they were refuting was negative.

Maybe they don't care about falsehoods being shared all over social media, so long as the information has a positive spin?

Here's the PR I think they should put out, or something along these lines:

ZIOPHARM Oncology, Inc. (Nasdaq:ZIOP) today issued the following statement regarding information shared on social media sites like Twitter by an individual with various user ID names including RobCos and pharmamaven.  

The statements made by this individual are misleading and wrong.  We have made no representations of having a patient in one of our trials with a clean MRI, or of having survived almost 1 year after failing other treatments.  

While our recent PR of May 18th cited favorable interim survival results it was noted in the release that these results are early and involve only a limited number of patients. While the company is encouraged by the results we wish to repudiate the claims made by this RobCos aka pharmamaven individual on various social media sites.

I would love to see it, but I won't be holding my breath.

Desperate ZIOP pumper cites "clean" MRI for phase I trial patient

The English language is insufficient to register my disgust with a prolific contributor to various social media platforms who has been promoting ZIOP as a winning investment.  

Verbal sword play is to be expected at places like Stocktwits, Twitter or on message boards where stocks are discussed.  Longs will tout the positives, whether real or perceived, speculating on a bullish future. Bears will naturally do the opposite.  There's lots of name calling and penis waving as debates rage, and a lot of the time it can be fun.  Conflict is the essence of a lot of entertainment.

But it can go over the top, into Enron or Bernie Madoff style pumping where information which is completely erroneous is foisted on the Internet.  

I want to be perfectly clear about something here.  This is not a reflection on Ziopharm the company. No firm, publicly traded or otherwise, can control what some morons put out on the Internet, and to expect otherwise is unrealistic.  

Years ago a SeekingAlpha writer wrote a blog which it seems was published on Forbes.com as well, with information that Ziopharm claimed was inaccurate.  The posting was removed, and based on the available information it seems Ziopharm was claiming that the author's information about a Phase II study of their drug candidate Palifosfamide was misleading and wrong.

You can read their response here:  

http://www.globenewswire.com/news-release/2012/10/19/498408/10009112/en/ZIOPHARM-Issues-Statement-Regarding-Misleading-Blog.html

That is all well and good, ultimately investors need to have good and reliable information upon which to make investment decisions.  The fact that Palifosfamide ultimately failed doesn't matter, if Mr. Pearson was putting out inaccurate or misleading information it behooves the company to set the record straight.

But its a two way street.  You can't just seek to correct falsehoods that throw a negative light on your company, and then ignore an outright lie because it has a bullish positive tilt.  And this lie is so disgusting it boggles the mind.

Here's the tweet.

 

rc‏@pharmamaven

@AvoidTheBag $ZIOP patient #1 stage 4 failed all other therapies MRI clean almost 1yr vs 3-5 mos expected OS http://www.investorvillage.com/smbd.asp?mb=16353&mn=52416&pt=msg&mid=16038066 … $XON

10:46 AM - 24 May 2016

This is absolutely disgusting.  This patient #1 being referred to writes a blog himself, and he recently uploaded his MRI onto his site.  The only thing is the author of the blog makes no representation about having a "clean" MRI.  

You can check it out yourself:  https://thebrainchancery.com/2016/05/24/show-us-your-scans/

According to Ziopharm's own PR on the subject they say that: 

• "Recurrent glioblastoma is an aggressive cancer with one of the lowest 3-year survival rates, at 3%, among all cancers" 

This gentleman has been writing about his battle with cancer since April of 2012.  That's over 4 years ago. In September of 2015 he wrote about going on Temodar "AGAIN".  Noting that the previous time he'd done it his tumour shrank.  Temodar is a brand name for Temozolomide, the generic moniker.  

What did Ziopharm say about Temozolomide in their recent PR?

• For patients who have experienced multiple recurrences the prognosis is particularly poor, with a median overall survival (OS) of 6-7 months, while OS in patients that have failed temozolomide and bevacizumab, or equivalent salvage chemotherapy, is approximately 3-5 months. (*bolding and emphasis is mine)

This guy's story is an inspiration, and to totally misrepresent the facts to pump some stock is beyond reprehensible, in my opinion its criminal.  Saying all other therapies failed when this man's tumour shrank after chemo treatment with temozolomide is disgusting.

So who is the waste of skin "pharmaven"?  He posts on Stock Twits with the same user name and on other sites including Investor Village as RobCos.  Investor Village is ground zero for pumping Ziopharm.  Someone linked up one of my posts on there, and in just one hour there were over 100 page views coming from that site, then it was taken down.  What  a shock.  

RobCos of course is the chief pumper, cheerleader and moderator of the Investor Village forum. And Ziopharm in my opinion should distance itself publicly from this Enron style pumper.

A science lesson for investors in Ziopharm

Investors in ZIOP got quite excited by the news which just came out last week about the company's currently running Phase I trial for Ad-RTS-hlL-12 + veledimex.  The news was shared across numerous social media platforms where stocks are discussed and even on twitter.

Why were investors excited?  The subject line of the press release said it all, citing "Favourable Interim Survival Results".  That led some Ziopharm investors, many who post to stocks sites and twitter, to draw a cause and effect relationship.  Ten out of the eleven patients in the trial were still alive, ergo the trial was the reason these individuals were surviving.

If only science was that simple.

The first posting I ever wrote on Ziopharm was back in March of 2015 on Seeking Alpha where I expressed the opinion that ZIOP represented a speculative bubble.  That was when ZIOP was trading over $13 per share.  In the comment section I was roasted.   One thing in particular that I wrote served as a point of a attack for the haters.  In that posting I freely admitted that I do not have a medical or scientific background.

You can read that posting here:  http://seekingalpha.com/instablog/15663412-joe_retail/3802236-ziopharm-oncology-a-speculative-bubble-poised-to-collapse

Lacking an in depth knowledge of medicine I was deemed ill equipped to judge such a "transformational" company as Ziopharm.

In light of the excitement over this most recent "news" it appears that there are many investors in Ziopharm with even less of a scientific background than your's truly.  After all, I have taken science courses in both high school and university, and I at least understand the reasoning and rationale behind what is generally referred to as the Scientific Method.

Obviously those drawing a cause and effect relationship between this trial and patient survival do not. I can just picture some scratching their heads right now saying:  "The Scientific what"????

This is a single arm study, there is no control group nor is there a placebo group.  This is so rudimentary, but reading the comments on sites like StockTwits, Twitter, Yahoo, InvestorsVillage and InvestorsHub, its strikes me that a lot of posters have no idea what control and placebo groups are or why they're important.  That or they're being willfully obtuse in an effort to lure in the Homer Simpson types of the investment world by touting the survival results as "proof" the therapy works

Now to be clear, a phase I study doesn't need either a control or placebo arm because the goal isn't to prove something like a survival rate.  The primary goal is to simply prove safety, or efficacy if you prefer the fancier term.  Basically they need to ensure the treatment doesn't cause death or adverse events, like say a heart attack.  Secondary to safety is to determine the maximum tolerated dosage as well as any immune and biologic responses...if any.

On the primary objective of this study it appears that, at least at this early stage, its mission accomplished so far.  Ten of the eleven patients are still alive and there's no news about Adverse Events or AEs in those ten individuals.   That is excellent news in of itself.  Had there been a number of AEs and/or deaths, then they would likely have to go back to the drawing board.

As for the secondary objectives, particularly immune system response, we have a "suggestion".

CEO Dr. Cooper says in the PR that the data they have "suggests" the results are exciting.  What that means exactly, I haven't the foggiest idea.  I'm assuming it to mean that the results may be exciting, or that ultimately they may not, there isn't enough information to go on.  If the data was definitively exciting why qualify it by using the word "suggests".  

As for survival rate, that will be either proved or disproved in later trials, and those trials will be much more in depth, involving more than just 10 or 11 patients I have no doubt.

So why are control and placebo arms important?  I can't believe I'm explaining this, but its obvious from the posting I see on social media sites that a lot of people don't understand it, especially at InvestorVillage which strikes me as ground zero for the pumper crowd.

I'll deal with a placebo arm first.  The placebo effect is well known.  People receiving a sugar pill or something similar with zero medicinal value have been shown to experience healing results for years across a variety of trials and experiments.  The relationship between the mind and healing is an area that most people recognize.  Having a positive mental attitude boosts the immune system, while being depressed weakens immune response.  A patient just knowing they're receiving a treatment, that can help in achieving positive results, even if the treatment is something as useless as a sugar pill.

A control group on the other hand receives no treatment at all, not the drug therapy or a sugar pill (placebo).  The results of a drug undergoing a trial with three arms can then be measured against two variables, against those who had no treatment at all, and against those receiving a placebo.  If the drug arm doesn't outperform the placebo and control groups then you have a failed trial.  If the drug arm outperforms the other two, then you may be able to move onto the next step.  And if the performance is significant enough you may have something worthy of FDA or similar approval, ultimately a marketable drug or therapy.

Now to be as clear as possible, this is not easy stuff, not when you're dealing with a disease like cancer.  There are so many variables that it can be at best difficult and at worst impossible to run a 3 arm study.  To get the best and most scientifically responsible results, then each arm should be identical.  Same ages, sexes, races and with the same diseases at the same stages.   There can be differences in the way different racial groups respond to treatments based on varying genetic make ups.  Some populations are more prone to certain conditions than others.

With a disease like gliablastoma, I can't see being able to get 3 identical groups with the exact same characteristics, the same tumor locations and sizes, with the same treatment histories and everything else.  

Obviously with a two or three arm trial they would want to at least approximate each group, so that they are at least somewhat similar, but you're never going to get perfectly identical groups.

As noted in the PR, the results so far are incredibly early.  Only 6 patients treated 6.2 months or longer, and only 10 in total.  According to the clinicaltrials website this trial is not estimated to be fully completed until December 2018, over 2 years from now.

So why tout survival results from a trial not designed to measure that variable?  I am of the opinion, that as a public company, Ziopharm and its principles were looking to perhaps support a falling share price. There are a lot of Homer Simpson types out there who will draw cause and effect conclusions when at best all that can reasonably concluded is a correlation.

For those still unsure of the difference between cause and effect and correlation, I'll leave it to Lisa Simpson to explain it to you.

One last note, as noted in earlier postings about Ziopharm I own put options so my opinions are not without bias.

Ziopharm - News long on hope, vague on data.....

The primary goal of most phase 1 clinical trials is to prove safety, basically to show that a drug, therapy or treatment doesn't cause severe adverse reactions and/or death.  With the news out of Ziopharm today (May 18th, 2016) it seems that goal is being met.  They reported that their on going phase I trial of Ad-RTS-hIL-12 with Veledimex for patients with Glioblastoma has enrolled 11 patients with only 1 death.  

http://ir.ziopharm.com/releasedetail.cfm?ReleaseID=971714

The company cites the median follow up as being 6.2 months, which compares well given that this form of aggressive brain cancer typically comes with a prognosis of death in as little as 3 or as many as 7 months, depending on what treatments have already been administered according to the release.

It sounds good, and it is.  This trial is, so far, meeting the primary goal of a phase 1 trial, its proving itself to be safe.  But the data is more than a little thin and leaves lots of questions.

The first and most obvious question relates to the median figure of 6.2 months.  Median, as anyone who's taken even a high school level course in statistics knows, represents the middle point.  Given that this trial data represents 11 patients, this median figure means that 6 patients have been in the trial for 6.2 months and longer, and 5 have been in less than 6.2 months.  

Is this important?  I think it is, definitely.  Of those 5 cases that have been in the trial less than 6.2 months...How long have they been enrolled?  Is it a few weeks, a few days?  The PR doesn't say.  

Why not include that data, let the world know what the shortest and longest number of months in the trial is?   Instead of just citing a median figure why not include more information so that shareholders and prospective investors can make a more informed decision.

Instead of just saying "Overall median follow-up for patients enrolled in the trial is 6.2 months with 10 of 11 still alive".  Why not add...."with the range being from 1 month to 11 months"?  Another significant point is the one death.  At what month did it occur?  Was it at 1 month, at 2....at 10?  

I can't help but question why more data wasn't included.  Its only 11 patients, why not give the time in for each?  It wouldn't be hard, I'm sure the data is readily at hand.  

Obviously there are only 6 patients who have been enrolled for 6.2 months or longer, that much is not in question.  But presenting data on just 6 patients might seem almost desperate.  Did they include patients only enrolled for a month or two to boost the number so that it would appear more meaningful and then only cite the median figure in an effort to spin the news?  In my opinion that is a very legitimate question.

If you go to clinicaltrials.gov you can read about this trial:

https://clinicaltrials.gov/ct2/show/NCT02026271

If you check that site you will see that the estimated enrollment is 48 patients.  So 11 is less than 25% of the estimated total, and the study start date is listed as June 2015.  If they did start in June 2015, then they've been dosing about 1 patient per month on average.  The estimated primary completion date is given as December of this year, that's for the primary outcome measure, safety.

That means they're going to have to start enrolling patients at a much faster pace if they want to have any deep and meaningful data by the end of the year.

The estimated date for completion of the full study is given as December 2018.  

This is notable because Ziopharm, as everyone already knows, only projects having enough cash to maybe last to the end of 2017, and they fully disclose that they will be in need of raising more capital.

That has me thinking that this PR with very little deep or meaningful data was perhaps pushed out in an effort to prop up a falling share price.  If another secondary is coming sometime next year, and I view that as a slam dunk, then the higher the PPS is, the less dilution that will be required.  And with all the share based compensation it certainly seems logical to me that the powers that be within the company would want to shore up the falling share price.

Thoughts anyone?  As I've disclosed previously I do own put contracts so my views are not without bias.  

Ziopharm - No short squeeze and no buyout

I have been accused of being obsessed with Ziopharm, and there is certainly some merit to that opinion.  I have a passion for the stock market in general, and right now Ziopharm is an ongoing fixation that's lasted a little over a year.  

Before ZIOP those who follow me on stocktwits' (where I post as growacet) will remember that it was MOBI that occupied my bearish attention, being a stock I viewed as a hyped up pump job.  

Both MOBI and Ziopharm came onto my radar the same way, from an email blasting chop shop. This outfit has hyped a number of stocks, LEJU, SBOT and CLDN spring immediately to mind on top of the aforementioned MOBI and ZIOP.  

Touted as investments, citing forward looking promise....but you can check the charts to see how well they did as long term holds.  CLDN was pumped by this shop in early 2015, but don't look for it now, it doesn't exist.  After a 1:15 reverse split it merged with a company called Eiger Biopharmaceuticals.  

Puke, frankly this type of promotion turns my stomach.  

I had a friend named Dave.  I use the past tense because Dave (not his real name) isn't around anymore, not for his wife, not for his two daughters.  I'll never know the precise reasons Dave decided to take his leave, but I'm pretty sure I know why.  He played the market, and was just the type of guy that email blasting chop shops rope in.  He had a good job with a good salary, but dreamed of winning the market game and getting rich beyond his wildest dreams.

People can and do get hurt playing the stock market, gambling with money they can't afford to lose. And these promotional outfits couldn't give a rat's rosy rear end.  To quote Gordon Gekko:  ''Greed is good''.  So long as these slime make money, they don't care.  

I want to make one point very clear here, the shop I'm referring to is one of the best in my experience, and that's what makes them dangerous for newbie and unseasoned investors and/or traders.  What do I mean by good?  

What I mean is the stocks they tout often make very quick and sizable gains after they start pumping them.  Here's the chart for LEJU which stockreversals (hell I might as well include their name) started pumping shortly after it started trading.  In August of 2014, they recommended it at $12 to their email sucke...errr, subscribers.

That's pretty typical for the stocks this outfit hypes.  After touting it at $12 it quickly climbed up around $18.  Then over the ensuing months it crashed hard, falling all the way as low as $3 and change, today its worth somewhere around $5.

Someone who bought 10,000 shares at $12 would have been in for $120,000 and now they'd be getting somewhere around $50,000....a $70,000 loss.  And don't think those kind of losses don't happen.  

Of course they've long since moved on from promoting LEJU, and ZIOP for that matter.  

Their latest ''hot stock'' is KTOV', another relatively new issue like LEJU was.  Does the climb look familiar?

Can I say with certainty that KTOV will follow the same pattern that LEJU, ZIOP, CLDN, SBOT and all the others did?  Nope, I can't.....but I would not bet against it either.  I have no doubt that those promoting KTOV will say, ''this one is different'', it always is.

Now, again....let me be clear.  I know that apologists for stockreversals and other promotional outfits of this ilk will say, and rightfully so, that these stocks all did make gains from the prices at which they were profiled.  

In so far as I am able to verify that information, it is a true claim.

But I also understand the mentality of retail investors, as do promoters.  Retail investors have a bad habit of actually becoming attached to their stocks, of reading every news item and opinion piece that comes out.  Its not long before the average retail investor believes the forward looking promises. Especially with speculative companies with a history of burning through cash and diluting.

The professionals and the chop shop boys know this, they know how retailers think, and they profit from it.  I used to work as a financial consultant, and I know all too well that average investors, investing in individual stocks, that they overload and don't have proper diversification.  

Retail investors end up being the fulcrum around which the professionals make bank, alternately pumping and dumping, and then shorting and distorting.  Joe Retail (my chosen sobriquet here) wants to find quality stocks that he can buy and hold, ones that will deliver long term value.  Some volatility is to be expected of course, but not the kind that leads to charts like the one above for LEJU and all the others if you want to check them out.

So what happens?  Whether its MOBI two years ago, or LEJU or ZIOP, retail investors are left holding the bag, unable or unwilling to take a loss.  They become convinced they've been scammed. Not by the jokers who sent out the emails, but by dark market forces determined to hold their stock down.  

That's what's happening with ZIOP right now in my opinion.  Many shareholders are unwilling to acknowledge even the remote possibility that they were roped in by promotional hype.  And if they go to social media, places like InvestorVillage for example, they find others telling them what a wise choice they made.  Even if their shares are now worth half of what they paid for them.

Everyone can read the filings.  Ziopharm has not misrepresented anything.  They have nothing in late stage development.  And they're projecting that they won't have enough cash to get them beyond 2017.  Ziopharm's 10Q and 10K filings are very clear in saying that they're going to be in need of raising yet more money.  And they allow that their current resources may not even last til the end of 2017, that expenses could increase meaning they would run out even sooner.  The risks are fully disclosed.  

The quarterly and annual filings use terms like expectation, and words like may and could.  But expectations are often not met, and what ''may be'' and what ''could be'' can also be expressed with equal accuracy by saying ''may not be'' and ''could not be''.

The hope that many ZIOP shareholders seem to be clinging to now is that of either a buyout or a short squeeze.  Or both.

Again, this is only opinion because we're talking about the future here....but to use the vernacular of my youth growing up in NYC and NJ, ''FUGHEDDABODIT''!!!.

Firstly on the buyout side.  Yes, RJ Kirk has orchestrated some blockbuster deals in this space.  He did an incredible job in selling both Scios and New River to big pharma companies .  But Scios and New River had drugs that were either approved or in late stage development.  Ziopharm by contrast is probably 5+ years away from even being close to anything, and as noted before they don't have enough Do Re Mi to last that long.

On top of that the buyers of Scios and New River....they definitely got the raw end of the deal in my opinion.. Johnson and Johnson has had to take write downs for Nacretor, the drug developed by Scios.  I could be wrong, but the old adage....''fool me once'' springs immediately to mind.  

Maybe RJ can convince someone to buy Ziopharm, but I can't see why they'd pay anything even close to the current MC of $900 odd million for a cash burning company with nothing in late stage development.  

Finally there's the case of short interest, which for Ziopharm sits at about 30% of the float as of the most recent update to April 29th 2016 according to WSJ.com.  This is nothing new for Ziopharm of course, the short interest has been high for a long time.  

Shorts didn't rush to cover the 35 odd million they were short in November 2015 when the price was pushing up near $15.  Why they'd all of a sudden be forced into covering at less than half that price now is beyond my ability to comprehend.  I think those touting a pending short squeeze, that they're either naive novice investors, or industry hacks trying to keep the retail monkeys holding their bags.

Full disclosure, I like to have some skin in the game about the stocks I write about...and with ZIOP I do own put contracts.  All the other stocks previously mentioned in this posting though, I have no position long or short in any of them and no futures contracts.  

I'm going to close this off, but I want to write about one last thing, my faith.  I am Christian, and as most people will be aware, a central tenet of the Christian faith is to 'do unto others....'.  I don't want to overstate this, I'm not one of those guys you are going to see standing on a street corner trying to get people to accept Jesus as their personal Lord and Savior, I'm not an evangelical nor a fundamentalist.  But I do have a strong faith in the teachings of Jesus of the Bible, in particular those which appear in more than just one Gospel.

Writing this blog is somewhat cathartic for me, and it helps me sort out my own thinking.  And one thing I know is that I might just have a log in my own eye while I rant about the sliver in the eyes of email blasting chop shops.  I've written about some companies that I believe have good prospects for price appreciation, but I have not fallen in love with them and if they make big gains I fully intend to dump them.

EGT.V certainly falls into that category.  And LAC.TO is another that I'm watching closely for irrational exuberance.  So far the only stock I've written about that I genuinely believe has excellent prospects as a buy, hold and prosper investment is HMPR for the reasons enumerated in my posting on that company.  I'll be writing about another soon, Extendicare a dividend paying retirement-nursing home.

Peace.

Ziopharm - The Wall Street Sting

Have you seen ''The Sting''?

Its a movie from 1973 about con-artists in the 1930s starring Robert Redford and Paul Newman, among many other notable actors including Robert Earl Jones, the father of James Earl Jones.

Here's the Cliff Notes version, or Coles Notes for Canadians like me :-)

Two small time hustlers, Hooker played by Robert Redford and Luther played by Robert Earl Jones, pull a con on a guy charged with delivering money from an illegal gambling outfit.  They play out a little scheme  and succeed in switching his envelope filled with about $10,000 for another stuffed with tissue paper.  They score big.  The only problem is that the 'bag man' they hustled was a runner for one of the biggest crime bosses in the city, Doyle Lonnegan, an Irish mobster.

Lonnegan has Luther killed and has a contract put out on Redford's character Hooker.  Wanting revenge on the big crime boss Lonnegan, Hooker seeks out legendary con-artist Henry Gondorf, played by Paul Newman, who is also a friend of the now deceased Luther.  They concoct an elaborate scam to swindle Doyle Lonnegan out of $500,000.

But here is the central point.  Newman's character Gondorf explains to Hooker that the con has to be played all the way through.  After they've taken Lonnegan's cash the old Irishman still can't know he was swindled.  Its a great movie and here's a spoiler, they succeed.  But knowing that won't ruin the movie, its all about how its done.

What does this have to do with Ziopharm you ask?

Allow me to explain.  But please note, this runs deeper than Ziopharm, this is just the way the big Wall Street type players operate a lot of the time, especially when it comes to speculative money burning companies.

The Company

Let's go back in time, all the way to 2014.  Ziopharm closes out the year with a closing price of $5.07 on December 31st 2014, which is actually a big improvement over where it was a few months earlier in October when shares could have been had for just $2 and change.

All the way back in 2011 Ziopharm entered into a channel partner agreement with Intrexon, not that it ever had much affect on the share price.  Between January 2011 when the agreement was signed and the end of 2014 ZIOP's share price never once touched even a mere $8.

As 2014 closed out the 10K filing for that year reveals Ziopharm was down to about $42 million in cash and equivalents, with cumulative net losses totaling over $370 million to that point in its history. This amount may seem large, but take note of the fact that this company has been around since 1998 when it was incorporated under the name Net Escapes Inc. which was later changed to Easy Web in 1999.  Ziopharm was born in 2005 via a ''reverse acquisition'' of Ziopharm Inc.

Shares issued up to December 31st 2014 were a little over 104.4 million, with the company authorized to issue as many as 250 million in total.  Basic and diluted net losses per share for the year ended 2014 came it at (-$0.31).  The line item for stockholders equity shows $33.8 million, or about 33 cents per share.  In terms of a clinical pipeline, at the end of 2014 it appears there was nothing undergoing any clinical trials, just plans  for 2015.

So let's sum up.  at the end of 2014 Ziopharm was a company that:

• Started out as an outfit called Net Escapes then later changed it name to Easy Web.
• Had over 100 million shares issued and outstanding
• Net losses for the year came in at over $31.7 million
• The accumulated deficit at the end of 2014 was approximately $372 million
• Had no current trials developing any drugs or therapies.
• Their only late stage (ph-III) trial had failed in 2013 for palifosfamide.

I've seen OTC penny stocks that looked better strictly from a fundamental and financial perspective. If you want to verify any of the information I've just provided you can read Ziopharms 10K filing for the year 2014, in fact I encourage it:

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=10519440&RcvdDate=2/26/2015&CoName=ZIOPHARM%20ONCOLOGY%20INC&FormType=10-K&View=html

So how did a company with this type of history go on such a wild ride, climbing from less that $3 in October of 2014 to highs of near $15 in 2015?  And how did the company raise the money needed to continue operating?

Wall Street to the rescue!!!

Enter J.P. Mogan Securities LLC as the lead underwriter for a secondary offering of 10,000,000 shares priced at $8.75 for the public in February of 2015.  In fact they over subscribed, taking an additional 1,500,000 shares under the same price conditions.  $8.75 as noted was the price to the public, the underwriters paid $8.225 per.  That filled Ziopharm's cash register to the tune of about $90 million after discounts and expenses.  

Thanks to the cash infusion Ziopharm was now well capitalized, and they projected their resources might be enough to finance the company into the fourth quarter of next year.  After that their filings say they will require further financing.

But how could the underwriters get the public excited enough to pay $8.75 or more for the 

secondary offering?

J.P. Morgan Securities LLC was the sole book running manager for the offering, and BMO Capital Markets acted as the senior lead manager.  Then there was Griffin Securities, Maxim Group and Mizuho Securities U.S.A. all of whom acted as co-managers for the offering.

That's quite a team, with analysts to provide coverage and clients numbering likely in the hundreds of thousands.  Still though it probably would have been a tough sell, a biotech/pharma company with nothing in late stage development and burning through cash with over 100,000,000 shares issued at the end of 2014 and more on the way.

But by the time those 11,500,000 shares started trading big news had already been announced.

The MD Anderson feeding frenzy

Thanks to an agreement with the MD Anderson Cancer Center,  Ziopharm made a big splash in the hot CAR-T space. Companies like Juno and Kite had already seen explosive growth in their share prices thanks in major part to their CAR-T initiatives, and now Ziopharm was set to join the  party.

Of course the partnership with Anderson didn't come cheap, Ziopharm and Intrexon ponied up $100 million large for the deal, split evenly between the two.  Thankfully MD Anderson took payment from both in shares, because let's face it, the way Ziopharm burns through cash they didn't have a lot left over.

Even better, JP Morgan was hosting their 33rd annual Health Care Conference in January of 2015. What better place to announce the MD Anderson news?  Apparently MD Anderson was a willing partner, and was okay with accelerating the agreement to accommodate Ziopharm and Intrexon, but not for free.  It required an additional payment of $15 million split equally between the two companies, all in shares again of course.

What was the effect of announcing the Anderson deal at the JP Morgan Healthcare conference?  You be the judge, on the day Ziopharm's CEO made his presentation over 38.7 million shares of ZIOP traded hands with the price closing at $8.87 after closing at just $5.74 the previous day for a one day gain of 55%.

And that was just the start, Wall Street was just getting warmed up.  After all, the secondary offering which JP Morgan was leading was slated for February.  But now they had a compelling story. Ziopharm had just been "chosen" by the most prestigious cancer centers in the United States, and maybe even in the world.  This was a story that needed an audience, and with some major players in the financial markets on board you know the story was going to be told.

Enter the analysts

Remember the firms involved in the public offering of an eventual 11,500,000 shares?

JP Morgan's Cory Kasimov rated the stock as neutral following his firm's Healthcare Conference and did not provide a price target.  Other companies working the secondary offering however were far more bullish.

• BMO came out with an outperform rating and a price target of $15 after the conference saying that the Rheo Switch technology "could" be a game changer.  
• Griffin rated ZIOP a buy and put a price target of $12 on the stock, which was later raised to $21 in March.

Bring on the promoters

It wasn't long before ZIOP became the darling of social media.  Interest exploded with the Ziopharm thread on InvestorVillage becoming the most active forum led by some guy with the user name RobCos assuming the role of chief cheer leader.  On Stocktwits thousands of user IDs put Ziopharm on their watch lists.  

Anonymous emailing shops like stockreversals started hyping Ziopharm to their book. Some outfit called "Medical Technology Stock Letter" through its website Bioinvest included Ziopharm in its reccomended portfolio and alerted its email subscribers.  

The games had begun and ZIOP's share price did what would be expected, it soared, taking three or four runs at the $15 mark in 2015 but never able to break through that barrier.

And now?  As of this past Friday May 13th 2016 the PPS closed at just $7.25, even less than where it was following all the excitement of early 2015.

So what happens now?

Many of those investors who bought into the hype and excitement are likely hunkering down, convinced in the long term potential for Ziopharm to develop a cancer treatment or cure.  According to the projected timelines included in Ziopharms own SEC filings clinical trials take between 1 and 2 years for phase I, between 2 and 3 years for phase II and between 2 and 4 years for phase III.

Given the early stage that Ziopharm is at shareholders are looking at between 5 and 9 years from start to finish before the company projects that a drug approval "could" be obtained.  I use the word could because Ziopharm could fail again like they did 2013 with palifosfamide.  And the company anticipates having only enough cash to get them into late 2017, next year.

After the secondary share offering in 2015 the investment machine went to work, analyst targets of up to $21 per share, email blasts, social media types all over twitter, stocktwits, yahoo and other sites. All that activity brought in a lot of buyers obviously.  But is there any incentive now to bring in a huge level of buying interest?

I'm sure there are individuals posting in social media who believe they can spur interest in the company, but realistically nothing can compare to the hurricane winds that come from a stock that has the big boys of Wall Street working their magic.

Maybe sometime next year though, when Ziopharm is again running low on cash, maybe then another tsunami of promotion will come to bear and push the PPS higher.  Until that time I see the PPS drifting.  Ziopharm has a huge following and I have no doubt that there are Hedge Fund types pushing it around, pumping it up and dumping then shorting and distorting, that's their game.

Perhaps they could make their existing cash last a bit longer with some austerity measures.  It certainly had to by eye popping when American Business Journals came out with the story that Ziopharms CEO earned more money in 2015 than the CEOs of major pharma companies like Novartis and Roche.  (STORY HERE)

In the meantime retail buy and hold longs will be told..."Ahh well, that's the market, you can't win them all".  Retailers are the marks, and nobody is gonna yell GOTCHA when the bag closes.  After all, this is nothing new....and  the machine that is "The Street" will want them coming back for the next big show and investing more money.  

If its shares of Ziopharm that are being sold again the story will have to be even better than it was at the start of 2015 in my opinion.  Now its a company with an accumulated deficit of over half a billion dollars, billion with a B.  And instead of a 104 million odd shares there are now over 130 million.

The comment field, as always, is open.  But no profanity or attacks will be tolerated, keep it mature.

Full disclosure, I own ZIOP put contracts so my opinions and views are not without bias.

Why did Univ of Texas Investment Management Co sell out of Ziopharm?

*Full disclosure, I own ZIOP put contracts so my opinions and views are not without bias.

Was UTIMCO "mandated" to sell its holdings in Ziopharm?  Or was that just something a stock promoter made up?

Marketing is an interesting thing, sometimes it borders on propaganda.  Repeat something often enough, and many people come to accept it as fact, even if there are no facts to back it up.

Companies and their advertisers repeat a line over and over until it becomes embedded in the collective conciousness.  If I say "Maxwell House", the first words that will spring into the minds of many people will be "good to the last drop".  Hear the words "Fox News" and the statement "fair and balanced" will likely be associated, even by those who believe Fox News to by anything but.

Its not just in business either, branding statements are all over politics as well.  The city of Toronto had a famous and infamous mayor, who maintained much of his popularity even after numerous scandals and drug use because of the oft repeated line that he "saved Toronto taxpayers $1 billion dollars".  It wasn't true, but it was repeated so often that....in the minds of a good many people, it was.

Which brings me to Ziopharm and the Univ of Texas Investment Management Co or UTIMCO for short.

As most people reading this will be aware Ziopharm and Interexon entered entered into a licensing agreement with the University of Texas MD Anderson Cancer Center.  As part of this agreement Ziopharm issued 11,722,163 common shares to the Board of Regents of the University of Texas System.

http://www.sec.gov/Archives/edgar/data/1019231/000101923115000008/sec13gziopharm.htm

Those shares have since been sold.  But why were they sold?

There's a Seeking Alpha blogger with the username Options2Wealth with over 700 followers on that site who's blogged frequently about ZIOP.  Back on November 29th 2015 he put up a posting: "ZIOP You Ain't Seen Nothin' Yet!". That was back when Ziopharm was trading over $13 per share.  He was predicting big things, to the moon....all the usual stuff.

Then in December 2015 the bottom fell out as the share price cratered all the way to about $5 by the end of January. 

Part of the reason for that drop may have been that the University of Texas reported selling off a large number of their shares, and they've since sold off what was remaining.  The question was (and is) why?

Seeking Alpha To The Rescue

Options2Wealth then wrote another blog posting entitled "Oh, What  A Whupping!" published February 21, 2016.

In this posting the writer explains why he'd been so wrong about the predictions he'd previously made.  And he wrote that the University of Texas' charter "mandated" that UTIMCO had to sell any unrestricted securities, and not to be worried about it because they had no choice basically:

• ZIOP shares that MD Anderson received as part of the landmark agreement it signed with ZIOPHARM and Intrexon in January 2015, were all sold off by the Committee tasked with managing MD Anderson's investments...(Not because the Committee lost faith in ZIOP's technology and decided to bail, but it disposed off those shares because its charter so mandates...) - *Bolding is mine.

And that's all well and good.  But is it true?  Or is it like former Toronto Mayor Rob Ford's claims that he never used drugs?

If you check that blog posting on this supposed "mandate" you will see that I asked for the author to provide a link to that information, but I did not get a reply.  Just another poster saying:

• If the endowment funds receive unrestricted securities, UTIMCO will follow a liquidation plan to convert the securities to cash (see Plan below). When the Funds receive distributed securities, Securities Operations notifies the liquidating investment manager and indicates any restriction on the sale of those securities. If the endowment funds receive restricted securities that cannot be immediately sold, the securities are held until they become unrestricted and then are liquidated based on the liquidation plan for distributed securities."

I replied again asking for a link, but again there was never any reply to my request.  I've done numerous searches of the verbiage in that reply looking for a verifiable source, but have so come up totally empty.  All I find is that its been cut and pasted into investor forums all over the place.

The share price then recovered, getting up close to $10 by the beginning of March 2016.  Did this widely disseminated "information" (sic) about UTIMCO being "forced" to sell help shore up investor confidence?

I have conducted my own research on the matter and have found nothing about UTIMCO being mandated to sell unrestricted securities, like those paid to them by Ziopharm

Is there a mandate or not?  I'm guessing that a lot of ZIOP shareholders are under the impression that there is.  Ziopharm has quite the footprint in social media.  At InvestorVillage the ZIOP thread is pretty much always the most active board.  On stocktwits the ZIOP stream has over 4,000 IDs watching it.  And on Yahoo's board for ZIOP, this story that UTIMCO had no choice but to sell is accepted as fact, just as it is on all the other social media sites I've looked into.

Just like with Maxwell House and Fox News....I bet if you asked most ZIOP shareholders why UTIMCO sold they'd answer:  "Oh, they had to sell...its part of their mandate", based on what they've seen on social media.

My own research on the matter led me to this:

https://www.utimco.org/scripts/internet/fundsdetail.asp?fnd=4

And to this:

• Equity outperforms fixed income over the long term, therefore we have an “equity orientation”, while recognizing that during certain periods fixed income can present attractive risk-adjusted returns; ( https://www.utimco.org/funds/allfunds/2015annual/pdfs/2015_UTIMCO_Annual_Report%20-%20Printable%20-%20Low-Res.pdf )

I find it hard to reconcile an organization with an "equity orientation" divesting equities unless it had reason to believe that it was a good time to sell, not because of some "mandate", that I'm unable to find information on anywhere except via second hand sources on social media sites with no attribution and links.

Now....could I be wrong?  Absolutely, if someone could provide a link to information about this charter that mandates stocks like ZIOP must be disposed of, then I will be happy to acknowledge having been mistaken.