Lithium Americas - Short Interest Continues to Climb....

Short interest for Lithium Americas isn't huge by any stretch, up to July 31st 2016 its only 1.42% of the total outstanding, or 4,254,140 shares.  Still that represents an increase of 691,631 from the last update of July 15th when the total was 3,562,509 shares.

I sometimes refer to short selling as "artificial dilution".  There are just shy of 299.5 million shares of LAC that have been issued, current up to July 31st.  However there are another 4,254,140 on top of those 299.5 million shares sitting in people's brokerage accounts, because some people have bought shares that don't physically exist.

I want to be perfectly clear on one point here.  I am not one of those commentators who is going to tout a possible short squeeze as a reason for being bullish and to encourage others to buy shares of Lithium Americas.  Why?  Quite simply because short sellers are frequently right, not always, but they have a very good batting average.  Better than longs in my opinion, that's why Hedge Funds are the whales of 'The Street'.   

I do not view short players as evil or "out to destroy shareholder value" as you often see on message boards and investor forums.  For me they are an essential part of the game.  Bears do two vital things, they provide for an orderly market and they improve liquidity. Without short selling the volatility in the markets would be insane, and buyers might find it difficult to locate willing sellers.

Thankfully, (for me) as noted at the beginning, the short position in Lithium Americas is small.  If it were in and around 10% of the OS count or higher, then I would have to reevaluate my position.  But at less than 2% of the total, I view it as noteworthy but not something to worry too much about.

Why noteworthy?

To short any stock a bear needs to have a big bank roll because of margin requirements.  And to short a stock like LAC, (trading at less than one Northern Peso or only about 72 US pennies) not only does a player need deep pockets but also cajones made of near 100% cast iron.

Short interest for LAC has been climbing steadily for months.  Back on March 31st it was just 769,200 shares.  By May 31st it had climbed to over 1.9 million and now it sits at over 4.2 million. And during this time LAC has gone from around 50 cents a share at the end of March to 96 cents currently...nearly doubling.

Bears must be hurting.  

But remember, for a long player holding a stock that has dropped...a paper loss isn't a capital loss until the shares are sold.  And for a short seller a loss on a rising stock isn't a capital loss until the position is covered, or bought back.

Many longs, if they buy 10,000 shares of a stock at a dollar....and if they see it drop to 75 cents, they'll buy another 10,000 to lower their average cost to .875.....And if the price drops further to 50 cents they'll buy another 10,000 shares to  bring their average cost down to 75 cents.  Of course that's just an example but you get the idea, its called averaging down.  If someone is convinced that a company will be a long term winner, and assuming he or she has the capacity to do it....averaging down can be great strategy if the company being invested in succeeds.

Bears can do the same thing, just in reverse.  

Someone who shorted 500,000 shares of LAC at 50 cents, could short another 500,000 at 75 cents and another 500,000 at $1.00.  Now our notional bear would be short a total of 1.5 million shares of LAC at an average selling price of 75 cents.  Those sales would have netted Mr. Bear $1,125,000 but if forced to buy them back at a buck, they would cost him $1.5 million for a loss of $375,000 plus brokerage fees.  But it isn't a loss until he either chooses or is forced to cover.  If he can ride out the rising share price, and if the company he's short on ultimately fails....then he can still be a big winner.

See what I mean about short sellers needing to have deep pockets?  Margin requirements for shorting a penny stock like LAC can be huge.  Yes it trades on Canada's big board TSX and not the riskier Venture, and yes they have the JV with SQM and are a holding in the only Lithium ETF, but its still a penny stock.  And shorting a penny stock can mean margin requirements of as much as 100%.

Let me put that in perspective for you.

Using the previous example of someone who's short 1.5 million shares of LAC at an average selling price of 75 cents CDN.  That means the short seller netted $1,125,000 from the sales.  But if LAC is trading for $1.00 CDN a broker can require the short seller to have $3,000,000 on deposit in a margin account, $1.5 million for the current share value plus an additional 100% on top.  And if LAC climbs to $1.25 then the amount of money in the margin account would have to go up another 25% to $3,750,000 in total....and so it goes.  

Now, it could be that there are long players looking to accumulate LAC who have used short selling as a means to "shake the tree".  Retail investors are notoriously price sensitive, so seeing LAC drop from $1.10 down to 90-95 cents, its reasonable to expect that some likely decided to sell.

But there are many commentators out there who are calling the overall Jr Lithium mining space a bubble.  I do not consider it unreasonable to expect that there might just be a Hedge Fund out there, and maybe more than one, that have decided to play Lithium Americas to the short side.

Canadian Hedge Funds are smaller than their American cousins, but still sources like the Financial Post report many with $100 million or more in assets, and a few with over $1 billion.  Those are very deep pockets.  And if LAC does start moving higher again they may just be able to ride it out in hopes that the longer term bubble thesis proves accurate.   

There are a number of expected events that could drive buy side interest in the coming weeks and months:

• Project update for the Argentinian mine
• An updated Feasibility Study (FS) with more current Li prices
• Updates on the Nevada property
• The start of construction at Cauchari-Olaroz

Anyway we'll see how it all plays out.  I'm a shareholder here so my opinions are not without bias. And with that being said I still consider the risks here to be substantial, with a very real possibility for losses from current levels.  And should the PPS take off causing a Hedge Fund to find its survival threatened?  I won't cry, I don't dislike short players....they're part of the game, and I'm sure they don't cry when retail investors lose money.

Iceberg orders - Why you can't always trust L-II

You've probably heard of an ancient Chinese book called "The Art of War" written by Sun Tzu in the 5th century.  Although  it was designed to explain military strategy its also very popular as a text for how to succeed in the business world.  

A key principle in the book is about deception, here is what it says:

All warfare is based on deception. Hence, when we are able to attack, we must seem unable; when using our forces, we must appear inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near. 

Many view the public markets as a war, a battle between longs and short...dah bulls versus the bears. I also view it as a David and Goliath struggle pitting small retailers against big industry players. A war between the lunch bucket crowd logged into discount brokerage accounts on one side, pitted against an army of market professionals.  And unlike the Biblical account where David slays the giant, in the market game its the Goliaths that usually win.

And one reason they're able to win in my opinion?  Deception.

When a retail player logs in with their discount broker and places a limit order, either a buy or a sell...BING, it pops up on the order book and can be seen on L-II.  Maybe you've checked it yourself. You decide to place a buy order for my favorite fictional stock, ABC which show 10 lots on the bid at $2.00 and 10 lots on the ask for $2.10.  You put in a bid for 10 lots at $2.05 and...BING...you see your 10 lot order pop up on Level II as the highest bid.  

When a Goliath puts an order in however, he has some other options, one of which is an "iceberg" order.

What is an iceberg order?  With a real iceberg floating in the ocean, you can only see a small potion of the ice, most of it is hidden below the water line.  With an iceberg order a large player can have 10 lots showing at the bid at say $2.00, but another 1,000 lots on the bid at the same price, but hidden from view.  

Why would someone want to hide their interest in buying?  Pretty simple and obvious.  The big player doesn't want everyone knowing that they have major interest in a stock.  After all, if the big buyer thinks $2.00 is a good price for ABC and everyone sees a massive order for 1,000 lots (that's 100,0000 shares) on Level II, then those selling might think...."Damn, maybe something is coming, maybe I should hold on...or maybe even buy some more".  

And the same thing works when selling.  Rather than "advertise" that he wants to dump 100,000 shares after ABC has climbed to $10, instead the iceberg is used on the sell side, with only 10 lots showing and the rest hidden.  

If you pay attention to message boards for a stock that's getting a big run you've probably seen messages like:  "Only 10 lots available at $10, once those get taken out this is gonna fly"!!!  It happens all the time....usually in tandem with some bullish news combined with promotion and lots of hype.  

The game is deceptive, but also necessary I would argue, otherwise there wouldn't be fortunes to be made, and of course it follows.....fortunes to be lost.  Its a zero sum game and not everyone can win, some will get shares while others get cash.  And knowing about the deceptive games is still only half the battle, there are so many traps designed to ensnare the naive and greedy that no retailer no matter how good can win all the time.....just try to win more often than you lose and don't be shy about taking profits in my opinion.  

And that goes double when you're dealing with shares in a company that is losing money currently but promising big things down the road.....all too often the road stretches out forever and is littered with freshly printed shares.

Good luck.

Sunday thoughts - Beware when a stock becomes a religion....

The world is evolving, or perhaps devolving....depending on your point of view.  

I'm finding more and more people insist on viewing things in absolute terms, as being right or wrong, black or white, good or bad.  It doesn't matter if its politics, religion, or even stocks.  Donald Trump or Hillary Clinton, a lot of people insist on seeing one as a saint and the other as the devil.  A particular faith or denomination is either on the side of God or its in league with Satan.  And with publicly traded companies the same dynamic plays out, stocks are either awesome or garbage for some people.

I write a lot about the lessons my late great father taught me from his days working on both Bay and Wall Streets, blending in my own experiences working in the financial services industry. Dad taught me things like: "Don't marry a stock, especially those that are purely speculative".  And "You'll never go broke taking profits".  

My Dad was a great teacher.  But so was my late great mother.

Back in my teenage years I was drawn into a particular faith group.  How?  Uhm, I think her name was Tanya.  It wasn't a total shift from the religious upbringing of my youth, but this was an evangelical bunch  and they knew for certain the path to salvation and eternal life, or so they claimed at least.

My Mother didn't discourage me from attending their worship services or their activities.  Her only advice was to maintain what she called a "healthy bias".  Mom was a smart woman.  If she had forbidden me from participating, or made a big deal of it....Who knows?  I might just be on a street corner somewhere testifying, or maybe on TV using my faith to heal the sick and afflicted.  

I came to hold the view that on some points they were right, others I didn't agree with....and a lot of it, I was in between and unsure.  In my experience that's a healthy view, and I find it takes strength to admit that you don't have all the answers.  Only idiots are convinced they know everything.  

Now to bring this back to stocks.

There are many social media participants who approach investments with the fervour of a religious zealot.  There are posters to various sites who certainly view Ziopharm this way.  That's what I found when I did my first Seeking Alpha blog post on Ziopharm in 2015 expressing the opinion that at $13+ it represented a speculative bubble:  A Speculative Bubble Poised To Collapse?  

When I published that I was roasted by the faithful in the comment section.  I quickly found out what Galileo must have felt like when he dared to publish his theory that the Earth rotated around the Sun, or Scopes for teaching Darwin's theory of evolution.  I was a heretic.  

Why did one opinion cause so much consternation?  

In some cases I think its merely nervous shareholders who lack confidence in their investment, feeling a need to defend their position from any and all perceived attacks.  But in other cases I think the reasons are more insidious, with professional industry players looking to stir up as much buying as possible so sellers can get the best possible prices for the maximum number of shares being dumped.

I've seen the same thing with ABRW lately, anyone who doesn't buy into the forward looking promise is attacked.  

And its not just pumpers who are desperate to convert the great unwashed, so called "bashers" are no better. They're often desperate to convince others that they are stock market experts who never make a mistake when they tell others to dump a stock.

There's one joker on Twitter who plays both sides, alternately pumping with abandon and then bashing like crazy.  Joe Natural with the handle @ChinaStockPro was trashing RLYP repeatedly, posting negative comments with a youtube video of  a tree crashing to the ground: "TIMBERRRRR"!!!

 

JoeNatural‏@ChinaStockPro

$RLYP - oh my, only one word to describe investor faith in this management team's ability to execute

12:51 PM - 27 May 2016

0 retweets0 likes

How did RLYP do?  It's now trading at almost $32 after a buyout deal with Galenica for $1.2 billion in cash.  Back on May 27th it closed at less than $20 when Joe posted his bashing message. Obviously a massively bad call by Mr. Natural, unless of course he was playing that video in reverse.

Now this same false prophet and self proclaimed stock market expert is applying the same energy he used to bash RLYP and channelling it into pumping ABRW. We shall see how that works out.

Bottom line?  Be very wary of those who tell you they're never wrong.  If someone tells you they have the keys to the kingdom and you buy into their hype you might just get to heaven only to find that someone changed the locks.

Calling all contrarians - Galena Biopharma worth a look

Contrarian Investing

In terms of the broader overall markets there is a sure fire method if you're looking to lose money. Simply stated all you have to do is read the news and act accordingly.  When the news is bad take your money out and wait until things turn around to put your money back in.  Sell low and buy back higher in other words.

Over the past few years there has been no shortage of events that have sent shivers down the spine of the equity markets.  There's been the Greek bailout, fears over the US defaulting on debt repayments and a government shut down, and of course the very recent vote by Britain to exit the EU.  

Fears over these news stories have sent markets tumbling, but they've always rebounded.  

Contrarian investors of course do the opposite.  When others are taking their money out of the markets based on news driven fear, uncertainty and doubt, (FUD) the contrarian runs against the herd and buys in.

There's a big difference however between the broader markets and individual stocks.  While the overall markets have always overcome periods of fear based selling, some companies have not. They say a rising tide lifts all boats, however when bad news hits and the water drops, some companies sink right to the bottom and become ship wrecks.  

Its the old risk reward dynamic.  Employing a contrarian investment philosophy with vehicles like Mutual Funds and ETFs is much safer than using the same strategy with individual companies. While you can be confident that the overall market will recover from bad news, there are always the Enrons, the WorldComs and the Nortels that fade to black. 

But if you get it right with an individual company?  The rewards will blow away anything you'll achieve in an ETF or Mutt fund.  Apple is the most obvious example given its near extinction back in the 90s, but there are plenty of others like GM and Starbucks.

Galena Biopharma Inc.

So what about Galena?  2016 has certainly been a roller coaster year for this company as reflected in the trading of its shares (Nasdaq GALE).

After closing out 2015 trading in and around $1.50 the share price was cut in half early in 2016 as the the company announced that it was going to zoom its focus in on its cancer immunotherapy pipeline. That drop however started reversing in February and by June shares had climbed over $2 per.

Then the bad news hit.  The Independent Data Monitoring Committee (IDMC) conducting an analysis of Galena's Phase III clinical trial for NeuVax™ recommended that the trial be stopped due to futility.   

I'm not going to go into detail about the PRESENT clinical trial because I don't have the requisite background and there's plenty of information out there already providing a more in depth look. All I will add is that it appears that the drug arm of the event based trial did not significantly outperform the placebo arm.  One aspect that is interesting however is the wording used by the IDMC which is disclosed in the company's 8k of  June 27th 2016:

At this time the DMC recommends that the study be stopped for futility unless it is determined that there has been a systematic reversal in the study drug treatments in the two arms, in which case the IDMC should reevaluate the clinical evidence. 

The IDMC recommends that this be investigated as quickly as possible and, in the meantime, that this information be disclosed only to any individual(s) with a need to know about the procedures used to clarify the current situation. Finally, the DMC requests that Galena Biopharma inform the IDMC members of the outcome of this investigation and any decision with respect to discontinuation of the clinical trial as soon as possible. 

I don't want to read too much into the verbiage used, but it appears to me there is some "wiggle room" and that perhaps PRESENT could be re-started.  However I consider that to be a faint hope and something that shareholders might cling onto even though it appears to me as likely unrealistic.

Sometimes companies do bounce back from failure

Besides, there are other ways a company can recover from a so called "black swan" event.  Look at Ziopharm, a company some suggest I love to hate.  

Back in 2013 Ziopharm had a Phase III trial failure with palifosfamide which sent shares of ZIOP crashing from up around $6 down to less than $2.   A short two years later Ziopharm caught fire again and climbed to almost $15 in 2015 as investor excitement about the CAR T space sent shares bubbling with Ziopharm attaining a market cap in excess of $1.5 billion USD.

Those that bought ZIOP in 2013 had the chance to realize gains of 500% or more if they played the contrarian game and bought the bad news of Ziopharm's trial failure.  Perhaps those buying Galena around 40 to 50 cents currently will have a chance at similar gains in another year or two. 

Was this a dead cat bounce?

All my regular readers (both of them) know that I keep a close eye on short interest.  I don't view bears as an enemy however, but rather as a potential canary in the coal mine...so to speak.  If short interest is too high I fear the hedgers might know something I don't.

Leading up to this trial stoppage short interest was significant at over 25.6 million shares up to June 30th 2016.  The most recent update current to July 15th shows the number down to a little more than 17.6 million, a substantial drop.  Obviously the bad news gave shorts a chance to realize some healthy profits and no doubt some decided to turn paper gains into capital gains.  

When short sellers cover off on a stock that's just experienced a big drop it can lead to what's often referred to as a 'dead cat bounce'.  The bears buy back the shares they borrowed, but they're not buying them because they're bullish, but rather to cash in on winning short investment strategy. While a bull invests in hopes of a company's success, a bear is "investing" in hopes of failure. 

Does Galena have the resources to survive?

Science is expensive, tackling diseases like cancer can't be done cheaply.  The people employed in this overall space don't work for free, far from it.  Sainted figures like Albert Schweitzer and Mother Theresa never worked for public companies

Motley Fool writer Brian Feroldi put out an article detailing the company's financial state on the very day Galena stopped its trial. Linked below:

Why Galena Biopharma Inc. Is Being Obliterated Today

The headline is absolutely brutal, and if it wasn't designed to inflict maximum pain to the collective psyche of shareholders, I have little doubt that was the effect.  The article chronicles the current situation as of the date it was written and concludes by saying that its hard to see how the company could ever bounce back.  

The article is well written and for the most part factually based, but it also constitutes what I consider to be a hatchet piece, and I express that opinion as someone who currently has no position long or short.   And the article is already out of date with conclusions that are questionable in light of more recent developments.  Mr. Feroldi was completely wrong on one point, saying: 

"With its share price down so much today, the equity markets are no longer a viable source of funds".

The company just raised approximately $11.7 million through a registered direct offering with Raymond James acting as the exclusive placement agent. Combined with existing cash and the $23 million raised via a recent debt offering it looks to me like Galena is going to have no trouble keeping "the doors open" in the near to medium term.  

Bottom Line Opinion

I'm not a bull or a bear on Galena at this juncture, but I will continue watching.  Almost 80 million shares changed hands on June 29th, the day the bad news hit.  Some of that was undoubtedly short covering, but there was also buying going on.  Enough that the bounce off that day's low under 30 cents was more than just a dead cat in my opinion.  

I will be watching to see if bears continue covering off their winning bets, doing the smart thing and buying back low after selling high.  

Disclosure

I currently have no position in GALE either long or short, in the future however I may take out a long position.  This is strictly an opinion piece and I have received no compensation whatsoever for the writing of this blog entry.  For further disclosure statements please see the very bottom of this site.  

HMPR - Golden Cross

I'm not one to draw my hand into a fist and start pounding the table about any stock, its not my style. But if I was forced to pick one stock to pump, then HMPR would be the one I would choose.

Are there other stocks out there that will make bigger gains in the near term?  Oh yeah, much bigger...but most (and possibly all) will be in money losing companies playing the Promotion & Hype game to lure investors in on rosy projections about the future.  

If you've been watching the markets for any length of time you've seen it happen, and maybe you've been caught in one or more yourself. They soar, investors load up as they climb, convinced they're gonna be rich....then BAM, the bag closes and the PPS collapses.  Sometimes it takes a few months, sometimes a few weeks, and still other times its just a matter of days.  

HMPR doesn't qualify as that type of investment for me, because they aren't paying cheeseball promoters to interview the CEO, nor are they being hyped by email blasting chop shops and twitter morons trying to pass themselves off as stock experts.

Hampton Roads Bankshares is, (as the name implies) a bank, and it is profitable.  

If you like a company that puts out a news release for any and every little event....then move along, you won't like HMPR.  That's not to say there isn't news, just not the usual fluff you see so often with speculative money losing companies.  Hampton Roads Bankshares has a proposed merger with Xenith Bankshares that is expected to receive shareholder approval on July 29th. 

http://finance.yahoo.com/news/hampton-roads-bankshares-inc-xenith-212500712.html 

Perhaps in anticipation of that news the stock has gone on a bit of a run.  I've written about Hampton before, back on May 11th when the PPS was $1.81:

http://www.avoidthebag.com/2016/05/hampton-roads-bankshares-hmpr-great.html  

It closed Wednesday July 27th 2016 at $1.98 and now the chart shows the 50 day moving average poised to cross over the 200.  Followers of Technical Analysis (or TA for short) refer to this as a "Golden Cross", when a faster moving average crosses over a slower one.  And for devotees of TA the "goldenest" of golden crosses is the 50 over 200.

Full disclosure to my devoted blog dogs, (yes all three of you) I am a shareholder so my opinions are not without bias.  And while I believe HMPR is a solid "buy and hold" long term investment....I could be wrong.  Do your own DD and don't hesitate to consult with a licensed professional.  

HMPR hardly gets any chatter on places like twitter and stocktwits, this is not some speculative money losing company being hyped and promoted like its the greatest investment vehicle of all time and a sure fire winner.  If you want a stock like that sign up with some email blasting chop shop.  

Why Donald Trump will be the next American President....

Trump versus Clinton, Hillary versus the Donald.  The insider versus the outsider, the chosen one against the bombastic one.  Man oh man, this is gonna be a fun election for my American friends.

And Donald J. Trump is going to win.  

Okay, I hear what all my regular readers are saying, all three of them.  This is a blog about stocks, about the financial markets.  This isn't a political soapbox.  Why am I going on about the U.S. election?  

Well I'll tell ya.  

There's a reason Donald will win, and its the same reason why money losing companies are able to attract investors while printing off shares.  Mr. Trump will be moving into the White House for the very same reasons that people put hard earned money into companies whose executives earn million dollar salaries and bonuses but never deliver long term shareholder value, sometimes for decades.

Why?  Because people are stupid.  

Please note, I said "People" not "Americans".  The United States does not have a monopoly on stupidity.  Canadians like myself need look no further than our largest city, the cosmopolitan and liberal bastion called Toronto, which elected crackhead Rob Ford as mayor.  

Its a simple formula folks, you see it in politics and the public markets all the time.  Just tell people what they want to hear and make sure you have a really simple solution to any problem, no matter how complex.  All you have to do is sound strong and confident, even when you're talking outta your ass.

How it works in the public markets

You have some little beverage company that claims its going to compete with the Cokes, the Pepsi Colas the Nestles of the market.  How?  Easy, by merging with other little companies to bring about economies of scale and synergies, going after a small little niche segment.  Just think about it, some little Pink Sheet traded OTC company will go from pennies to $10 so buy all you can while the PPS has only climbed to a buck or two and you'll be rich.  And don't even think about who is selling, that doesn't matter.

In politics

How can the U.S. deal with illegal immigrants coming in from Mexico?  Simple, just build a wall. Easy peasy lemon squeezey, just say it after me.  Build a wall, build a wall....keep saying it until you understand that it can't fail.  If you're still not convinced pump your hand and chant, and say it louder. BUILD A WALL, BUILD A WALL!!!  

Confidence is key folks.  If you start trying to sound intelligent and nuanced, you've already lost.  

Now, with public companies we all know what happens.  Reality sets in and the PPS crashes leaving investors wondering:  "What the hell just happened"?  But that's okay for the CEO and other insiders because the money has been raised.  The salary and bonus checks will continue thanks to the stupidity of the investing public.  And some are so stupid they'll refuse to admit they even made a mistake. They'll still love the CEO and will blame dark market forces like hedge funds and short sellers. They'll scream at message board "bashers" who were too dumb to buy a ticket to the promised land.

In politics its much the same.  

Once Trump gets elected and the wall still isn't built or even started, it won't be his fault....it won't be because it was a really dumb idea.  It will be because of his opponents who didn't see Donald's genius. When protectionism isolates the United States from the rest of the world and men and women are out of work, it won't be because voters put the wrong guy in the White House, it'll be because of American enemies.  

Oh what might have been

It could have been a different election though.  The Democrats could have gone with a better candidate.  Instead they gift wrapped the nomination and handed it to Hillary Clinton. The former first lady, senator and secretary of state with the private server and bogus sniper fire story.  The contradictory progressive who also says she's a moderate, once against same sex marriage and now in favor of it.  Whiskey Tango Foxtrot???

Bernie Sanders would have offered a clear choice, old but dynamic Bernie knows how to do more than just talk the talk, he walks the walk.  He talks racial justice and marched with MLK.  Hillary talks about the glass ceiling and women's issues but laughs about getting a rapist off with time served. Bernie would have had a chance, but Hillary will inspire too many voters to stay home on election day.  Some voters will hold their noses too long and won't be able to leave the house in November.

In any case it will make for great theater over the coming months.  And for those who are dead set against a Trump presidency, take solace.  This blog made one other recent political prediction, that Britains would vote to stay in the EU, and I got that one wrong.  Maybe I'll be wrong again.

Juno Therapeutics being sued - Is Ziopharm next?

The shine has definitely come off the CAR-T space.  

If you're reading this miserable little blog then I assume you're already familiar with Chimeric Antigen Receptors and how they can allow T cells to recognize a specific protein (or antigen) on a tumor cell. And with the issue of toxicity and how the companies in this space are attempting to overcome it. 

This new and exciting field caught fire in 2014 and 2015 as investors stormed into companies investigating potential treatments for various forms of cancer using this new Immunotherapy.

Kite Pharma (Nasdaq KITE) started trading in June of 2014 around $25 per share, and it didn't take long for it to take off, getting up around $90 by January 2015 and again in November of the same year.  KITE is currently trading around $50 per share with a market cap of around $2.5 Billion.

At $50.18 (the most recent close) KITE is trading 44.1% below its 52 week high of $89.84

Juno Therapeutics (Nasdaq JUNO) started trading in December of 2014 in the $35 to $40 range and it too soared, getting up near $70 by June of 2015.  JUNO is currently trading under $30 with a market cap of a little over $3 billion.

At $28.83 (the most recent close) JUNO is trading 50.1% below its 52 week high of $57.82

Ziopharm jumped into the CAR T space in January of 2015 after reaching an agreement with the MD Anderson Cancer Center in tandem with partner company Intrexon that included paying Anderson $100 million in shares of the two companies ($50 million each) plus an additional $15 million in shares (also split evenly) to induce Anderson to agree to the deal in time for a JP Morgan healthcare investor conference.

Shares of Ziopharm did as might be expected.  After trading under $3 as recently as October of 2014, by March of 2015 they were trading over $14, and ZIOP reached those levels again as recently as November of last year.  ZIOP is currently trading under $5 per share with a market cap of about $600 million.  

At $4.60 (the most recent close) ZIOP is trading 69.1% below its 52 week high of $14.93

Juno Therapeutics has recently become the target of law suits centred around allegations of violations of Federal Security Laws regarding the reporting of a Phase II trial patient death, and that insiders engaged in the selling of shares before the news was released on July 7th 2016.  Before news of the patient death JUNO had been trading around $40, after the news came out the PPS dropped down to its current price around $28.  

Here is a link with details of one lawsuit:

https://finance.yahoo.com/news/juno-therapeutics-inc-ceo-sued-001500402.html

Ziopharm also recently reported a patient death in its Phase I trial for Ad-RTS-hIL-12.  And as with JUNO the news sent ZIOP's shares sharply lower.  Trading in and around $6 in the days prior to the news, shares dropped under $5 on July 15th and closed today's trading at $4.60  There have also been stories written saying Ziopharm was in discussions in regards to a possible $50 million equity offering that has since been withdrawn in the wake of the trial news.  

THE STREET NEWS STORY - Brain Tumor Patient Dies After Ziopharm Gene Therapy Injection

This news has also attracted various law firms, with PRs announcing that Ziopharm is being investigated for possible breaches of Federal Security laws.  

Here are some links from law firms seeking to contact Ziopharm shareholders in regards to their investigations:

https://finance.yahoo.com/news/shareholder-alert-khang-khang-llp-152500517.html

https://finance.yahoo.com/news/shareholder-alert-bronstein-gewirtz-grossman-141600177.html

https://finance.yahoo.com/news/important-investor-notice-lundin-law-163600987.html

https://finance.yahoo.com/news/shareholder-alert-levi-korsinsky-llp-141100642.html

https://finance.yahoo.com/news/important-investor-alert-goldberg-law-001600961.html

https://finance.yahoo.com/news/federman-sherwood-investigates-ziopharm-oncology-202100911.html

https://finance.yahoo.com/news/shareholder-alert-pomerantz-law-firm-150300712.html

Does all this activity mean Ziopharm, like Juno, will be sued?  I don't know, I'm not a lawyer.  The extent of my legal expertise comes largely from reading about a dozen John Grishman novels and watching old episodes of Law & Order.

I do know that this is one of the many risk factors outlined in Ziopharm's SEC Filings.  From their most recent 10Q you will find this:  

The testing and marketing of medical products entail an inherent risk of product liability. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products, if approved. Even a successful defense would require significant financial and management resources. Regardless of the merit or eventual outcome, liability claims may result in:

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Decreased demand for our product candidates;

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Injury to our reputation;

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Withdrawal of clinical trial participants;

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Withdrawal of prior governmental approvals;

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Costs of related litigation;

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Substantial monetary awards to patients;

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Product recalls;

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Loss of revenue; and

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The inability to commercialize our product candidates.

We currently carry clinical trial insurance and product liability insurance. However, an inability to renew our policies or to obtain sufficient insurance at an acceptable cost could prevent or inhibit the commercialization of pharmaceutical products that we develop, alone or with collaborators.

There is of course insurance for possible securities violations, which is included in a Schedule 14a filing:  

http://ir.ziopharm.com/secfiling.cfm?filingid=1193125-16-563936&cik=1107421

We maintain director and officer insurance providing for indemnification of our directors and officers for certain liabilities, including certain liabilities under the Securities Act. We also maintain a general liability insurance policy that covers certain liabilities of directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers. We have also entered into indemnification agreements with each of our directors and named executive officers.

I don't know what "certain" liabilities means.  Obviously it means some, but all.  So whether they are insured or not...the devil, as is often said, is in the details.

Too often inexperienced investors rush into a stock on hype, excitement and a climbing share price.

It pays to be fully abreast of all the risk factors.