I’m glad I waited, well, procrastinated before writing this post. One of my long-term investments finally had significant news. Oops. But is it oops forever, or just for a while? Forever is an interesting concept for a company that has, or had, the grand goal of dramatically increasing human lifespans. Where will it (the technology, the company, and the stock) go next?
Take a look at today’s chart. Up over 9%? That’s great! That’s better than most markets average in a year. So why am I not doing the happy dance? Look back a week.
Last week the stock dropped over 60% in one day, and continued to fall. If only I’d get past my distrust of stop loss orders that arose while invested in a different biotech, Dendreon (DNDN). Oh well, there sits a bit of my IRA, down to under $2 a share. Biotechs need partners. They need friends, too, but the best they usually get are partners. Geron had one partner that was helping with the less technological aspects of a new treatment for blood disorders. If the clinical trials were successful, they’d provide a treatment for an unmet need, as well as prove a technology that could also fight cancer. A true cancer vaccine could be incredibly valuable.
Unfortunately, Geron’s partner decided to back out. Down goes the stock. At one point in that dreadful day, I saw the ticker show a more than 80% drop. So much for sleeping in that day. A personal oops. Researching corporations can be difficult. Researching high technology is also difficult. Make that a bio-tech company and don’t be surprised that the news releases are exceedingly poor at releasing useful news. Regardless, someone was able to wade through the combination of corporate-speak, tech-jargon, and medical-cautions to read it as bad news.
In March of 2018, the stock spiked over 60% in under 90 minutes. Biotechs languish for a long time, then spike or crash within minutes before establishing a trend. That spike retreated, but the stock trended up rising from a low of $1.50 to almost $7 within a year. A very nice return. And, a reference point that puts the current price in perspective. After last week’s drop and today’s rise, the stock sits at $1.71, a more than 10% raise in less than a year.
Look back a little further. Over the last five years, GERN has gone through several spikes and drops. None were as severe as the recent action, but they’re all reminiscent of their previous events. Biotechs bounce. Until they finally begin making money and reporting it, they are great unknowns swung by hopes and fears more than by financial reports.
Go back further to when I bought the stock in 1999. As I wrote after March’s pop (GERN Spikes I Buy AST);
“That was in 1999. Within three months the stock went from $14 to over $71. I felt brilliant… “
I also noted;
“My wait has been long. GERN is the only stock I bought as a tip from a friend.”
I recall buying GERN back then, almost twenty years ago when I was just entering middle age, with the thought and intent that if they ever succeeded at dramatically increasing human lifespans, the treatment may be so valuable that the stock would be equally valuable, and that the only way to afford the treatment might be from wealth gained by owning the stock.
Today, my holdings aren’t enough to pay for a crown for a cracked tooth.
Technologies advance most from revolution instead of evolution. There are connections but the major advances are from big leaps like the switch from slide rules to mainframes to personal computers to smartphones; like the switch from casting out demons to casting out germs to only casting out the bad germs. Geron’s technology represents such a leap, but at this point it only represents it; it hasn’t implemented it.
I invest in such advances because I want civilization to advance, and because such investments were successful for me until my Triple Whammy. Whether they succeed again is only something to evaluate later, hopefully in my lifetime. Investing in such companies is possible because of the economic system in place in the US, because such companies are too risky for many investors which means they are more affordable for people like me, and because it is easier to find them now that we’ve created the revolutionary technology that is the Internet.
That does not mean such a strategy is guaranteed. It’s not guaranteed. There are no certainties in investing, regardless of what the brochures say. I’m a data geek. I’d welcome a meta-survey of the probability of success and expected range of ROIs (Return On Investment) of the various strategies. That’s something I’d like to fund if I won the MegaMillions lottery jackpot – but then, I wouldn’t need the results because I wouldn’t need to invest. Others would benefit, and my curiosity would be entertained.
I’ll continue to hold my remaining GERN shares. As I mentioned above, I bought some after being inspired by a friend, added to them as my portfolio grew, and then shaved off some as necessary after that Triple Whammy. I’m back to my original number of shares, and managed to actually make a profit. The power of those remaining shares has been diluted significantly, and so has their potential as Geron sold off most of their technologies.
While I could’ve played the game with stop loss orders and immediate responses, that would be counter to my philosophy of Long Term Buy and Hold. LTBH misses the swings but also minimizes the maintenance costs of investing in individual stocks. I want my money to make money for me, but I also don’t want to spend all of my time trying to make that happen. Time is more valuable than money, and I feel its loss just as much.
As for Geron’s other technologies, I’m lucky enough to have just as many shares in one of the recipient companies, Asterias (AST), which is making nice progress towards regrowing damaged nerves, another life-extending technology.
As for the MegaMillions lottery, today’s crazy financial world now puts that jackpot ($367M) above GERN’s market cap ($314M). Buy the treatment? Bah! Buy the company (but not really because the cash payout is “only” $214M.)