sce roadshows, page-14

Yep - that's a very good summary of how brokers start coverage of a new stock.

First they need a marketing document (which they have) and then they need some momentum to build (think of surfers waiting for the right wave). They invariably present to existing clients and SCE would already know many of the instos likely to invest in biotechs - and would also target select groups of their high-net-worth individual clients.

The initial approach is generally an introduction to explain the opportunity and why they believe such a detailed report is warranted (this is a superior research report by any standards) together with an indication of what to watch out for (and when).

Some investors will be more receptive/trusting of the SCE analyst and may take a position immediately. Most will take an initial watch-and-see approach - and depending on how it unfolds, they may invest subsequently.

Here the broker has the luxury of a really good story to introduce POH - as we all know - high value based just on the main plays. Then once the company starts to deliver (fairly soon) then trust builds amongst potential investors. In POH's case, the story is likely to get better - based on new/previously ignored other developments. If SCE are a good broker, then more of the investors previously presented to can be expected to invest.

Now that's the basic plan - but market sentiment plays an obvious overriding factor. From SCE's perspective, after all that work they don't want it to get buried in any general market dump. Best time to go is when the market is neutral or mildly positive...

There seems no reason to hold back on POH's account. The timing is good from the company's point of view. SCE can market into announcements (which gives the dealer/analyst a very good reason to ring the client).