repost of march 2006: why i am strong on this stoc

Now that we are well into the expected run-up in advance of the March 2007 announcement of the Results of the AOD9604 "Options" trials, I felt motivated to re-post something I put on this board nearly a year ago, in March 2006:

Why I am Strong on this Stock:

I have been asked occasionally why I am accumulating this stock. The answer is simple.

MBP is in my opinion the most exciting and unusual opportunity I have seen in the stock market in over a decade.

This very unusual opportunity was created by the confluence of a flawed phase two trial, irresponsible and mal-informed reporting in the Australian press, and the mistaken conclusion of the market that value had disappeared from the stock, all leading to the present deeply discounted share price.

First, the trial: After the results of Metabolic’s Phase 2B trial were announced in December 2004, there was a stampede for the exit as many investors concluded “the stuff just doesn’t work”. Remarks of this ilk were repeated in the press and were found in abundance on this very board. Well, the truth is that AOD9604 doesn’t work – that is, it doesn’t work like an appetite suppressant works. But, unfortunately, it was tested like one.

Consider this: if you want to test the efficacy of a weight loss drug that acts on the appetite, you might well consider a trial without a diet component. After all, if one wants to test the effect of an appetite suppressant drug on body weight, and if caloric intake is reduced as a result of suppressed appetite when exercise remains constant, then the drug alone might well induce weight loss.

But, AOD9604 does not suppress appetite. On its own, AOD9604 won’t do a thing toward reducing caloric intake. Without a reduction in caloric intake, or an increase in energy consumption through exercise or otherwise, significant weight loss will not occur. That’s a basic physiological fact. It should not have come as a great surprise that non-dieters didn’t lose much weight on AOD9604.

But, it will be another story entirely when AOD9604 is tested on dieters. AOD9604’s method of action enhances fat burning and thus will enhance the effectiveness of both diet and exercise. Keep in mind that success brings forth success, and this truism holds with human weight loss effort, in spades. This effect was noted in the previous trial, but is only anecdotal as it didn't form part of the trial protocol.

I am looking for significantly fewer drop-outs among the AOD9604 recipients as opposed to the placebo group in Metabolic’s new trial with diet as a component.

Down the road, marketing of AOD9604 may well center around the idea that “it helps make your diet work”.

Second, the reporting: I complained to the press in early 2005 about how their biased and sensationalistic reporting was depressing the share price of Metabolic stock. My point was that there seemed to be little point in Australians unthinkingly driving down the price of an Australian stock, thereby providing foreigners, like me, the opportunity of picking up a huge potential barn-burner stock at a bargain basement price. But, what do I know?

Well, I’ve been accumulating this stock for a while now. When this baby takes off for the moon, and it will, I am already comfortably seated.

Third, the market: Some people say that the market is “always right”.

No. The market is always wrong. That’s why prices are always changing as the market discovers its errors and tries to correct. When the market discovers how wrong it has been about this particular stock, the correction will be mind-blowing.

Metabolic Pharmaceuticals is a company with potential earnings per share of over $5.00 in a few years time, once products are going to market and royalty revenue is flowing in. I’m sure no one in the company would float such a number, but I’ve done the calculations, and this is a figure well achievable in the perceptible future.

I won’t argue with the short term traders, whether long or short. They are working this opportunity from an entirely different perspective than I am.

I’m looking at where I believe this stock will be in five years, and I am buying more. I may double my stake over the next few months.

(PS: I did just that - and more)

My two cent's worth. Feel free to disagree.