While some investors might heed the “Sell in May, and go away” mantra, if you’re a little guy looking for ideas in biotech, going away in June is probably more realistic. Better for me, as it coincides with the end of the pre-college academic year. I say June, because May is when folks are probably finalizing their investment theses or trading strategies going into ASCO, the B-I-G oncology meeting of the year beginning June 3, so going away in May could result in a lost opportunity.

The Mar-May time frame is always busy with 4th quarter/year end results flowing straight into 1st quarter updates, but this year felt more chaotic and I can’t seem to place a finger on it quite yet. Unless, of course, you count the tall middle one, the one that seemed to be taunting me with some stories that just don’t make any sense.

For instance, take $OXGN, which has 7M shares outstanding and is trading at roughly $5/share, a $35 MM market cap company. Yup, a whopping $35 MM, a microcap company for sure, but just about a month ago ago, they were even smaller, at a $12 MM valuation! What makes it weird is that their story has not changed over the past month, no new data, no new investors, no new management team – zilch, nothing to even feign progress. Broadly speaking, their story hasn’t really changed since 2009, when Symphony Capital exited Zybrestat (their vascular disrupting agent) for oncology and ophthalmology. So what’s the fuss? No clue.

As an aside, I am hopeful that perhaps survival data from their P2 FALCON trial in NSCLC will prove to be positive at ASCO (maybe the insiders know something we don’t?) and justify the recent gains, but there doesn’t appear to be much attention in the form of late-breaking ASCO abstracts and the like, so likely not. I do hope it fares better than $ASM’s ASA404 to provide some hope to patients.

The traders appear to have done well with $OXGN, riding a nice run up, but it sure does take some courage to be holding now. A nice friendly follow trade if you identify it early, I guess – just wouldn’t want to be the last person owning a part of the company into earnings tomorrow. With less than $5 MM cash at the end of last year and earnings call tomorrow, traders will likely make money on the way down as well. The joy!

Here’s another oddball. I’ve always considered $RXII an RNAi company (co-founded by Nobel laureate Craig Mello), but on the turn of a dime, they have instantaneously transformed themselves into a peptide-based immunotherapy company for breast cancer by merging with/acquiring Apthera, which has been static since 2008; June 2009 if you consider working towards a SPA progress.

I believe that you should build from your strengths, and I don’t see the relationship between peptide-based therapeutics and RNAi-based (nucleic acid) therapeutics, nor do I see overlap between breast-cancer and fibrosis. Yes, there is an immunology link, but we are talking about different pathways.

If you were on the Board and wanted to keep your RNAi option, wouldn’t it have made more sense to find an acquisition or project that is related to your existing lead RNAi target (anti-scarring)? Otherwise, quit the pretense, and invest fully to become the next $CLDA or maybe even, $DNDN. Playing the role of second-guesser here, they have made for lively conversation around the water cooler on portfolio management and corporate strategy.

How about a company with a product, like $ALTH? When Fotolyn was approved in 2009, they were the talk of town, the first approved agent for refractory PTCL and charging close to $30K per month of treatment. Unfortunately, it doesn’t extend survival, so the cost/benefit doesn’t seem to add up. I’d like to understand their premium pricing strategy and which consultants they used. Simple: Orphan indication, Yes. Novel pathway, No (DHFR inhibitor). Extends life, No.

It’s not entirely their fault, over the course of 2010, we have learned that outcomes matter – for them to change pricing strategy now would not be a bad thing. Heck, look at what happened with $KVA – they realized their mistake on Makena and reduced pricing.

Back to finding the next gem. Small cap biotech companies are truly entertaining.

There are many sites with good research (and free) on these drugs and companies, so check out their sites for more in-depth coverage. Once in awhile, I expect to publish parts of my own research, but I hate to be redundant.

No position in any company named today.