Shares in the drug developer, which is backed by big hitters such as former Macquarie Group Ltd (ASX: MQG) Managing Director Alan Moss, fell 31.2% in early trade and on high volume, to change hands at 16.5 cents.

Concerning side effects

The company said it had halted recruitment for the clinical trial after three "dose limiting toxicities" related to the chemotherapy regimen, mFOLFIRINOX, emerged.

The trial was seeking to investigate the use of the company's lead drug narmafotinib in combination with the chemotherapy regimen modified FOLFIRINOX in treating advanced pancreatic cancer.

The company pointed out that its own compound was not the result of the toxicity.

As the company said:

Eight patients have been dosed with daily narmafotinib in combination with the mFOLFIRINOX regimen administered on its routine cycle and doses. Three events of protocol-defined dose-limiting toxicity (DLT) have been observed at this time, though importantly none have been attributed to narmafotinib and instead relate to the chemotherapy regimen. Five of the 8 patients remain on study and will continue to receive the narmafotinib – mFOLFIRINOX combination with continuing safety monitoring as before.

Amplia said it would "halt recruitment in AMPLICITY and focus its resources on exploring combinations other than with FOLFIRINOX''.

Amplia Managing Director Dr Chris Burns said regarding the results:

The dose limiting toxicities observed are very disappointing for the patients and their families; however, toxicity with FOLFIRINOX chemotherapy is well documented. Given these effects, and the evolving landscape for pancreatic cancer treatment, we will continue to build on our promising ACCENT trial data, as well as plan for additional studies with new, targeted agents being developed for pancreatic cancer. While efficacy data from AMPLICITY is early, four of the eight patients in the trial have recorded stable disease at their first (2-month) scan, with one of these patients subsequently recording a partial response at their 4 -month scan. No other efficacy data is available at this time though updates will be reported in due course.

ACCENT potential is large

While it was bad news for the company today, Bell Potter recently said there had been good recent news out of the ACCENT trial, where in a Phase 1b/2 trial in 64 pancreatic cancer patients, there had been four "complete responders''.

Bell Potter said the trial outcomes to date were "remarkable" and there was "compelling evidence that narmafotinib's anti-fibrotic mechanism is allowing chemo to exert greater effect and penetrate tumour tissue more effectively''.

Bell Potter has a speculative buy rating on the stock and a 42-cent price target, albeit this was before today's announcement about the AMPLICITY trial.

Amplia was valued at $135.9 million at the close of trade on Thursday.

The post Down 30% today, is it time to buy into this beaten-down biotech share? appeared first on The Motley Fool Australia.

When many ASX shares were tumbling with the market, this small-cap stock doubled in value to 23.5 cents.

The catalyst for this was the release of updated data from the single-arm Phase 1b/2 ACCENT trial evaluating narmafotinib plus chemotherapy in 64 metastatic pancreatic cancer patients.

Is it too late to buy this small-cap ASX stock?

Despite its incredible rise on Monday, Bell Potter believes there is still potential for the pharmaceutical company's shares to rise materially from current levels.

In response to yesterday's big announcement from Amplia Therapeutics, the broker said:

The new data was from pre-planned analysis by independent central reviewers, as opposed to analysis by the site investigators which had been reported up until today. The clear highlight was the classification of four new confirmed complete responders. This takes the total to five confirmed complete responders deemed to have disappearance of all measurable lesions for at least two months. The five confirmed complete responders – i.e. 8% of treated patients (n=5/64) – is a remarkable outcome when comparing to the three historical Phase 3 trials with the same chemo backbone where complete responses were seen in only 1 in ~500 subjects (well below 1%).

Additionally, when comparing to other novel drugs in active development, none we are tracking have reported more than 1-2 complete responders. While caveats related to single-arm, mid-size studies remain relevant, the outcomes reported today provide further compelling evidence that narmafotinib's anti-fibrotic mechanism is allowing chemo to exert greater effect and penetrate tumour tissue more effectively.

Big potential returns remain

According to the note, the broker has retained its speculative buy rating and 42 cents price target on the small-cap ASX stock.

Based on its current share price, this implies potential upside of almost 80% for investors over the next 12 months.

However, given its speculative nature, this would only be suitable for investors with a high tolerance for risk.

Commenting on the small-cap ASX stock, the broker said:

No material changes to our forecasts or valuation following this update. We maintain our BUY (speculative) recommendation. Upcoming catalysts include (1) early updates from the AMPLICITY Phase 1b study in 2H CY26; (2) announcements related to any new clinical studies in combination with kRas inhibitors or in ovarian cancer patients, albeit timing is speculative; and (3) updates on the Phase 2b/3 trial preparations.

The post Why this promising small-cap ASX stock could rise almost 80% appeared first on The Motley Fool Australia.

The S&P 500 Index (SP: .INX) fell 2.31%, and the Nasdaq Composite Index (NASDAQ: .IXIC) lost 3.64% after two of the world's biggest tech companies revealed their earnings results.

Despite the sea of red today, two ASX biotech shares are shooting the lights out after releasing positive news announcements.

Let's take a look at these two companies and what they've revealed to the market today.

These 2 ASX biotech shares are star performers on Thursday

Amplia Therapeutics Ltd (ASX: ATX)

This ASX biotech share was up 41.94% to 8.8 cents this afternoon and up 12.5% over the past 12 months.

Amplia is an Australian clinical-stage biotech focused on developing two oral drugs that inhibit Focal Adhesion Kinase (FAK) for the treatment of cancer and fibrotic diseases.​

Today, the company reported some positive results from its Phase 2a clinical trial.

The trial is investigating a drug called narmafotinib in the treatment of advanced pancreatic cancer.

Amplia said three patients enrolled in the trial had recorded at least a 30% decrease in the overall size of their tumours, as well as no new ones, over a two-month period.

Two other patients have recorded sustained stable disease for a four-month period.

Amplia CEO and managing director Dr Chris Burns said the results were "extremely encouraging".

Dr Burns commented:

We are well on track to reach the efficacy threshold of six confirmed partial or complete responses by the end of this quarter, which will then allow us to restart the trial to recruit the full cohort of fifty patients.

Tissue Repair Ltd (ASX: TRP)

This ASX biotech share is up 59% to 35 cents and trading 12.9% higher over the past 12 months.

Tissue Repair is a clinical-stage biopharmaceutical company developing advanced wound-healing products for chronic wounds and aftercare.

Today, the company revealed it has received approval from the Therapeutic Goods Administration (TGA) for its first advanced wound healing gel product, TR Pro+.

The gel contains Tissue Repair's proprietary active ingredient, Glucoprime (0.1%), which is derived from yeast. The product has been approved in 10g and 50g tubes and 3g sachets.

Tissue Repair says TR Pro+ "represents a new standard in the aftercare of medical and aesthetic procedures".

It said the TGA listing would enable it to promote its scientific and clinical data more broadly.

In a statement, the ASX 200 biotech company said:

Importantly securing general claims around skin healing, repair and regeneration will allow the
Company to significantly expand the indications that it can market the product for including acute
wounds, and a broad range of derm conditions.

Investors in this ASX biotech share are clearly delighted with the news, judging by the skyrocketing share price today.

Tissue Repair launched TR Pro+ a year ago when it had regulatory status as a cosmetic product.

The company reported record sales of TR Pro+ in the third quarter, with 130% quarter-over-quarter growth and distribution expanding to more than 160 clinics.

The post 2 ASX biotech shares rocketing more than 40% on big news appeared first on The Motley Fool Australia.

At one point in intraday trade, Amplia shares were up a massive 56% to 32 cents. They've since pulled back slightly to 29 cents per share.

The Australian company says its AMP945 inhibitor is able to boost the anticancer activity of standard treatment drugs by up to 27% in animal trials.

The trials were undertaken in collaboration with Professor Paul Timpson from the Garvan Institute of Medical Research.

Amplia Therapeutics is advancing the pipeline of Focal Adhesion Kinase (FAK) inhibitors for the treatment of cancers and fibrosis. FAK is increasingly important in the field of cancer immunology.

What's driving the Amplia share price higher?

Investors are fighting to get hold of Amplia shares after the company released data from its latest trials using the AMP945 inhibitor on mice.

In its announcement, Amplia advised that new data has shown AMP945 is able to improve anticancer activity.

The trial combined oral doses of AMP945 with standard treatment drugs — gemcitabine and Abraxane — used in the treatment of aggressive pancreatic cancer.

The new data found adding intermittent doses of AMP945 increased the survival rate by 27%.

The mice that received AMP945, with gemcitabine and Abraxane, survived for a median of up to 28 days. This compared to 18 days for mice who didn't receive the treatment.

This follows previous studies revealing AMP945 enhances the activity of chemotherapy by increasing cell death and reducing the spread of cancer cells.

What did management say?

Garvan Institute of Medical Research Professor Paul Timpson said:

The pancreatic cancer cells used in this experiment are extremely aggressive, so showing any beneficial effect on survival is very encouraging. A 25% improvement in survival in this model is very impressive and a level of improvement that we rarely see.

Amplia CEO Dr. John Lambert added:

These data further underpin the rationale for our planned Phase 2 clinical trial in pancreatic cancer. Earlier data told us that adding AMP945 to gemcitabine and Abraxane increased cancer cell death and reduced proliferation, and this new data tells us that those effects actually translate into prolonged survival in this model. We are strongly encouraged by these results.

Amplia is planning a Phase 2 clinical trial in pancreatic cancer patients towards the end of this year.

The Amplia share price has risen by around 120% during the past 12 months.

The post Why the Amplia (ASX:ATX) share price is rocketing 41% higher today appeared first on The Motley Fool Australia.

During late-morning trade, shares in the Australian pharmaceutical company are up 7% to 29 cents.

Amplia is an Australian pharmaceutical company. The company is focusing on the development of Focal Adhesion Kinase (FAK) inhibitors for cancer and fibrosis. It's lead novel oral molecule, AMP945, is a "pure-play" inhibitor. This targets the formation of scar tissue (fibrosis) both in cancer and diseases such as idiopathic pulmonary fibrosis.

AMP945 is aimed at blocking FAK's activity which lessens scar tissue. Thus, AMP945 allows cancer treatments to be more effective without fibrosis.

What did Amplia announce?

The Amplia share price is on the move today. This comes after the report that it has progressed in the development of its novel inhibitor.

According to its release, Amplia advised that it has commenced a multiple ascending dose (MAD) study in its phase 1 clinical trial of AMP945. The decision to advance the FAK inhibitor was based on the positive results seen to date.

Amplia stated that during phase 1 trial, healthy volunteers undertook a single ascending dose (SAD) of AMP945. Patients were carefully monitored to gain a better understanding of the safety and tolerability parameters. As the initial study nears completion, it was revealed that no health issues were identified regarding the SAD administered to volunteers.

In light of the positive developments, Amplia decided to begin a MAD study involving 3 cohorts of subjects. The first lot of patients will be receiving their doses sometime this week. Different amounts will be administered to each group. The MAD study will run for a period of 7 days.

The data from both the SAD and MAD studies will help Amplia establish the desired dose of AMP945. This will be important for its future phase 2 clinical trial. Amplia is expecting that phase 2 will be commencing at the end of the 2021 calendar year.

Additionally, Amplia noted that it was also studying the impact of food on the absorption of AMP945. Amplia is currently analysing results after the separate trial concluded last month.

Words from the CEO

Amplia CEO, John Lambert, welcomed the company's progress, saying:

We are delighted that we have been able to advance AMP945 into our MAD study on the basis of the positive data seen so far in the SAD study. AMP945 is a very specific inhibitor of the FAK enzyme and has very little off-target activity. The excellent safety profile that we have seen in our SAD study to date is consistent with data from our preceding non-clinical studies.

We are very encouraged by the data that we have seen from the trial so far and look forward to reporting headline results from this Phase 1 clinical trial in Q2 2021.

About the Amplia share price

In the past 12 months, the Amplia shares have risen close to 200% reflecting positive investor sentiment. During March, its shares dipped to a 52-week low of 4.5 cents before storming higher to 37 cents in October.

Swapping hands for 29 cents today, the company's shares are only 25% away from its multi-year high.

The post Here's why the Amplia (ASX:ATX) share price is up 9% today appeared first on The Motley Fool Australia.

What was in the announcement?

According to the announcement, former Macquarie CEO Allan Moss now owns 8.69% of Amplia Therapeutics through an investment company he controls called Blueflag Holdings. The company purchased 7,500,000 shares for $750,000, paying 10 cents per share. 

Allan Moss was one of the founders of Macquarie Group and is known for his skill in choosing investments.

Who else is buying Amplia Therapeutics shares?

Also announced on Tuesday was that fund manager Platinum Asset Management had increased the size of its substantial holding in Amplia Therapeutics. This followed an institutional entitlement offer by the company. Platinum Asset Management increased its holding from 8.60% to 19.89%. The fund manager bought 11,454,000 shares for $1,145,400. The purchase price was 10 cents per share. 

Amplia Therapeutics director, Dr Warwick Tong, also  participated in the institutional entitlement offer, purchasing 200,000 shares at $0.10 per share.

About the Amplia Therapeutics share price

Amplia Therapeutics is a biotechnology company with a pipeline of treatments for cancer and fibrosis. Its treatments work by inhibiting the spread of  affected cells throughout the body. The company is focused on ovarian and pancreatic cancer.

Earlier in July, Amplia Therapeutics announced that it planned to raise $4 million at a price of 10 cents per share. The company also raised $930,000 in January.

The company is raising capital to move toward a phase 1 trial of its AMP945 treatment. This is the company's leading FAK inhibitor, which works by stopping cells from spreading when they are affected by cancer or fibrosis. According to the company, it is on the cusp of transforming into a clinical-stage company. The company plans to move towards a stage 2 trial in 2021. 

For the year to the end of March 2020, Amplia Therapeutics had a loss after tax of $2,219,474. Its research and development expenses were $1,071,677, and general and administration expenses were $858,886.

The Amplia Therapeutics share price is up 211% from its 52-week low of 4.5 cents per share. It has returned 141% since the beginning of the year. The Amplia Therapeutics share price is up 61% since this time last year.

The post Amplia Therapeutics share price up 16% in 2 days as former Macquarie CEO takes substantial stake appeared first on The Motley Fool Australia.

Making the case unusual is that the micro-cap biotech in question is ASX-listed Innate Immunotherapeutics Limited (ASX: IIL).

Since the scandal it has changed its name to Amplia Therapeutics Limited (ASX: ATX) perhaps in an effort to brush the episode under the carpet. 

According to reports in The Australian newspaper congressman Chris Collins was tipped off over the phone by the Innate Immunotherapeutics CEO that clinical trial results for one of its drugs were negative.

The congressman in possession of the inside information then tipped off his own son who proceeded to sell large amounts of  shares, while tipping off other associates to run for the hills as well. 

When the negative public announcement came the stock tanked 90% lower, with a journalist named Jerry Zremski working as the Washington Bureau chief of The Buffalo News first picking up the story of suspicious activity. 

Mr Zremski even contacted ex-Motley Fool writer and amateur sleuth Sean O'Neill who had also picked up and flagged the suspicious activity as outlined in the excellent article hyperlinked. 

It was lucky for the local regulator ASIC who had the whole affair picked up for it and pursued with gusto by the feared US regulator the SEC. 

For every case of insider trading picked up (in this case Mr Collins' son's greed in selling straight away appears to have given the game away) there are almost certainly dozens or perhaps hundreds of cases that go undetected or unproven.

Out of the around 2,300 companies listed on the local market the majority fall into the small-cap or speculative buckets. 

At this end of the market even if information is not legally 'inside information' different market participants are often acting on different amounts of information. While misinformation or false representations are also a big problem for retail investors to navigate.

Regulation also cannot be relied upon as the principle of 'caveat emptor' persists.

As Julius Caesar once said; "The fault, dear Brutus, is not in our stars, but in ourselves." 

I would not suggest punting on speculative stocks unless you are a highly-experienced investor well informed on a particular business.  

You can find some of the more popular speccy ASX stocks across all sectors including mining, healthcare, and biotechnology.

Some popular penny stock names with punters looking to get-rich-quick include Paradigm Biopharmaceuticals Ltd (ASX: PAR), Fastbrick Robotics Ltd (ASX: FBR), Avz Minerals Ltd (ASX: AVZ), Benitec Biopharma Ltd (ASX: BLT) and Bionomics Ltd (ASX: BNO). 

The post US congressman resigns over ASX insider trading penny stock scandal appeared first on The Motley Fool Australia.

In June last year I wrote an article about Innate Immunotherapeutics Ltd (ASX: IIL). It was a biotech company, grossly overhyped (in my opinion) and it had a failed clinical trial that saw its share price fall by 91% when it returned to trade.

Nothing unusual about that.

I then published a brief follow-up piece showing the share price chart, which is what I normally do when a company experiences a heavy fall in a single day. The price chart showed something highly unusual. I have annotated it here to make it more clear:

Note the time of the apparent plunge in the share price? I don't have trade data that far back, and without getting a pixel ruler out, the trading looks to have been around 12.30pm.

According to the ASX markets platform, Innate Immunotherapeutics entered a trading halt at 12.53pm, after an apparent sharp decline in the share price (according to Google's data).

The company called for a two-day trading halt as it had received results from its Phase 2B trial. The results of the trial were not publicly disclosed until Tuesday (2 trading days later) when the stock plunged 91%. However, in my opinion, it really looked as though there was strong selling activity before the trading halt.

I wrote at the time:

"Curiously from the Google chart it also looks as though the sell-off began on Friday a few minutes before the company hurriedly entered a trading halt. The announcement was only this morning which suggests that somebody with knowledge of the results was front-running the announcement. That's something I'd hope the regulator will be looking closer at." 

While I was concerned about what I thought was potentially insider trading, it was a throwaway comment on behaviour I've seen dozens of times over the years in ASX microcaps, and I didn't think any more of it.

Little did I know that a journalist called Jerry Zremski, the Washington Bureau chief of The Buffalo News was following the story.

Jerry got in touch on Twitter and we exchanged emails. As it happens, a US Congressman, Chris Collins, had a large investment in Innate Immunotherapeutics and was a director of the company until 4 May 2018.

News coverage in the US suggested that this information was fairly widely known in the US also.

Over the course of several months Jerry pursued the story tenaciously and just yesterday, US Congressman Chris Collins, his son Cameron Collins, and a Stephen Zarsky were arrested by the FBI for conspiracy to commit securities fraud – by trading on inside information in Innate Immunotherapeutics.

According to The Buffalo News:

"Collins has been charged with one count of conspiracy to commit securities fraud, seven counts of securities fraud, one count of wire fraud and one count of making false statements to the FBI. His son and Zarsky face similar charges."

Which is an incredible outcome for what I thought was an otherwise unremarkable pump and dump in an ASX biotech stock.

I would like to stress that the charges are just allegations at this point. I would also stress that I had no role in the story whatsoever beyond an email or two with Mr Zremski.

Innate Therapeutics released an announcement this morning stating that they had cooperated with all investigations, that no other officers of the company were under investigation, and that they considered this matter private to Congressman Collins.

According to media reports, the US SEC made the following statement:

""We allege that Christopher Collins breached his duty of confidentiality to Innate's shareholders, exploiting his access to nonpublic information about the company's clinical trial results so that his son could avoid significant financial losses," said Stephanie Avakian, Co-Director of the SEC Enforcement Division, in a press release.

"Our laws are designed to prevent and punish such misconduct, which undermines investors' trust in the fairness and integrity of our markets."

Australian investors may of course wonder why this ASX insider trading is being prosecuted by the SEC instead of our own suited gentlemen at ASIC.

They will have to keep wondering, as ASIC is not particularly quick off the mark, and I don't think I've seen a comment from ASIC Media in the 14 months since the alleged insider trading at Innate.

Let this be a lesson to investors out there considering investing in risky parts of the market in unproven or speculative miners, biotechs, and technology stocks. Suspicious trading is not the unusual part of this story – what's unusual is that they got caught.

The post ASX Watergate Arrest: The alleged insider trading at Innate Immunotherapeutics Ltd (ASX:IIL) appeared first on The Motley Fool Australia.

Whilst there are changes across all of its major indices, the All Ordinaries (Index: ^AXAO) (ASX: XAO) is by far the index with the most going on this quarter.

A total of 64 new shares will be added to the index at the expense of the same number of existing constituents on March 19.

Here is a quick summary of some of the changes being made this quarter:

Additions.

There have been a number of eyebrow-raising additions to the index this quarter.

This includes the addition of the first medicinal cannabis company on a major Australian index – Cann Group Ltd (ASX: CAN).

New additions from the resources sector include mineral exploration companies Avz Minerals Ltd (ASX: AVZ), Argosy Minerals Limited (ASX: AGY), and Artemis Resources Ltd (ASX: ARV).

Infant formula hopeful Bubs Australia Ltd (ASX: BUB) will also be a new entrant to the index.

Finally, a few tech shares that have been added to the All Ordinaries include LiveHire Ltd (ASX: LVH), Yojee Ltd (ASX: YOJ), Fastbrick Robotics Ltd (ASX: FBR) and GetSwift Ltd (ASX: GSW).

Removals.

A lot of the companies making way for these new additions will not be a surprise to investors.

These include the embattled CBL Corporation Limited (ASX: CBL), Innate Immunotherapeutics Ltd (ASX: IIL), Mcgrath Ltd (ASX: MEA), Resapp Health Ltd (ASX: RAP), and Yowie Group Ltd (ASX: YOW).

I think it is fair to say that all five companies have had a disastrous 12 months, so their removal would have been largely expected.

Elsewhere, other removals of note include Billabong International Limited (ASX: BBG), GBST Holdings Limited (ASX: GBT), and Sundance Energy Australia Ltd (ASX: SEA).

What now?

When the All Ordinaries rebalances it often provides a short-term lift to the shares added to the index and the reverse to shares removed from the index.

This is largely because index funds that track the market need to buy or sell shares accordingly. But also because some fund managers are restricted from buying shares that are not included in the All Ordinaries. This could mean they have to dump shares that have been kicked out or can now buy shares that they have been previously unable to buy.

The post Cann Group Ltd is one of 64 new shares added to the All Ordinaries this quarter appeared first on The Motley Fool Australia.

They are as follows:

iSentia Group Ltd (ASX: ISD)

After a shocking 2016, this media monitoring company followed it up with another stinker in 2017. Its shares are down a further 51% this year, extending its two-year decline to a staggering 71%. The company's disastrous acquisition of the King Content business was initially the key driver of its decline. But since then its core business has struggled from higher levels of customer churn. As a result, management expects FY 2018 EBITDA to be as much as 22% lower compared to a year earlier. While I do like the company, I would keep a safe distance until it starts delivering consistent profit growth again.

Innate Immunotherapeutics Ltd (ASX: IIL)

The worst performer on the market this year has been this biotechnology company with its massive 97.5% decline. The catalyst for this was the release of negative results from its Phase 2b trials in June for its MIS416 treatment for multiple sclerosis. Unfortunately for its shareholders, those results found that the multiple sclerosis treatment was no better than a placebo. In October the company advised that it is actively reviewing a number of possible options for the company to acquire a new technology that could be merged into the business. It had planned to make a definitive statement about the company's future prior to Christmas, but has failed to deliver on this.

Quintis Ltd (ASX: QIN)

Remember Quintis? The shares of the sandalwood plantation manager have been suspended from trade since May 15. But prior to that they had lost 82% of their value since the start of the year due largely to a report from short-seller Glaucus Research. That report alleged that the company's business model was a Ponzi-scheme and the true value of its shares was zero. In November Quintis posted a massive statutory net loss after tax of $416.8 million after making a significant reduction to the fair value of its biological assets. If its shares ever return to trade, I would suggest investors avoid them at all costs.

The post Were these the 3 worst shares on the ASX in 2017? appeared first on The Motley Fool Australia.

Whilst those five shares helped carry the index to a 2.6% gain over the period, the five shares below have acted as a drag on it.

These are the five worst performing shares on the All Ordinaries in the last 12 months:

The Innate Immunotherapeutics Ltd (ASX: IIL) share price has fallen 89% in the last 12 months after the biotech company released negative results to its Phase 2b trials in June. Those results found that its MIS416 treatment for multiple sclerosis was no better than a placebo. Unfortunately for shareholders there doesn't seem to be any way back for the company now.

The Quintis Ltd (ASX: QIN) share price has plunged 82% since this time last year following a sudden fall from grace. The declines began earlier this year when short sellers targeted the company, claiming it had a Ponzi-like operation. Since then there has been shock announcement after shock announcement, including the revelation that the company was unaware that it had lost one of its largest supply contracts in December of last year.  The company's shares have not traded since May but are expected to resume trading on 1 September 2017. Stay well away would be my advice.

The Blackham Resources Ltd (ASX: BLK) share price has lost 82% of its value in the last 12 months. Despite a rise in the gold price, the gold miner's shares have come under heavy selling pressure this year after strong rains led to the loss of 26 days of open pit mining. Furthermore, the knock on effect of this has been slower than expected dig rates which have significantly reduced the total ore mined.

The Resapp Health Ltd (ASX: RAP) share price is down 77% during the period. Like Innate Immunotherapeutics, the decline in its shares relates to a disappointing study result. According to the results of its Smartcough C study, predefined endpoints for positive percent agreement and negative percent agreement with clinical diagnosis are unlikely to be met. This strikes me as another one to avoid.

The Yowie Group Ltd (ASX: YOW) share price has fallen almost 74% in the last 12 months after a series of profit downgrades sent shareholders to the exits in their droves. As I wrote last month, Yowie released its quarterly update at the end of July which revealed a 23% increase in quarterly revenue. Whilst this is positive growth, it is worth noting that with nine days remaining in the quarter the company provided guidance for 37% growth. Furthermore, it meant the company fell short of its full-year guidance which had already been downgraded three times in the space of 12 months.

The post These are the 5 biggest losers on the All Ordinaries in the last 12 months appeared first on The Motley Fool Australia.

• Innate Immunotherapeutics fell 91% in June
• Resapp Health fell 77% yesterday

In both cases the collapse followed the failure of a trial to show positive results. Research companies need to prove that their therapy is successful in a variety of trials, to justify regulatory authorities such as the US Food and Drug Administration (FDA) giving the company approval to sell.

So, when a company only has a sole product that it is researching and that therapy is found to be unsuccessful, typically the only assets are cash in the bank and a treatment that doesn't work. This is why shares plunge so heavily. Usually for drug or medical treatment developers, there are 3 phases of trials, each progressively more rigorous and complex.

Investors can easily get tripped up by investing in companies in these research stages, particularly when early research appears promising. In my view, investors should treat all research stocks with extreme caution, for 3 reasons:

• Especially at the pre-clinical or Phase 1 stages, it is very easy to massage trial data to get the conclusions that you want.

The easiest way to do it is by excluding certain results from your conclusion. Excluding results is scientifically valid for a number of reasons, but it is very difficult for external shareholders to tell if the science is good or if the result was (even unintentionally) cherry-picked by being selective with the data.

This is why double-blind, randomized-controlled trials conducted by external parties are so important. You don't even need to know what a double blind, randomized controlled trial is (though you should learn) just know that if your company is running one, that's good science.

• The threshold to success is very high, and can appear understated

First, the threshold to getting your drug/treatment scientifically and regulatorily validated is very high and success is far from guaranteed. This is a hurdle that is difficult to explain because it differs depending on the product and intended customers, but the difficulty is hugely underestimated by investors.

Secondly, even excluding manipulation via the first dot point above, the early results from a drug/treatment/thing can sometimes be misleading for one key reason:

This reason is because the people that trial new drugs are often those that are desperate – people who are really sick and/or don't respond to any existing treatments. So, in Phase 1 and sometimes Phase 2, there is sometimes an artificially narrow band of patients being tested. Who is to say that a drug is not more or less effective on the sickest 1% of patients? Will it prove equally useful across the population with different age, weight, gender, at earlier vs later stages of a disease, and so on?

• The outcome is typically binary

If the treatment does not work then the company is, as a general rule, worth next to nothing if it has no other prospects. All those years and all that money poured into research, it's very hard to extract any value from these intangible things for shareholders. Even companies with real products and multi-millions in sales like Sirtex Medical Limited (ASX: SRX) have seen savage falls in their share prices when clinical trials are unsuccessful.

My default position is to say 'no' to companies that have no sales and only one product under research, and I believe that should be your approach too. From an investment perspective it is too hard to quantify the risks, and the penalties for being wrong are swift and ruthless.

The post One crucial thing to consider before investing in risky biotech shares appeared first on The Motley Fool Australia.

Sounds simple, but it trips up a lot of investors. Here are 3 simple things that could ruin your investing record:

Trading too often

Depending on which broker you use and how much you invest, you could end up paying around $15 per trade, which is equivalent to a 1.5% fee on $1,000 every time you buy and sell.

Many fund managers underperform the market due to having a 1.5% per annum in fees; if you're a DIY investor and you trade too much, you're imposing the same headwinds on yourself – making it that much harder to earn a respectable return over time.

Being in a hurry

Often investors think that by looking outside the big names like Wesfarmers Ltd (ASX: WES) and Commonwealth Bank of Australia (ASX: CBA), they can increase their returns. It's true, they can. But unfortunately the search often leads many investors into high-risk shares like Resapp Health Ltd (ASX: RAP).

Higher risk business hopefuls are often hotly discussed on internet forums which can have the effect of making them appear more investment-grade than they are – sometimes with terrible consequences for your investment, as investors in Innate Immunotherapeutics Ltd (ASX: IIL) discovered in June.

Having the wrong focus

There are some mighty smart fund managers and other investing professionals that are quoted in the media hundreds of times each week. It's easy to follow their advice. However, the vast majority of it isn't necessarily suitable to each investor's individual circumstances.

For example, fund manager Allan Gray Australia was quoted last week about the opportunity of companies they hold like Mineral Deposits Limited (ASX: MDL) and Capral Limited (ASX: CAA). Allan Gray is a good fund manager, but most investors simply aren't prepared to own resource companies at the bottom of the commodity cycle when they are ugly and unpopular.

They might be good investment ideas, but following them if they are not suitable for you could lead to selling at the wrong time, trading too much, and/or being in a rush to earn back what you lost in your investment mistakes.

The post The 3 biggest investing mistakes you can make appeared first on The Motley Fool Australia.

Getting rich quick

The idea is that, by supercharging their returns, these investors can make up for lost time and enjoy a wealthier retirement. Unfortunately, by trying to get rich quick in this type of company, most investors will fail to get rich at all.

This approach can be tolerable if you're a younger person trying to make up for all those holidays and smashed avocado toast. You will lose money, learn the hard way, and it will suck – a lot – but it can be outright disastrous if you're an older investor putting larger amounts of money into risky companies.

The problem with the 'speculative investing' approach is that it has binary outcomes. Either you make a lot of money – maybe, and if you're lucky – or you lose most of your investment. The most likely outcome is that you trap yourself for years into a company that is 'gunna' do awesome stuff – someday. In the meantime, these companies are burning a lot of cash for an outcome that, in the end, may not even occur. You can find an illustration of this phenomenon here.

Getting rich slow

A blue-chip company like Wesfarmers Ltd (ASX: WES) might not sound exciting or worthwhile, but at least it is profitable and you're earning a 5% return per annum (dividends) instead of going backwards like you are with unprofitable spec companies. Bottom line; trying to make up for lost time will only lead you to take great risks.

I have three suggestions for all investors who might be looking at speculative companies:

• If a company doesn't have a proven track record selling its product (if it isn't earning meaningful and growing sales) don't buy it. They could have the greatest treatment/device/thingamajig in the world, but they still have to sell it to people, which is harder than it looks.
• You can still make a lot of money in a company with a proven business model, as this example shows
• If you must own speculative stocks, keep them to a small part of your portfolio, say 5% or less of your total investable funds
• Try a common-sense approach to valuing the speculative stocks. If a company's market capitalisation (the total value of all its shares) is $200 million, it has less than $1m in sales, and is losing $10m in cash every year for example, there is a very good chance it's not worth $180 million – i.e., it is likely overpriced or perfectly priced, and you could lose money.

It is a sad irony that many investors would see much better returns overall by targeting lower returns.

The post Here's how to get rich quick (and stay poor forever) appeared first on The Motley Fool Australia.

Companies like Prima BioMed Limited (ASX: PRR), Innate Immunotherapeutics Ltd (ASX: IIL), Pharmaxis Ltd (ASX: PXS), Cynata Therapeutics Ltd (ASX: CYP) and others are all investing heavily in researching their chosen treatments, which they hope will lead to life-changing (and financially rewarding) therapies in the future.

However, this lure of a bright future is like a naked flame for moths – a lot of the time, all it does is burn investors. Here are some key things to consider before purchasing any biotech business:

It's a binary outcome

It's common to think that by investing in an early stage company now, your patience and courage will be compensated for with a successful business, like this:

Investment + Patience = Treatment successfully developed = Profit

Unfortunately, that's not how it works. It's more like:

Investment + Patience + capital raising + plunging share price = 50/50 success or failure = _____?

At the end of the day, all it takes is a failed trial to see your investment worth $0 – like when Innate Immunotherapeutics plunged 95% on Tuesday.

That's a big problem, because:

Research is very expensive

There are 4 phases that every biotech researcher goes through. Each reflects greater complexity and a higher hurdle to prove that a treatment is viable:

Phase 1 > Phase 2 > Phase 3 > Regulatory approval (sales can commence after this)

As a rough rule of thumb, you could say that it takes at least 1 year to complete each Phase, although this varies hugely depending on the phase and the type of treatment and can easily be much longer (and rarely any shorter).

Following that, add a year for regulatory approval. It is often faster but there is always the chance that a regulator will require more research before approving a treatment, resulting in delays.

So as a rule of thumb it takes at least 4 years to get from pre-Phase 1 to having regulatory approval. Here's why that's concerning:

A fictional example

Imagine a fictional company, Magic BioPharmaCeuticals (ASX: MBPC). It has a successful Phase 1 trial under its belt, a market capitalisation of $60 million, $7 million cash at bank, and is burning $2 million cash per quarter in research and administration expenses.

We could say that the company is 'worth' $67 million, i.e., market capitalisation (the total value of all its shares on issue) + net cash.

If we take the rule of thumb that it will take at least 3 years (12 quarters) to complete phase 2 and 3, achieve regulatory approval, and commence sales, an investor is looking at $24 million in cash outflows. So, your $67 million at the time of purchase turns into at least $43 million and that's before the dilatory effects of capital raisings (issuing more shares to raise funds).

This works out to be about a 35% loss on your investment and that is before the company succeeds or fails. So it could look something like this:

You will lose at least 35% of your money on MBPC, and there is at least a 50% chance that the research either fails or is delayed longer than 3 years, resulting in even greater cash losses. Should you buy?

Most likely you should not. The only thing that could save you in that situation is if the market is more enthusiastic than you are, and offers to pay you a higher price for your shares. This is often why people buy these companies – in the hopes of a higher share price. However, it doesn't take too many years of constant cash losses to drain investor enthusiasm and I am yet to see a speculative biotech that can maintain a high share price.

This type of company is completely unsuitable for the vast majority of investors.

The post Warning: Every investor should read this before buying speculative biotech companies appeared first on The Motley Fool Australia.