This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Biotech Stock Mailbag: Discovery Labs

BOSTON ( TheStreet) -- This week's Biotech Stock Mailbag opens with an email from Jack W., who wonders about the future of Discovery Labs (DSCO - Get Report).

"I listened to Discovery Labs' conference call, and the CEO made it sound like the company was in a strong position to partner its drugs. Does this sound right to you? The stock looks cheap."

I listened to the conference call Wednesday, too, and I was gobsmacked by two things: first, that CEO Robert Capetola didn't use the call to announce his resignation. How is this incompetent CEO, a decimator of shareholder value, still in charge of Discovery?

Second, Capetola and his minions must be living in a fantasy world. How else to explain all the talk about Discovery's "revolutionary technology," "manufacturing expertise" and record of clinical success.

Really? Discovery has tried and failed three or four times to convince the FDA to approve its infant lung drug Surfaxin -- a record of futility that is unmatched.

This ignominious achievement has destroyed the company's stock price. The company has $23.5 million in the bank and will burn through $13 million in the second half of this year. On top of that, Discovery has a $10 million loan that comes due in April.

Yet, Capetola thinks potential partners are going to be knocking on his door eager to throw money at the company in exchange for rights to his lung surfactant technology?

Why wouldn't a partner, if any existed, simply wait until next year for Discovery to go bankrupt, at which point the company's assets can be picked up for nothing? It's not like Disovery has any negotiating leverage. The company is circling the drain!

1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
CTIC $1.80 -5.76%
BCRX $8.11 0.12%
BDSI $13.75 -1.72%
DSCO $1.15 -4.17%
INO $8.09 -1.20%


DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs