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Monday, October 30, 2017

Will Heinz surprise the Street?

Kraft Heinz (KHC) is an iconic American food company, manufacturing many popular brands like Velveeta cheese, Oscar Mayer hot dogs, Maxwell House coffee, Jell-O and Kool-Aid. While they are still famous and popular, they have started to lose their competitive edge in the fast changing world with new generations and new eating habits. Its revenue has been in constant decline in the past 3 years. This dire trend has finally hit its stock prices. After reaching the all time high at $95 early this year, KHC has lost a third of its value and is trading around $75 as of today. It seems KHC has nowhere to go but further down. I do believe KHC has a lot more to go down from the current level in the long run. The question is if a short term miracle may save it for now. I think it is possible from the speculation perspective.




KHC will be reporting earnings on Thu after close. It has just reached its new low for the year and the expectation for it is extremely low obviously. This is often the time when a surprise may strike. If the earnings are just a little bit less bad than expected, it may trigger a revenge bounce, causing a huge short squeeze. We have seen this kind of surprise moves many times this year and there is a reasonable chance we may see it again for KHC. Its momentum indicator MACD seems also to agree with this speculation as it has shown a clear negative divergence on its daily chart. But let me be clear, this is purely a speculation and there is no guarantee whatsoever! KHC may tank further after its earnings. So don't touch it if you cannot lose for the speculation!

Friday, October 27, 2017

Dimon is suffering from Default Bias




As you most likely have already known that the JPMorgan CEO, Jamie Dimon has famously claimed that bitcoin was a fraud and would soon collapse and disappear. I just read something about Default Bias (DB) and I think Dimon is among those suffering from DB!

 

So what is DB? Just ask yourself what you will do when you get a new iPhone. Do you change a lot of settings yourself or just go with the default setting? I bet most people (me included) will only go with the default setting or at least most of the default setting. Why so? Because this is driven by a fundamental psychologic nature of human beings: we believe the pain of losing is greater than the joy that comes from gaining. Default is usually the most common choice with much lower risk of failing or losing than a new setting. This is especially true when we are facing life-changing but brand new technical innovations, more so if they are extremely early and poorly understood. Bitcoin and the underlying technology, blockchain (BC), is at this stage. We have seen almost identical reactions when the Internet was newly born.  Here's a quote from U.S. astronomer Clifford Stroll in 1995: “Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic. Baloney.”

 

Even the inventor of Ethernet, Robert Metcalfe, didn't believe in the Internet. "I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse,"  

 
Sounds familiar? Next time when you hear something like that about bitcoin/BC, just laugh. I will for sure!  

Wednesday, October 25, 2017

Be happy with today’s selloff


Over the last few years, it is almost a clockwise occurrence that the market will go higher over the Christmas time, so nicknamed the Santa Claus rally. Now we are moving into Nov and it is the time again to consider a SC rally. The question is: is it as sure as it was in the past years? Certainly it is too early to be sure with anything but my thinking would be it depends on how the market will behavior in the coming days or weeks prior to Christmas.

 

The market usually sets itself up for a SC rally, in a way to gain enough technical strength and energy by experiencing some selling first to cause enough panic with oversold conditions. Then a SC rally ensues. It is almost always set up that way. This year, I was not so sure before today. You see, for months the market has again and again reached its new highs and we are hardly seeing even a 1% decline, not mentioning 5-10% decline that is quite normal in any bull market. If this continues towards the Christmas with the market steady going up or sideway moving without much downside, I can hardly see any major rally to be seen during the Christmas. We may even see a SC selloff instead!

 
Having said that, the past few days a divergence between the market new highs vs increasing VIX was sending us a hint that some sort of one or two day panic selling was on the way. We have seen this kind of divergence back in April and August when VIX started to move up from its extremely low (<10) while the market was happily moving up every day. Then all the sudden out of blue, VIX shot up 50-60% with a couple of days and the marketed tanked by 2-3% plunge. Today’s selloff that hopefully can last another day or two will actually nicely set up a stage for the market to go into the SC rally by the year end. I hope we can see more downside with elevated panic from this selloff! Be happy if you are waiting for a Santa Claus rally.

Sunday, October 22, 2017

A revenge of the US dollar is coming?

The US$ has not had a good time this year and has lost its value over 10% in less than a year, a rather significant weakness for any major currency. As I said, I think this year's weakness for US$ may be a major trend change for it and may last for several years. But nothing goes in a straight line either direction. About a month ago, I noticed that US$ appeared to be forming a bottom. Checking back now, it seems more clear that it is indeed bottomed for now. It is showing a textbook inverse Head & Shoulder pattern, a bullish setup often leading to an upward breakout. If it can decisively break out the resistance around $94, very likely it may go up to challenge its next major resistance at the 200 DMA around $97. If this happens, some pain will be felt for other currencies, mainly Euro, Canadian $ and Aussie $. As of now, you may want to short Euro, e.g. buying EUO, an inverse ETF against Euro. It is too early to call when this US$ revenge will end but I think it will likely stops around its 200 DMA and resumes its next leg down again. I still believe it is a multi-year's downtrend for US$ but at the moment it is just taking a breath.



Saturday, October 21, 2017

A 75%+ dividend yield


Dividend yield has an inverse relation to the underlying stock price. If the dividend payout is constant, then the higher the stock price, the lower the dividend yield, and vice versa. So as a general rule, don’t be lured into some high dividend paying stocks, especially those with very high yields. It often means the stock price is declining fast that usually suggests something wrong with the company. So I’m hardly interested in such kind of very high yield stocks. But this one has some interesting wrinkles with it. Let me explain.

 

The company I’m talking about is EP Energy (EPE), an independent exploration and production company for oil, natural gas and natural gas liquids in the United States. It is going to pay a quarterly dividend of $0.575 with an Ex-date of Oct27 (i.e. you must own the stock at least on Oct 26 to qualify for this dividend). With share price around $3, the annual dividend yield will be about 75-80%. Here are few things you need to understand:

  • The dividend EP pays out cannot be covered by its cash flow, meaning it is paying out the dividend on debt. Indeed it is true that EPE is heavily in debt that is a big risk for long term holders.
  • EPE share prices have been extremely volatile and in a big downtrend in the past 3 years since it became listed. Understandably this is not unique to EPE but for the whole sector as the past 3-4 years have been the most brutal period for the oil sector. In the past year, it has declined 25%. But lately the oil sector appears to have been stabilized and may have reached the bottom. Oil stocks are accordingly showing the early sign of recovery. EPE may be also in the same bottoming process and its weekly technical is promising. In other words, unless the company has something terribly wrong that is unknown to investors yet, its downside risk is probably limited and may even start to move up moving forward.
  • The most intriguing part is its unbelievable track record of hiking dividend consistently in the past 5 years during the worst period of its business era. It has increased its dividend each quarter for the past 21 quarters (at an average rate of 9.1% per quarter and 35.7% per year) and the current quarterly amount ($0.575) will make the annual payout to $2.30, an extraordinary 75%+ forward dividend yield based on the current stock price. 
So what’s the take from the above information and what will be risk if one wants to earn this 70% dividend? As I said, normally I won’t even look at such a trade given the inherent high risk involved for stocks with extremely high dividend yields but this one may be worth a try.  You see, EPE has a good track record of boosting dividends  consistently for 5 years during the worst period and now it has good sign that the energy sector is stabilizing and may even start to move up in the next few years. So it may be reasonable to bet that EPE is less likely to cut its dividends in the next year regardless if it will continue to increase it. If the latter that seems also quite possible, then it’s a bonus for traders. If this expectation holds true, then traders will have at least 70% downside risk protected if you hold it for at least a year to get the full annual dividend. Again, if the sector is stabilizing, such drastic stock plunge seems also less likely unless EPE surprises everyone with some really bad news not publicly known up to now. But let me be very clear, this is risk-reward probability game. Even though the odds is quite favorable to me, the worst case scenario may still come that could wipe out most of the invested capital if not all. Only trade with what you can lose if you want to bet for it!

Saturday, October 14, 2017

My adventure in digital renting




I don’t know if there is formal name called digital renting but if no,  let me be the first one to name it. And I think this will likely be the future rental business in the making to at least go together with the centuries long physical rental business, most famously like house or car rentals. So how do I define the digital renting? Well, roughly anything that one can rent out digitally without the need to deal with the physical properties could be a form of digital renting. In this sense, I assume the already popular renting business for movies and ebooks is one of them. But what I really means here is more for individual digital assets that can be rented out, just like you own a house and you rent it out at the personal level. So far it is still too imaginary for most of people I guess but I have already started one with good progress that I can share with you today. With last week’s topic about bitcoin, you may guess now that I’m talking about something related to bitcoin and its underlying technology. More specifically the digital mining business for now.

 

As you may surely know by now, I’m a huge fan of this new technology, blockchain (BC). More I learn it, more I become convinced that the next 20 years will become the BC era. While it is still too hard for most people to imagine what is coming with BC, soon you will suddenly find that a lot of our assets will be digitized that will allow us to openly save and transact them via BC-based technology without fear of being hacked or stolen. You can pass this blog now if you think I’m too crazy to talk about this but just be aware that it will be your loss, not mine, if you don’t start to educate yourself about BC and be open-minded for something life-changing that is coming. Let’s get into some meat how my first adventure with digital renting tastes like.

 

I have already talked about it a few times actually. It is about the Gaga Watt digital coins that I have bought a few months before. And now I have rented them all out and they are making money for me day and night, actually minute by minute more precisely! Briefly, this GW coin is issued by the company, Cryptonomos which owns and provides the infrastructure services for those who want to mine bitcoin or other cryptocurrencies. As the coin holders, I’m almost like owning part of the business as I have the right to use the services or rent my coins out for others to use the services. So far I can see 3 ways for me to make money or monetize my GW coins.

  • The most direct way of earning money for me is obviously the “rents” I got from those who rented my coins. Initially I thought I’d get some cash directly from the renters but soon I realized what I’m getting is not cash, but the underlying cryptcoins that the renters mined. In other words, each time a renter mined a coin, I got a tiny fraction of the coin that was based on the open market price of the coin at that moment. This is really around the clock mining business as renters are not restricted to one area but across the globe. My account is updated every hour and indeed each hour I see some coins are credited to my account throughout the day. How much I get is totally dependent on the market price of the coin: I get more if its price gets lower and less if it is higher. So based on the market prices, I can estimate how much money I could get if I sold them at that point. So far I mostly get bitcoin and etherum, the two most popular cryptocoins (CC), and much less with litcoin. So I can easily calculate the return from them. Based on the past few weeks of what I have got, my annualized return is roughly about 30%, consistent with what the company has projected. There are 3 rental rates I can choose; the higher it goes, the harder it will be to rent out the GW coins. In order to make sure I always rent out 100%, I simply go with the lowest rental rate. This way, I know all my GW coins are working to accumulate cryptocoins for me without me doing anything. I’m really excited about this mode of online renting business. Little by little, I’m increasing my hoard of cyptocoins that could be very valuable down the road, similar to getting dividends from stocks!
  • While I can easily sell the coins I’ve got now for immediate cash return, I think the future potential return from the CCs could be much bigger and even huge, if my vision turns out to be true that the BC based technology will become the mainstream widely used application just as what the Internet is doing for us now.  I’m betting this future return could be moonshot if I’m lucky enough as an early crab eater.
  • The final potential has less certainty but I think it is quite possible as well. That is to openly trade my GW coins if I want to sell them, if their demand is high with inflated prices. I talked to their representative and they informed me that indeed this is also in their plan, probably in 2 years from now. So far they want to focus on what they have promised to the GW coin holders to allow them to rent out their coins with sufficient mining services available. When the business become more established in a few years, it will make more sense to let their coins be openly tradable. I like the plan.
Surely you have sensed my excitement about my adventure thus far with the digital renting. But I would be a big liar if I’m not talking about the potential risk associated with it. Actually it is a real risk that the BC technology won’t become the next Internet as I’m expecting and/or the CCs may be totally banned by governments around the world. While I don’t want to underestimate the potential risk, I truly don’t believe the likelihood of a total clasping of the BC/CC is high. It may take longer time than I thought but based on what I’m seeing every day, I even become more convincing that BC/CC world is coming to our daily life sooner than later. But still, as with any speculation, you need to manage your risk to the level that you can take if you are wrong. The money I’m putting into this adventure is a tiny fraction to my total asset and it won’t be any meaningful pain to me even if I lose everything from it. But the potential reward could be dozens or even hundreds of time if I’m right about the BC/CC that can indeed change our life like the Internet. That’s the risk-reward ratio I’m willing to bet on!

Friday, October 13, 2017

Will Amazon strike again?




It has become a norm these days that whenever Amazon touches something, the companies for the thing will falter. We have seen this again and again, mostly in retail business, especially those relying brick & mortar stores. It is truly disruptive! You may have also noticed that in the past week or so, pharmacy stocks have been hit hard. Yes, again, it is related to the rumor that Amazon may decide to get into the online pharmacy business in the next few weeks. You can imagine how retail pharmacy investors are worried about their companies’ future. They run first.

 

If indeed Amazon wants to get into the pharmacy business, how will it do it? Sure, Amazon may just want to set it up from scratch by doing everything by itself. But pharmacy business is a highly regulated one and it could be a huge challenge for Amazon to jump into it directly. After seeing what it has done with Whole Foods for the grocery business, I’m thinking loud that there is a reasonable chance that Amazon may also want to jump start by buying a retail pharmacy company. This will allow Amazon to take off the regulatory risk immediately and deep dive into the business much smoothly. If my speculation comes true, which one may be the target of Amazon? There are 3 major retail pharmacy companies coming into my mind immediately. The two pharmacy giants, CVS and Walgreen, are the most popular ones and they are available almost every corner of streets across the country. Both of them are very well run and very profitable but they are not cheap at all. I think it is less likely Amazon will take either of them but if you ask me which one is more likely between the two, I’d say Walgreens. While both companies are very comparable in almost all the parameters, Walgreens has much less debt on its book than CVS, roughly one time less. But anyway, I don’t think it is likely for either of them.

 
I think the more likely target for Amazon is probably Rite Aid (RAD). Well, you may even have not heard of it or rarely seen it on the street. Indeed, it is a poorly run much smaller retail pharmacy and actually on the verge of bankruptcy to some extent. It is heavily in debt. So why am I thinking this is more possible a target for Amazon to take? Well, it all comes down to the reason why Amazon wants to buy a retail pharmacy in the first place. I don’t think Amazon is too much cared about the popularity and profitability of the pharmacy as it will make it popular and profitable. Due to the nature of the online business, it also does not need to have too many retail stores as it could be a huge management burden for Amazon. All it needs is to bypass the regulation hurdles as quickly as possible.  And for that purpose, a small and much cheap Rite Aid may service Amazon much better. Of course this is purely a speculation from my wild imagination and you don’t need to take it seriously. But also don’t be surprised if you suddenly hear the announcement that Amazon is taking over Rite Aid!

Saturday, October 7, 2017

Bitcoin has been pronounced dead hundreds of times




It has been a brutal few weeks for bitcoin holders as bitcoin has got slaughtered harshly following the announcement of China that they are banning all the ICOs (Initial Coin Offer) and  also closing all the China-based cryptocurrency exchanges. The pain can be enormous for those who chased it and got in at its recent peak price around $5000. Honestly, even as a bitcoin big believer, I also think bitcoin is in a bubble, but definitely not in the sense of what those doomsayers have claimed. I think bitcoin is in a huge short-term bubble that needs to burst first before going up further. In the long run, I have no doubt it will be a great value player, a transformational wealth creator! Actually I like what is happening now for bitcoin and the like as it is the only way to allow me to get more of them cheaply when the dust settles. Let me share with you a few thoughts:

  • Since its birth less than 10 years ago, it has increased its value from a few cents to now $5000 at the peak. Someone has counted that there have been at least about 200 times reflected in the major headlines news that bitcoin was called dead or something similar by various doomsayers, including many very influential bodies. The most famous one occurred about 2 years ago also following the announcement from China that they would ban any financial institutes to transfer funds for bitcoin exchanges. Bitcoin got slaughtered as well and crashed from over $1000 then to as low as about $200 at its bottom. Then it revived and came back astonishingly strong to reach the bubbly top at $5000.
  • The Chinese government’s extreme action to totally ban bitcoin and the like may sound like the end of world for bitcoin but in reality there is little concern for it. There are several aspects on this:
    • Due to the nature of blockchains that is the cornerstone for bitcoin, there is no way to totally ban bitcoin, unless the Internet is totally blocked. For example, one can still mine bitcoin on the Internet and easily exchange it for money via foreign exchanges abroad either directly via Internet channel or even physically by mailing or carrying a physical bitcoin wallet to do so if the Internet access is blocked. It certainly make people’s life more challenging but believe me, people will find a way to survive as long as bitcoin is still increasing in value.
    • The Chinese government is notoriously extremely changeable in terms of regulations. I don’t think they will keep the current stance forever. More likely they will probably just take the time to start implement regulations that can be controlled by the government. After all, this is a transformational new technology that China does not want to be left behind. We have seen numerous times what the Chinese government has done and changed in the past in various areas that are new to them. This time is no difference.
    • Even in the worst case scenario that bitcoin is indeed totally blocked forever in China, it is still not the end of world. Many other countries and jurisdictions are more open to new technology and innovation and take a more supportive attitude for bitcoin.  For example, Sweden, Switzerland, and Canada are taking a more progressive approach. Canada has already treated ICO as securities that can be legally issued under regulations. Sweden has launched an ETF for bitcoin.  And Japan, which recently legalized bitcoin transactions, will soon launch an ICO platform, called COMSA ICO, that facilitates new coin offerings.  Australia is also considering to legalize bitcoin. The more interesting case is Russia which totally banned bitcoin in 2014. But now their financial minister has openly acknowledged that there is no point to block bitcoin and they will legalize bitcoin by the year end. The list will only grow as the time passes by.
    • So what happens in the US? It is too early to tell for sure but all the evidence suggests it will be a more adoptive environment. If you don’t know yet, the Commodity Futures Trading Commission – the CFTC, – that regulates futures and options trading just approved a trading platform called LedgerX for bitcoin options. This will allow big money investors to hedge their cryptocurrency risk the same way regular currency investors do. There is no reason to believe that the other government security regulator, SEC, will totally go to the other direction. It may take more time but I think eventually SEC will follow the CFTC lead, especially now it has a new head who is known to be more open to bitcoin.    
  • You certainly have heard the influential financial heavyweight,  Jamie Dimon (CEO of JP Morgan), has called bitcoin a fraud. But interestingly, people immediately found that JP Morgan is actually buying bitcoin even after Dimon has publically denounced it. So the question is why JP is buying bitcoin in Europe while it is a fraud per their CEO? If you think about it further, what can you expect a head of a major bank will say about bitcoin when it is going to be a major threat to their core business? This is just like what you will hear from the head of Post Office about their opinion on email. We will certainly hear more such BS moving forward but I think it will become increasingly laughable jokes when bitcoin becomes more adopted by people around the world. What do you think about this quote? “For society, the Internet is wonderful, but for capitalists, it will be a net negative. It will increase efficiency, but lots of things increase efficiency without increasing profits. It is way more likely to make American businesses less profitable than more profitable. This is perfectly obvious, but very little understood.” Sounds pretty stupid, right? But can you believe this was said by one of the smartest investors, Charlie Munger, the buddy of Warren Buffet and the co-founder of  Berkshire Hathaway? I have no doubt we will feel the same in 5-10 years for what Dimon said now when we look back at that time. By the way, don't simply believe something just because he or she is big influential guy. Actually Dimon has already claimed a couple of years ago that bitcoin could not survive beyond $400. It is already 10 times higher now!!
  • One evidence that bitcoin will go into the mainstream is the fact that retail business has already started to accept bitcoin as a legitimate payment. Two of the country’s biggest names in e-commerce, Overstock.com and TigerDirect.com, have started accepting Bitcoin as payment. Directly or indirectly bitcoin holders can spend their cryptocurrency in brick and mortar stores including Home Depot, CVS, Kmart and Sears as well as online at web retail granddaddy Amazon.com. The trend will only continue with more retail business to join the game. It is simply not stoppable!
  • Last but not least, I recently heard another interest argument why bitcoin won’t die: the widespread acceptance by third world countries where they are facing increasingly severe inflation problems with their official currencies. You probably all know that Venezuela is collapsing and their official currency has become virtually worthless. Stories have emerged that bitcoin has become a life-saving vehicle for preserving their buying power for many people. I think this is indeed an interest but very logical argument for the utility of bitcoin and I also believe it will only become more so when the world has become increasingly more of turmoil in many countries. Since bitcoin is strictly limited in its supply to only 21 million coins possibly being mined and the population of the third world is so huge, this may create a vast shortage of the bitcoin supply down the road when so many people want to have it. I think it is just a matter of time!

You may ask why I spend so much time to write on bitcoin. Well, for one it is my hobby to share my thoughts on something I think interesting. It is not a burden but fun for me to do so, especially I don’t need to put together all the details at once. I often joke by saying that writing this investment blog is an anti-depressant for me. On the other hand, I also want to leave my thoughts as a historical record here. I’m pretty sure there is some historical meaning with all the discussions about bitcoin now and I want to leave a trace here.  About 20 years ago when the Internet was still in its primitive stage in use, I was called by my boss (a Cornell professor) as a genius because I could use the Internet to look for some interesting information for him, in addition to just using it for sending emails. Now looking back, it was almost unthinkable how little people felt about the Internet’s utility back then. I wish you won’t be among those only calling me “genius” retrospectively in 5-10 years from now that I’m so enthusiastically talking about the future for bitcoin now. For sure, only the history can tell if I’m right but I firmly believe I am!

Friday, October 6, 2017

A new Celgene is shaping up?




You probably often hear the stories that some biotech stocks jump 50%+ in a day following some successful clinical trial results. But a 200% jump in a day is not something you often see in the stock market. It is very rare indeed! We just saw it last week. The company is Zogenix (ZGNX), a single drug clinical stage company focusing on CNS indications.  Zogenix shares skyrocketed after it reported success in a Phase III trial for Dravet syndrome for its drug ZX008. Dravet syndrome (DS) is a rare, catastrophic, lifelong form of epilepsy with high mortality up to 20% with no effective treatment till now. So ZX008 will be an orphan drug that will be competing with another successful to-be-approved drug by GW Pharma. So why its story has excited investors so much? Two reasons I think: for one the expectation for ZX008 was too low (more below) that its success in the Phase III trial got virtually everyone a big surprise. Relatedly, there was a huge amount money in shorting the stock prior to the study result that has caused a gigantic short squeeze. Even as I’m writing now, the short float rate is still has high as 15%. Now back to my topic, why do I think Zogenix may become another Celgene, one of the most successful biotech companies. To answer this question, we need to learn a bit about the medical history and how Celgene started to be so successful.

 

In short, Celgene basically started with a single failed drug and revived it to be a multibillion dollar drug. The drug is called Thalidomide which has a very dark and painful history due to its safety problems. The thalidomide disaster is one of the darkest episodes in pharmaceutical research history. The drug was marketed as a mild sleeping pill safe even for pregnant women. However, it caused thousands of babies worldwide to be born with malformed limbs. Naturally the drug was pulled out from the market for the indication. But amazingly scientists later learnt that thalidomide has an anti-angiogenesis effect and Celgene took the opportunity to develop it to become an extremely successful anti-cancer drug for multiple myeloma (MM). Since then Celgene has evolved to become the insurmountable biotech giant that continues to be the No 1  leader in the MM area. With this short history in mind, let’s see how similar ZX008 is to thalidomide.

 

The generic name of ZX008 is called Fenfluramine. You may not know what it is but you probably have heard an anti-obesity medication, Fen-phen, another drug with a very painful history in the drug development. For relatively mild indication for overweight, the drug was found to cause heart valve disease and pulmonary hypertension, including cardiac fibrosis and therefore was withdrawn globally in 1998. Obviously Zogenix is trying to following the footprints of Celgene and is exploring this drug in more severe indications as it has shown to be able to control seizure to some extent. Due to its notorious safety profile, apparently most people did not believe this drug prior to the results from the Phase III trial. Now it turns out that ZX008 with a low dose of fenfluramine appears to be effective in DS patients with a quite acceptable safety profile at least based on the trial data. No wonder all the sudden everyone was chasing the stock or covering their shorts, which shot it as high as 200% in one day. In the short term, definitely it is risky to chase it now but long term, I think Zogenix has the potential become another very successful biotech either stand-alone or being acquired. Of course it is way too early to be sure about its future as a successful clinical development does not always guarantee the success of the company commercially. The drug’s cardiotoxicity is still a big concern and will likely lead to some limitation in its immediate potential. Having said that, the company is very small in size as of now and any commercial success, even limited, from ZX008 will provide it with a strong foundation for further growth. Maybe someday, Zogenix will really become another Celgene!