MELA*****************************

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MELA*****************************

Post  jon on Thu Dec 02, 2010 11:01 pm

This stock has taken a sh!t kicking lately , but the bottom line in my opinion is , their device has already recieved pre-approval by the General and Plastic surgery Devices panel , and due to the binding protocol agreement between Mela and the FDA , final approval will be forthcoming.

They have some frivolous lawsuits against them presently due to some whiny investors who don't like losing money , but in my opinion , these lawsuits will work in favor of the approval process , the FDA will be dragged into this lawsuit or even face one of their own for breach of contract by MELA , the simplest way to avoid all the fuss would be to approve the product , which has been pre-approved by the last panel anyway.

I have seen this scenario play out before in other stocks and made a sh!tload of money off it.

HIGH RISK/HIGH REWARD

Analysts predict a share price of $9-$14 if approved.

MELA Sciences, Inc. announced that the General and Plastic Surgery Devices Panel appointed by the U.S. Food and Drug Administration (FDA) voted by majority that, for its proposed indications, MelaFind is safe and effective and that its benefits outweigh the risks. The FDA will take into account, among other things, the panel's recommendation in making its final approval decision. The FDA has not provided a date as to when it will make a decision regarding the MelaFind PMA application.
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Re: MELA*****************************

Post  Max on Fri Dec 03, 2010 2:07 am

Book Value of approx $1 per share, all cash. Need a calculation of potential revenue stream if profitable. At current valuation of $3, the company would have to earn $2 per share (or $70M) in order to break even. Doesn't look so bad. All hinges on the approval I guess, so we need some more information on the new schedule.

I have no real idea whether this is supposed to be a sophisticated and expensive or cheap low tech device, but guess it would lean more towards the latter. The maximum price I could see for a low tech laser is approx $1,000, so they would have to sell 70,000 of these units for it to break even. If they are being sold primarily to doctors/hospitals, it gets a little tougher to meet this sales target. However, I read something about expanding into the cosmetic segment, which might be more promising. These details are somewhere, just have to dig for them I guess.


By the way Jon, you wouldn't happen to be known as Furgy on another forum would you? I invited some guy to join the forum who started an interesting discussion on day trading that sounded a lot like it would fit in here, who was also interested in MELA.

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Re: MELA*****************************

Post  lukera on Fri Dec 03, 2010 8:44 am

Quick research shows you may want to hold off for a Bit to see how the new class-action lawsuit plays out. OR buy in now while it's hitting rock bottom.

http://www.globenewswire.com/newsroom/news.html?d=208248

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Re: MELA*****************************

Post  jon on Fri Dec 03, 2010 10:26 am

As I said , this one is HIGH RISK. Shocked

Not for the faint of heart.

Max , yes it's me , I gave up on the day trading thread on the other forum , they're a pretty nice bunch over there but very conservative , just mention "day trading" and everyone gets excited , it's like a major sin.

As for Mela , the fundamentals don't matter , the device itself doesn't matter , all that matters is FDA approval and shareholder sentiment , that's what I base all my biotech trades on , so far it has served me very well , but , you WILL get the odd loser , it just part of the game.

Did you see the chart on EPL , same thing , bought it on some trusted advice , never spent any time at all on DD into the company , up 38% in one day , is good money in my books , could have done better if i held longer , but that would have added to the risk factor.
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Re: MELA*****************************

Post  Max on Fri Dec 03, 2010 11:12 am

Yeah, I invited you, because I thought you would fit in much better here. I agree, nice, but closed minded, conservative, and generally brainwashed by classical textbook investing advice. I admit that myself, and most of the others here are amateurs, but I think there is a willingness to explore more opportunities. Honestly, I am much more conservative than most here, but I like to hear the other side of things and learn rather than pretend there is no strategy to day/swing trading and that all the ridiculous profits everyone is bringing in is due to luck.

I think you have the right idea for this kind of stock, but the fundamental analysis is still helpful in defining the bottom (It should not go below the cash value per share), and therefore defining the amount of risk, as well as determining how far the stock has already been built up in anticipation of good news. MELA had a price of $20 and only book value of $1, I would not be as interested as I am now. Knowing the risk involved allows me to act with more confidence.

Regarding the lawsuit:

A sounds like BS. There are a lot of disclaimers in the financial statements regarding risk already and that is just part of the game.
B doesn't make a lot of sense, but maybe there is something to it if they provide more information. Still I find it unlikely that MELA somehow convinced them they were in a materially different line of business.
C This may be one where they have grounds depending on what management represented.
D Could be grounds, but really how many of these lawsuits have ever been successful?
E Can you even sue for this? If so, I am suing every company I ever lost money with.

Finally, they make a claim that the device doesn't really work. If this is true, then there is not a whole lot left to the company is there?

Now, if I were a short seller, I would back the lawsuit (these things are expensive, and a lawyer is not going to take a frivolous case without some chance of success or some kind of financial backing right?) and increase publicity to decrease the stock price.

If I were a pumper, I would probably wait until the lawsuit cools and then increase publicity about the chances for approval still existing (whether or not it is true), and point out that the stock is trading near its cash value.

I personally find it unlikely that management did anything stupid enough to provide legitimate grounds for the lawsuit.

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