Why Lanza and I sold ACT stock

advanced cell technologyIt wasn’t so long ago that I did a post explaining why after following the company for years, I finally bought a small amount of stock in the stem cell biotech, Advanced Cell Technology (ACT; symbol ACTC). In part it was motivated by my enthusiasm to see them publishing a paper, a very preliminary paper, on their human ES cell-based clinical trials for macular degeneration.

However, being more of a scientist than a stock trader, I found myself fairly quickly having second thoughts, particularly after the stock did not do much of anything despite the good news from their paper and then started in fact going down.

So within a short period of time I sold my shares in ACT for a small loss.

Why?

While I support ACT and the work that they are doing as a stem cell scientist myself, I calculated that the illogical nature of the stock market more generally, especially when it comes to small biotechs, was going to make me unhappy.

Turns out I wasn’t the only one selling ACTC stock recently, as David Jensen reports that ACT scientific leader Robert Lanza sold 7.7 million shares for $1.5 million on Jan. 23 and 24. Seeking Alpha first reported the sale.

I expect my reasons were different than Lanza’s although we may never know.

And for all we know at some future date, I may lament my selling of my tiny bit of ACT stock if their clinical trials are successful in the longer term.

Anyhow, maybe I should take the advice of an ACT investor who once emailed me, saying, “You should stick to the science part of stem cells!”

8 Comments


  1. Paul–
    The only kind of cash you should put in volatile stocks like ACT is money that you can afford to lose. Not that you will, but it is not a short-term investment or necessarily for persons without nerves of steel, which is about 99.9 percent of the population.


  2. Hi Paul,

    “Buy on Rumor, Sell on News”. That is what investors do. Buying stock should always be done in tranches and not in lump sums. The chance of timing the market is never a good idea.
    Clinical Stage Biotech’s sell stock to fund operations which allows for science evolution of its IP. In ACT’s case and other life science companies they have endured the credit crisis as best as they can through unfavorable stock purchase agrements. The credit crisis not only hurt the average American and is still ongoing, it has slowed down research and development. 65% of ALL FDA clinical trials are done outside the United States because it is just far to expensive to conduct trials in the U.S.

    As far Doctor Lanza selling stock, Dr.Lanza did not take a paycheck from Advanced Cell Technology for almost a year in 2008 and first half of 2009 because the company could not afford to pay him. He did not take a job at Harvard, Pfiezer or etc during this time of which would have meant a million dollar salary and lab of 50 researchers to do his bidding.. 90% of his science staff at ACT were let go and actually went back to the mundane lab tasks whilst at the same working on his cutting edge science.
    Although the ACT paper was exciting it is only 2 patients and Big Pharma and investors will need a completed phase I before going mainstream. I am of the opinion that if ACT can show its hRPE MA-09 cells can attach to the Bruch’s membrane with out safety issues a treatment for the #1 unmet medical need in the world will be a reality.

    All the Best
    JTG
    http://www.investorstemcell.com


  3. Yeah I was watching the stock, it was doing good for a while. I ended up never get any of the stock because I was restricted from buying stocks under a dollar, thankfully.

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