Editor's Note

The outlook for this company's success is fading faster than the recent headlines. There is a saying, "all hat, no cattle."


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NLNK - Newlink Genetics - Company Profile

Newlink is a biopharmaceutical company focused on discovering, developing and commercializing immunotherapeutic products to treat cancer patients. Newlink has had some challenges with recent trials and shares are declining.

Shares recently bounced slightly when they said they were researching a vaccine to prevent the Zika virus. Unfortunately they have some serious competitors including GlaxoSmithKline (GSK), Sanofi (SNY) and Inovio (INO). The Zika virus scare blossomed into the U.S. headlines a month ago and then faded.

The virus is transmitted by mosquitoes and sexual contact with someone that already has the virus. People that catch the disease rarely even know they have it but a byproduct for pregnant women is severe birth defects.

Newlink partnered with Merck in 2014 to develop a vaccine for Ebola. An eventual vaccine was developed but Newlink did not discover it. They licensed it from the Public Health Agency of Canada. Since Newlink did not develop it but merely discovered the PHAC compounds would work, they passed it on to Merck and the headlines faded.

Newlink has not developed any infectious disease vaccines so they were quickly ignored once the Zika headlines began to fade.

Shares have declined from $23 and are falling steadily. Earnings are May 30th.

I am recommending we short Newlink shares with a decline below Friday's low at $18.04 which was a 16 month low and nearly a 3-year low. I am not recommending an option because they are expensive.

With a NLNK trade at $17.85

Short NLNK shares, initial stop loss $19.25