byetta scripts and the problems with AMLN

The picture tells the story... Although scripts were flat before, the bogus pancreatitis warning by the FDA had an effect on scripts. Couple this with the LAR bio-equivalence debacle and with the pounding that the whole stock maket took and you have the current AMLN stock price of $7.4... Here is my take on things....
- AMLN management is really really bad. There response to the pancreatitis bogus warning made the situation worse. They have also failed to cultivate proper relationships inside the FDA so that they are always surprised and one step behind the FDA decisions.
- The drugs, Symlin, Byetta are first in class and the pipeline potential of LAR and the obesity drugs make the AMLN potential unrivaled in the industry.
- However, given the ineptness of the management team and the reluctance of the BOD to do anything about the management I am starting to worry that the company will ever capitalize on its potential.
- At this point the stock is more of a value play then a growth story. Th PPS is selling at less then 2x revenues, and it has plenty of cash on hand, essentially if someone was to were to buy at today's prices they will be getting the LAR potential and the obesity pipeline for free.
- As sad as this maybe, I don't expect AMLN to remain an independent company for long. I expect that the stock will recover to around $15 by February, March time frame, then I expect the company to be take out between $25 and $30/share.
- I have been adding between $12.5 and $7

update on AMLN and the pancreatitis BS

Just in case anyone is following my AMLN recommendation and have seen the price tumble today down to $20. Don't be fooled by the pancreatitis story, it is all smoke and zero substance. The reality is that there are more pancreatitis and deaths for the diabetic population not on byetta then the population that is on byetta. Byetta rate of pancreatitis is the same as the general population. So you could make a better case that taking byetta actually reduces the rate of pancreatitis. Sadly though, the company management has failed to properly communicate these facts and the FDA is just a very inept, and corrupt organization. Another sad fact is that there are now diabetics that could benefit from the drug that will probably stay away from it. This will make one of my PPS drivers even less likely to happen then I originally thought. I expect that when the dust settle the PPS will recover some. The two reasons that I was and still am long AMLN are still intact ( obesity partnership or LLY buyout). The buyout is actually now more likely then ever. The PPS of the buyout unless the price fully recovers to the high 20's low 30's is probably now unfortunately lower. These levels are obviously a better entry point.

Update on AMLN, DNDN, and I am starting to nibble on ELN - August 07 2008

I know I promised to update this blog but Summer is my favorite time of the year and I try to stay away from the computer as much as possible.. Plus I am the kids chauffeur and they have a lot of activities, lol... But here we go...

AMLN:
A lot of churning since my last post but back to where we were in June... I still like AMLN short to mid term as they are a lot of catalyst for upside price movement. The risks are limited to the stock market vagaries and biotec surprise events like healths scares attributed to the drugs.
The multiple upside catalysts are...
- Byetta up tic in scripts. Amln and LLY have increased the sales force. They are hoping to see results in early September. I am not holding my breath on this catalyst as so far management moves to increase sales have all been a bust. I give this a 10% chance at success.
- Obesity partnership: Speaks for itself, should be an injection of cash plus give further credibility to its pipeline. I look for the stock to eventually move into the 50's on the strength of that move this year and much higher in the future. I expect this to happen this year but strongly depends on the next catalyst.
- LLY acquires AMLN: LLY views AMLN as a captive take over target. Plus a lot of the AMLN executives come from LLY. My guess is that LLY is working on that move right now. They do not want to let AMLN get an obesity partner as it would make their take over of AMLN more expensive and complicated. This is my least favorite catalyst as LLY is cheap and the upside is limited. Even a 50% premium form these levels we are looking at a price in the mid 40's.

So in summary AMLN is an excellent short to mid term investment with limited native downside. Buy the stock or leaps now. 6 month price target mid-40's to high 50's..

DNDN:
As I've said before this is not a stock for the faint of hart, very high risk. I am in it because it has 10 bagger potential. Provenge and Neuvenge could potentially become the standard of care for prostate and breast cancer... Let that sink in for a minute in terms of potential market cap for DNDN... And we should know as early as October or as late as the second half of 2009. Let me expand. In October the FDA has essentially agreed to approve Provenge ( DNDN has an approvable letter) based on the interim result of a large Phase III trials. Now it will be much harder to prove efficacy with the interim results, survival delineation in the trial becomes more obvious the more time goes by. But I give the interim a 30% chance of success. If the interim is not successful, then we have to wait until mid 2009 to get the final results . I give the final results an 80% chance of success.
My strategy:
Although the interim ha a low probability of success, I can't afford to be out of the stock because of its explosive potential. So I have been accumulated enough stock to be very happy if the interim is successful. However, I am also selling long and mid term puts $5 and $2.5 strike price, that I expect will be assigned to me if the interim is not successful. This will essentially allow me to double down if the interim fails.

Near term ( October): interim successful - PPS mid 20's, low 30's; Interim not significant / not positive: PPS ~ $2....

ELN:
Over the past week, I have taken a serious look at ELN. My initial impression is that the short took control of the stock and manipulated the news to drive the stock below what the real news warranted. The price is now at $11. I have started to nibble on the stock by buying calls and selling puts. I will expand more on this stock as I learn more and recommend a strategy with expected price target.

My best stock picks - June 5th 2008

AMLN:
I have owned AMLN for years. I first accumulated AMLN when the stock was around $8... I sold all my position in 2006 at $43. I started accumulating AMLN again this year. I feel that there are near to mid term catalysts that could double the price per share. The share price today 6/5/08 is $32.5.

DNDN:
I bought DNDN last year at around $5 and saw it catapult to $25 after a couple of months. I did not sell because I felt the stock had a much higher potential. I did not count on the corruption at the FDA to raise its ugly head. The stock went back down to $5. This stock is not for the faint of heart. It has an incredible mid and long term upside but also some mid term risk. I will expand on both at a later time