Wednesday, August 27, 2008
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.
Thursday, August 7, 2008
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.
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.
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