Whew -- I need to learn how to consistently write for this blog!
Here is a quickie ... please follow the link below to read a short article about Gary Aguirre, who was fired from the SEC for daring to investigate a hedge fund's activity.
http://www.truthout.org/122208J
(in part):
" ... In the investigation that I conducted, which is now the subject of a Senate report, there was suspicious trading activity involving both a hedge fund involving an $18 million profit. They also detected a $150,000 profit by a low-level employee of General Electric (GE) and a Taiwanese kung fu instructor. SEC passed on the hedge fund case where the trading indicated millions in profit and SEC focused on the GE employee and the kung fu instructor. The SEC and the US attorney rigorously prosecuted the low-level GE employee, but both passed on any investigation of the major hedge fund.
This is not a rarity..."
... and the beat goes on. *sigh*
Regards,
Trond
Monday, December 22, 2008
Thursday, November 13, 2008
Auto Industry Bailout?
Tell me it ain't so. We're considering an auto bailout?
My objection to the proposed auto bailout is that the auto companies were the ones at fault -- not funding the pensions correctly in earlier, good years. It is not the auto industry per se that is being hurt -- the companies can simply go bankrupt and then the Pension Guarantee Board or whatever it is called will take over the pensions and the taxpayers are still liable.
It is the workers who are being hurt by not having the pension they were promised. Recall that their wages would have been higher, all else equal (which it admittedly never is) if the company hadn't been supposedly funding their pensions.
The companies are at fault here, totally. They should have funded the pensions, they didn't. In those time periods, the management and BODs were probably paid bonuses by seeming more profitable by NOT funding the liabilities as they should have. It is inconceivable that we bail out the COMPANIES.
If the auto industry is not making enough to survive, they either need to raise prices or fold. Ugly times are coming, folks.
Regards,
Trond
My objection to the proposed auto bailout is that the auto companies were the ones at fault -- not funding the pensions correctly in earlier, good years. It is not the auto industry per se that is being hurt -- the companies can simply go bankrupt and then the Pension Guarantee Board or whatever it is called will take over the pensions and the taxpayers are still liable.
It is the workers who are being hurt by not having the pension they were promised. Recall that their wages would have been higher, all else equal (which it admittedly never is) if the company hadn't been supposedly funding their pensions.
The companies are at fault here, totally. They should have funded the pensions, they didn't. In those time periods, the management and BODs were probably paid bonuses by seeming more profitable by NOT funding the liabilities as they should have. It is inconceivable that we bail out the COMPANIES.
If the auto industry is not making enough to survive, they either need to raise prices or fold. Ugly times are coming, folks.
Regards,
Trond
Wednesday, October 29, 2008
The ups and downs of Elan
Right on the heels of good Tysabri news comes another PML case.
A little background -- Tysabri was pulled from the market in 2005 after just a couple months. 3 patients from the clinical trials developed PML -- which is a usually fatal infection in the brain caused by the JC virus. Somewhere around 80%+ of us have the JC virus dormant in our system, yet our immune system usually prevents it from penetrating the blood-brain barrier.
Of those 3 patients, it was eventually determined that one probably had had MS misdiagnosed, and the other two were in Avonex/Tysabri combined trials. Further, the misdiagnosed patient and one of the two combo therapy patients had had prior doses of MS drugs which weaken the immune system dealing with the blood-brain barrier. (Further background -- Elan's marketing partner, Biogen, happened to be the maker of Avonex and pushed the combo therapy trials in the US).
Tysabri is about twice as effective as the next best therapy at keeping MS patients from having relapses. The patients basically stormed the FDA and made it clear they were willing to take the PML risk to keep Tysabri -- see some of the quotes at the end of this post!
In August of 2006 theFDA voted to allow Tysabri back on the market, with VERY stringent protocols (called the TOUCH system) designed to keep patients who had used certain immuno-suppressing drugs previously, off Tysabri until those drugs had been washed out of the system.
The label on Tysabri says that the risk of PML is 1 in 1000. As of June 2008, about 31,000 patients were on it in non-trial prescriptions. In July, 2008, 2 patients in Europe were disclosed to have PML. Elan promptly cratered from $21ish to around $9.
Those two patients, however, are still alive. One is doing quite well and is home; the other not so well and in the hospital still. That one, had had prior immuno-suppressing drugs also though -- Europe was not bound by the TOUCH protocols. There is a new therapy for PML called plasma exchange (plex) that strips the Tysabri out of the body very quickly, which allows the immune system to ramp up immediately against the JC virus.
So now we have a third post-re-entry case -- Elan fell in after hours trading from $7ish to $5.50.
It appears this patient was in monotherapy too -- which actually bodes well for recovery. We now have 5 MS patients who developed PML -- 2 on mono and 3 on combo. This is out of nearly 40,000 total users -- 35,500 after the 3rd quarter results and 4,000 in the prior trials and marketed in 2005. Unless another 30 people develop PML in the next quarter, the risk is MUCH lower than 1:1000 -- and PML is no longer a near-certain death sentence.
Tysabri, at the forward one-year run rate, JUST became a blockbuster ($1B in sales). This case may dampen some demand, but the growth of new patients is still happening. Both companies agree they will have 100K patients on therapy by 2010, even counting in PML risk and dropouts. If acheived, that would lead Elan to a share price of $18 - 25 within 2 years.
That allows for no potential in the rest of the pipeline - and you heard it here -- we have AAB-001 in Phase III that will affect a subpopulation of Alzheimer's patients better than Aricept. We should learn more about that late next year of 2010 also -- and THAT would be a game changer with sales potential in the tens of billions.
Reagrds,
Trond
Tysabri quotes
Quotes and snippets regarding MS patients about Tysabri. These come from editorials, a bulletin board from the National MS Foundation, and from online MS bulletin boards.
Some of the quotes are in bold. These are my emphasis. [Trond]
My sister has had MS for over 2 decades. She has slowly gotten to the point where she is 100% bed ridden and needs a catheter. She can't even sit in a wheelchair any longer.She took TY 3 times and it was a miracle. I witnessed her walking on her own out to her mail box some 75 yards from her house. She could cook, eat on her own, use the bathroom ALONE for the first time in years. She had regained her life, her dignity, her future.
Bartira Tibertius of Chicago … received Tysabri for a full 28 months as part of a clinical trial. "I was doing great. I even forgot that I was sick," Ms. Tibertius, a language teacher and translator, tells us. "But now I'm getting very, very scared. It's deteriorating and I know that," describing numbness and tingling in her hands, arms, feet and face. As for any possible risks from the drug, she says, "I'm more scared of not having Tysabri than having Tysabri. If you told me the Tysabri would shorten 10 years of my life I would do it. I want quality of life, not quantity.">>
Talked to my sister this AM about the Avonex story. Here's her reply & I quote; "How many relapses did I had when I took Avonex? I won't take that crap ever again. I want to go back on Tysabri." End of quote. Avonex is toast.
I was in my neurologist’s office for an appointment late last winter and there were these people there, laughing, acting, and looking as if there wasn’t a care in the world. I thought it was a little odd. Why were they there? There didn’t look sick. During my appointment, my doctor told me that they were in the Tysabri study and had come in for their treatment. I had to stop the interferon because of liver complications. I had to stop the chemotherapy because of heart complications. I now have to take daily injections of Copaxone, since we were out of choices, and the MS is progressing, my doctor suggested Tysabri. It WAS my only choice. I was waiting for our insurance company’s approval the morning I heard it was being suspended. I was looking forward to a monthly treatment instead of daily injections that have unpleasant and painful side effects. I was looking forward to something that might offer more promise in managing this disease. I was looking forward to a treatment that offered hope that I might be able to return to some type of gainful employment. I went on Social Security Disability a few months later. I ended up with worsening symptoms on top of having to manage daily injection site reactions. The MS may have progressed any way, but who knows, it might not have. I sure would have liked a shot at it!
I was diagnosed with MS on April 10, 1996 (our Anniversary). At that time I experienced numbness in both of my feet. After both an MRI and a spinal tap my neurologist was able to confirm my condition. This was not what we wanted to hear but I was prepared to fight with all that was within me. Since that time my condition has progressed. It has affected my vision, my mobility (I struggle to walk with a walker now), my thought process, my speech, I now am incontinent, and am very tired most of the time. My quality of life is not good. My numbness is to my knees in both legs and is affecting my hands. My struggle to walk and my frequent falling is affecting my back (I now have 3 bulging disks) causing me to be in constant pain. I also deal with muscle spasms in both legs daily which also causes me to fall frequently.My neurologist has tried many treatments along the way which include Avonex, Rebif( which was a terrible experience), steroids, and many other drugs for specific symptoms. With all of this help my MS continues to progress with more and more relapses occurring much more frequently now. In Feb. ’05 I was given my first and only infusion of Tysabri. This was the most positive response I had ever had!! My fatigue was nearly eliminated (I did not have to lie down during the day for a month or more), my walking improved, my muscle spasms were gone, the vision problems were resolving, my thought processes greatly improved, my speech returned to normal (even my singing voice returned), the incontinence problem was much improved and there was once again hope for a quality of life.
"If I have to I'll take her to Europe for Tysabri if they approve it before the f**king FDA gets off their ass."
A little background -- Tysabri was pulled from the market in 2005 after just a couple months. 3 patients from the clinical trials developed PML -- which is a usually fatal infection in the brain caused by the JC virus. Somewhere around 80%+ of us have the JC virus dormant in our system, yet our immune system usually prevents it from penetrating the blood-brain barrier.
Of those 3 patients, it was eventually determined that one probably had had MS misdiagnosed, and the other two were in Avonex/Tysabri combined trials. Further, the misdiagnosed patient and one of the two combo therapy patients had had prior doses of MS drugs which weaken the immune system dealing with the blood-brain barrier. (Further background -- Elan's marketing partner, Biogen, happened to be the maker of Avonex and pushed the combo therapy trials in the US).
Tysabri is about twice as effective as the next best therapy at keeping MS patients from having relapses. The patients basically stormed the FDA and made it clear they were willing to take the PML risk to keep Tysabri -- see some of the quotes at the end of this post!
In August of 2006 theFDA voted to allow Tysabri back on the market, with VERY stringent protocols (called the TOUCH system) designed to keep patients who had used certain immuno-suppressing drugs previously, off Tysabri until those drugs had been washed out of the system.
The label on Tysabri says that the risk of PML is 1 in 1000. As of June 2008, about 31,000 patients were on it in non-trial prescriptions. In July, 2008, 2 patients in Europe were disclosed to have PML. Elan promptly cratered from $21ish to around $9.
Those two patients, however, are still alive. One is doing quite well and is home; the other not so well and in the hospital still. That one, had had prior immuno-suppressing drugs also though -- Europe was not bound by the TOUCH protocols. There is a new therapy for PML called plasma exchange (plex) that strips the Tysabri out of the body very quickly, which allows the immune system to ramp up immediately against the JC virus.
So now we have a third post-re-entry case -- Elan fell in after hours trading from $7ish to $5.50.
It appears this patient was in monotherapy too -- which actually bodes well for recovery. We now have 5 MS patients who developed PML -- 2 on mono and 3 on combo. This is out of nearly 40,000 total users -- 35,500 after the 3rd quarter results and 4,000 in the prior trials and marketed in 2005. Unless another 30 people develop PML in the next quarter, the risk is MUCH lower than 1:1000 -- and PML is no longer a near-certain death sentence.
Tysabri, at the forward one-year run rate, JUST became a blockbuster ($1B in sales). This case may dampen some demand, but the growth of new patients is still happening. Both companies agree they will have 100K patients on therapy by 2010, even counting in PML risk and dropouts. If acheived, that would lead Elan to a share price of $18 - 25 within 2 years.
That allows for no potential in the rest of the pipeline - and you heard it here -- we have AAB-001 in Phase III that will affect a subpopulation of Alzheimer's patients better than Aricept. We should learn more about that late next year of 2010 also -- and THAT would be a game changer with sales potential in the tens of billions.
Reagrds,
Trond
Tysabri quotes
Quotes and snippets regarding MS patients about Tysabri. These come from editorials, a bulletin board from the National MS Foundation, and from online MS bulletin boards.
Some of the quotes are in bold. These are my emphasis. [Trond]
My sister has had MS for over 2 decades. She has slowly gotten to the point where she is 100% bed ridden and needs a catheter. She can't even sit in a wheelchair any longer.She took TY 3 times and it was a miracle. I witnessed her walking on her own out to her mail box some 75 yards from her house. She could cook, eat on her own, use the bathroom ALONE for the first time in years. She had regained her life, her dignity, her future.
Bartira Tibertius of Chicago … received Tysabri for a full 28 months as part of a clinical trial. "I was doing great. I even forgot that I was sick," Ms. Tibertius, a language teacher and translator, tells us. "But now I'm getting very, very scared. It's deteriorating and I know that," describing numbness and tingling in her hands, arms, feet and face. As for any possible risks from the drug, she says, "I'm more scared of not having Tysabri than having Tysabri. If you told me the Tysabri would shorten 10 years of my life I would do it. I want quality of life, not quantity.">>
Talked to my sister this AM about the Avonex story. Here's her reply & I quote; "How many relapses did I had when I took Avonex? I won't take that crap ever again. I want to go back on Tysabri." End of quote. Avonex is toast.
I was in my neurologist’s office for an appointment late last winter and there were these people there, laughing, acting, and looking as if there wasn’t a care in the world. I thought it was a little odd. Why were they there? There didn’t look sick. During my appointment, my doctor told me that they were in the Tysabri study and had come in for their treatment. I had to stop the interferon because of liver complications. I had to stop the chemotherapy because of heart complications. I now have to take daily injections of Copaxone, since we were out of choices, and the MS is progressing, my doctor suggested Tysabri. It WAS my only choice. I was waiting for our insurance company’s approval the morning I heard it was being suspended. I was looking forward to a monthly treatment instead of daily injections that have unpleasant and painful side effects. I was looking forward to something that might offer more promise in managing this disease. I was looking forward to a treatment that offered hope that I might be able to return to some type of gainful employment. I went on Social Security Disability a few months later. I ended up with worsening symptoms on top of having to manage daily injection site reactions. The MS may have progressed any way, but who knows, it might not have. I sure would have liked a shot at it!
I was diagnosed with MS on April 10, 1996 (our Anniversary). At that time I experienced numbness in both of my feet. After both an MRI and a spinal tap my neurologist was able to confirm my condition. This was not what we wanted to hear but I was prepared to fight with all that was within me. Since that time my condition has progressed. It has affected my vision, my mobility (I struggle to walk with a walker now), my thought process, my speech, I now am incontinent, and am very tired most of the time. My quality of life is not good. My numbness is to my knees in both legs and is affecting my hands. My struggle to walk and my frequent falling is affecting my back (I now have 3 bulging disks) causing me to be in constant pain. I also deal with muscle spasms in both legs daily which also causes me to fall frequently.My neurologist has tried many treatments along the way which include Avonex, Rebif( which was a terrible experience), steroids, and many other drugs for specific symptoms. With all of this help my MS continues to progress with more and more relapses occurring much more frequently now. In Feb. ’05 I was given my first and only infusion of Tysabri. This was the most positive response I had ever had!! My fatigue was nearly eliminated (I did not have to lie down during the day for a month or more), my walking improved, my muscle spasms were gone, the vision problems were resolving, my thought processes greatly improved, my speech returned to normal (even my singing voice returned), the incontinence problem was much improved and there was once again hope for a quality of life.
"If I have to I'll take her to Europe for Tysabri if they approve it before the f**king FDA gets off their ass."
Tuesday, October 21, 2008
Tysabri numbers
Color me happy.
Biogen presented their earnings today and part of that was Tysabri numbers.
Background: Biogen is Elan's marketing partner for Tysabri. In late July it was disclosed that 2 patients in Europe had developed PML -- which Tysabri has a black-box label warning for, estimated at 1 in a 1000 chances of contracting.
We went from 31,800 patients at the end of June to 35,500 patients at the end of September. (#s are totals-- 600 of those are in clinical trials). So we gained 11% patients, in a quarter where we lost over half the market cap due to PML fears.
As usual, most PR coverage was negative - even false. For example, Lisa LaMotta, a Forbes Online columnist, wrote the following (as of 10/21/08 at 9:40 PM it still says this -- I fully expect by tomorrow it will be "updated" / edited ... AFTER the immediate damage has been done.
http://www.forbes.com/2008/10/21/biogen-idec-biotech-markets-equity-cx_lal_1021markets24.html?partner=yahootix
Market Scan
Biogen Bitten By Tysabri
Lisa LaMotta, 10.21.08, 3:45 PM ET
"....Biogen Idec reported earnings that beat expectations mostly due to the sale of its two multiple sclerosis drugs, but investors were disappointed by a slight slowdown from the second quarter in the number of patients taking one of them...
...As of the end of September, more than 35,500 patients were on Tysabri,the mulitple sclerosis drug in question, down from 31,800 at the end of the second quarter...."
1) slight slowdown? The RATE OF GROWTH slowed down. but the number of patients increased!
2) use a spell checker if you are going to call yourself a Forbes journalist!!! (sorry, catty, I know)
3) First time I've heard of 35K being lower than 31K.
Almost sounds like she'd written the hit piece first -- intending simply to fill in the expected bad numbers, doesn't it?
Next -- PML risk; rated at 1:1000.
We have 35,000 on therapy now, and 3,000 from before 2006, with a total of 4 patients contracting PML. It sounds to me more like 1 : 10,000.
Elan is around $9 right now, and SO UNDERVALUED by Mr. Market that is scary. Tysabri sales are increasing and we officially hit blockbuster status -- sales of $1B (granted -- projecting forward revenues).
Before the PML scare in July just on Tysabri Elan was valued around $20. (don't get me started on the Alzheimer's drug AAB-001 and its potential -- a massive Phase III trial nearly a year already underway from it's first dosed patient and a statistically significant showing in a subgroup of gene carriers).
It will probably be one more quarter before the market shows Elan any love -- and coincidentally the next quarter which should show a large increase in quarter-over-quarter sales of Tysabri.
So I would not be surprised if Elan bounced between $8 and $11 over the next three months -- but by February of 2009 I fully expect to see Elan at about $14 - 17; a rather sweet return of 50% or so. If an interim look at AAB-001 comes in positive, then the rocketship ignites.
Regards,
Trond
Biogen presented their earnings today and part of that was Tysabri numbers.
Background: Biogen is Elan's marketing partner for Tysabri. In late July it was disclosed that 2 patients in Europe had developed PML -- which Tysabri has a black-box label warning for, estimated at 1 in a 1000 chances of contracting.
We went from 31,800 patients at the end of June to 35,500 patients at the end of September. (#s are totals-- 600 of those are in clinical trials). So we gained 11% patients, in a quarter where we lost over half the market cap due to PML fears.
As usual, most PR coverage was negative - even false. For example, Lisa LaMotta, a Forbes Online columnist, wrote the following (as of 10/21/08 at 9:40 PM it still says this -- I fully expect by tomorrow it will be "updated" / edited ... AFTER the immediate damage has been done.
http://www.forbes.com/2008/10/21/biogen-idec-biotech-markets-equity-cx_lal_1021markets24.html?partner=yahootix
Market Scan
Biogen Bitten By Tysabri
Lisa LaMotta, 10.21.08, 3:45 PM ET
"....Biogen Idec reported earnings that beat expectations mostly due to the sale of its two multiple sclerosis drugs, but investors were disappointed by a slight slowdown from the second quarter in the number of patients taking one of them...
...As of the end of September, more than 35,500 patients were on Tysabri,the mulitple sclerosis drug in question, down from 31,800 at the end of the second quarter...."
1) slight slowdown? The RATE OF GROWTH slowed down. but the number of patients increased!
2) use a spell checker if you are going to call yourself a Forbes journalist!!! (sorry, catty, I know)
3) First time I've heard of 35K being lower than 31K.
Almost sounds like she'd written the hit piece first -- intending simply to fill in the expected bad numbers, doesn't it?
Next -- PML risk; rated at 1:1000.
We have 35,000 on therapy now, and 3,000 from before 2006, with a total of 4 patients contracting PML. It sounds to me more like 1 : 10,000.
Elan is around $9 right now, and SO UNDERVALUED by Mr. Market that is scary. Tysabri sales are increasing and we officially hit blockbuster status -- sales of $1B (granted -- projecting forward revenues).
Before the PML scare in July just on Tysabri Elan was valued around $20. (don't get me started on the Alzheimer's drug AAB-001 and its potential -- a massive Phase III trial nearly a year already underway from it's first dosed patient and a statistically significant showing in a subgroup of gene carriers).
It will probably be one more quarter before the market shows Elan any love -- and coincidentally the next quarter which should show a large increase in quarter-over-quarter sales of Tysabri.
So I would not be surprised if Elan bounced between $8 and $11 over the next three months -- but by February of 2009 I fully expect to see Elan at about $14 - 17; a rather sweet return of 50% or so. If an interim look at AAB-001 comes in positive, then the rocketship ignites.
Regards,
Trond
Sunday, October 19, 2008
Closing up shop
I just have to pass this along...
-----
Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into the spotlight last year after his one-year-old fund returned 866 percent betting against the subprime collapse.
Last month, he did the unthinkable -- he shut things down, claiming dealing with his bank counterparties had become too risky. Today, Lahde passed along his "goodbye" letter, a rollicking missive on everything from greed to economic philosophy.
-----
Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding.
Instead, I am writing to say goodbye. Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it."
I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.
All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are. I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices.
What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don't worry about my employees, they were always employed by Mr. Springer's company and only one (who has been well-rewarded) will lose his job. I have no interest in any deals in which anyone would like me to participate.
I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life -- where I had to compete for spaces in universities and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.
On the issue of the U.S. Government, I would like to make a modest proposal.
First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government.
Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man's interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft's near monopoly. I believe there is an answer, but for now the system is clearly broken.
Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won't see it included in BP's, "Feel good. We are working on sustainable solutions," television commercials, nor is it mentioned in ADM's similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products.
Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won.
At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country.
My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let's stop the rhetoric and start thinking about how we can truly become self-sufficient.
With that I say good-bye and good luck.
All the best,
Andrew Lahde
-----
Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into the spotlight last year after his one-year-old fund returned 866 percent betting against the subprime collapse.
Last month, he did the unthinkable -- he shut things down, claiming dealing with his bank counterparties had become too risky. Today, Lahde passed along his "goodbye" letter, a rollicking missive on everything from greed to economic philosophy.
-----
Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding.
Instead, I am writing to say goodbye. Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it."
I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.
All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are. I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices.
What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don't worry about my employees, they were always employed by Mr. Springer's company and only one (who has been well-rewarded) will lose his job. I have no interest in any deals in which anyone would like me to participate.
I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life -- where I had to compete for spaces in universities and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.
On the issue of the U.S. Government, I would like to make a modest proposal.
First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government.
Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man's interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft's near monopoly. I believe there is an answer, but for now the system is clearly broken.
Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won't see it included in BP's, "Feel good. We are working on sustainable solutions," television commercials, nor is it mentioned in ADM's similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products.
Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won.
At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country.
My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let's stop the rhetoric and start thinking about how we can truly become self-sufficient.
With that I say good-bye and good luck.
All the best,
Andrew Lahde
California Propositions
Well, we're getting close to Election Day. Are you registered? Do you know where your polling station is?
Let me start by saying that I do not think one should vote on a particular issue if you do not know anything about it, nor do you care. This is not a test where you might get something right by filling in every question. A casual yes or no will rob someone else of their vote that has purpose behind it.
Now, please do not take that to mean only vote when you have a burning need. If you know about an issue and have ANY interest in the outcome, vote and be counted! If you really want a particular person in office, or DO NOT want someone else in office, vote for or against. But voting is not only a right but a responsibility -- exercise it well.
Let's recap the first three...
Proposition 1 has been replaced by 1A. I do not see any real differences and still say NO.
Proposition 2 I said YES, but regard as a pretty lightweight issue. I may end up not voting at all on this issue, as per my rant above.
Proposition 3 I said NO.
Proposition 4 is the Waiting Period and Parent Notification law.
This is a tough issue because it deals with abortion, which already splits the electorate. As a parent, albeit of boys, I have considerable sympathy for the pro side. The possibility of my sons having surgery with my wife or I not being notified makes me cringe.
But -- I have to look at the possible consequences, and I realize that not all families are exactly a functional, cohesive unit. My wife has worked with troubled teens who come from bad home situations -- and some girls would honestly and literally fear for their lives if they has to tell their parents they were pregnant.
Now, let's be clear, Prop 4 has language saying that there are alternatively -- telling a different family member or getting a waiver from a court. But let's try and live in the real world -- what girls are going to be able to navigate through the court system? If they have a bad family situation, are they going to trust an aunt or grandmother?
I say NO.
Proposition 5 is the parole and rehab issue.
There is a LOT of language behind this law. I come away fairly impressed.
To those who do not know me, let me be clear -- I am a big fan of consequences for one's actions. Jailtime has to be an option for determent to work. Yet, drug offenses are in a different baliwick. When someone is addicted, I think we have to consider some alternatives. Californian's spend so much on incarceration as it is, and our jails are so crowded, that we have to go a different direction.
This bill seems to be specific enough to a range of behaviors that it will not be mis-used, and it leaves real determent as a last option, or for repeat offenders.
I say YES.
Proposition 6 is the Police funding and Criminal penalties law.
I don't feel this is necessary to spend a lot of time on. For me, the item that sways me is codifying a number of gang related offenses. I feel this gives the court system additional weapons by allowing more and specific charges. Plea bargaining seems to be the way defendants manage to lessen their consequences; so the more specific charges that can be leveled against them, the better from the rule of law.
I say YES.
Proposition 7 is the Renewable Energy bill.
To my great surprise, I am in favor of this bill. Normally, I would look for protections for the consumer (none) and real audits for the monies to be spent (some, but not great).
Here's my position: every election cycle we bitch about how we want alternative energy solutions. And yet no bill or law seems perfect because we want it all: we want to force those nasty coal and gas companies to invest more in green energy, we want consumers to do what is right, even if it's more expensive, we want government to run leaner and yet to promote renewable energy.
WE CAN'T HAVE IT ALL. And thus we have to make a decision at some point that it's worth some higher prices, some annoyances, and some additional government cost. A major debating point for the presidential candidates has been alternative energy and both are for it. But is anyone under the illusion that it will be free?
By forcing demand higher for alternative energy sources, companies will slowly start allocating more resources towards finding better solutions. As more of these solutions come into the markets, costs will come down and at some point match and compete with the costs for electricity produces through coal.
We will face higher costs, as consumers. But this is one case where the end justifies the means. I say YES.
Proposition 8 eliminates gay marriage by codifying marriage in the State Constitution as being between one man and one woman.
I, a straight man, am married to a straight woman. Oddly enough, my marriage is just as strong now as it was prior to May 16, when the state Supreme Court overturned the ban on gay marriages.
So I am a little non-plussed when Prop 8 supporters say they are protecting, defending, and strengthening MY marriage.
Now, California does have a domestic partnership law, but that does not cover contingencies that spouses take for granted.
The line of attack I am frankly surprised that supporters have not used is that if we allow two people of the same sex to get married, why should not more of any sex? (bigamy, polygamy)
That might be opening the floodgates!
Regardless, beyond being what I consider an abuse of amending the Constitution, I fail to see how this "protects" marriage for anything but discrimination.
I say NO.
Prop 9 is the Victim's Right Act -- I say YES.
Again, this issue is not something that will be debated on it's merits; you will feel it is good or not. Even the Con arguments in the Voter Information Guide acknowledge it is "well-meaning" and only feel situations covered by this are already covered by Prop 8 in 1982.
I have not compared the two word for word -- but going solely by the wording of this Act, I approve.
Proposition 10 is the Alternative Fuel Vehicles law.
I have to come down on the nay side. This bill appears to be aimed at non-hybrid (gasoline/electric) types of vehicles. Although perhaps good in the long range view, I think this gives too much to that spectrum of vehicles that the market is already discounting. I would prefer to see the subsidies and benefits to hybrids -- which have already made some inroads on consumer choices. I say NO.
Prop 11 is the Redistricting Act.
Finally! I truly enjoy the squawking that both parties are doing against this law.
This would create a commission that mandates inclusion of Democrats, Republicans, AND independant/non-affiliated voters. They could not have been political candidates, a lobbyist, or large political donor within the last ten years.
They would be charged with drawing the congressional districts every ten years. No more gerrymandering!
I say, wholeheartedly, YES.
Proposition 12 is the Veterans' Bond Act.
This allows up to 3600 veterans the opportunity to receive loans for home purchases. Since 1921, this program, when funded, has been totally self-supporting.
The only anti-12 argument presented is that we should limit it to veterans who served in combat, instead of all veterans.
I say YES.
And there you have it. VOTE!
Regards,
Trond
Let me start by saying that I do not think one should vote on a particular issue if you do not know anything about it, nor do you care. This is not a test where you might get something right by filling in every question. A casual yes or no will rob someone else of their vote that has purpose behind it.
Now, please do not take that to mean only vote when you have a burning need. If you know about an issue and have ANY interest in the outcome, vote and be counted! If you really want a particular person in office, or DO NOT want someone else in office, vote for or against. But voting is not only a right but a responsibility -- exercise it well.
Let's recap the first three...
Proposition 1 has been replaced by 1A. I do not see any real differences and still say NO.
Proposition 2 I said YES, but regard as a pretty lightweight issue. I may end up not voting at all on this issue, as per my rant above.
Proposition 3 I said NO.
Proposition 4 is the Waiting Period and Parent Notification law.
This is a tough issue because it deals with abortion, which already splits the electorate. As a parent, albeit of boys, I have considerable sympathy for the pro side. The possibility of my sons having surgery with my wife or I not being notified makes me cringe.
But -- I have to look at the possible consequences, and I realize that not all families are exactly a functional, cohesive unit. My wife has worked with troubled teens who come from bad home situations -- and some girls would honestly and literally fear for their lives if they has to tell their parents they were pregnant.
Now, let's be clear, Prop 4 has language saying that there are alternatively -- telling a different family member or getting a waiver from a court. But let's try and live in the real world -- what girls are going to be able to navigate through the court system? If they have a bad family situation, are they going to trust an aunt or grandmother?
I say NO.
Proposition 5 is the parole and rehab issue.
There is a LOT of language behind this law. I come away fairly impressed.
To those who do not know me, let me be clear -- I am a big fan of consequences for one's actions. Jailtime has to be an option for determent to work. Yet, drug offenses are in a different baliwick. When someone is addicted, I think we have to consider some alternatives. Californian's spend so much on incarceration as it is, and our jails are so crowded, that we have to go a different direction.
This bill seems to be specific enough to a range of behaviors that it will not be mis-used, and it leaves real determent as a last option, or for repeat offenders.
I say YES.
Proposition 6 is the Police funding and Criminal penalties law.
I don't feel this is necessary to spend a lot of time on. For me, the item that sways me is codifying a number of gang related offenses. I feel this gives the court system additional weapons by allowing more and specific charges. Plea bargaining seems to be the way defendants manage to lessen their consequences; so the more specific charges that can be leveled against them, the better from the rule of law.
I say YES.
Proposition 7 is the Renewable Energy bill.
To my great surprise, I am in favor of this bill. Normally, I would look for protections for the consumer (none) and real audits for the monies to be spent (some, but not great).
Here's my position: every election cycle we bitch about how we want alternative energy solutions. And yet no bill or law seems perfect because we want it all: we want to force those nasty coal and gas companies to invest more in green energy, we want consumers to do what is right, even if it's more expensive, we want government to run leaner and yet to promote renewable energy.
WE CAN'T HAVE IT ALL. And thus we have to make a decision at some point that it's worth some higher prices, some annoyances, and some additional government cost. A major debating point for the presidential candidates has been alternative energy and both are for it. But is anyone under the illusion that it will be free?
By forcing demand higher for alternative energy sources, companies will slowly start allocating more resources towards finding better solutions. As more of these solutions come into the markets, costs will come down and at some point match and compete with the costs for electricity produces through coal.
We will face higher costs, as consumers. But this is one case where the end justifies the means. I say YES.
Proposition 8 eliminates gay marriage by codifying marriage in the State Constitution as being between one man and one woman.
I, a straight man, am married to a straight woman. Oddly enough, my marriage is just as strong now as it was prior to May 16, when the state Supreme Court overturned the ban on gay marriages.
So I am a little non-plussed when Prop 8 supporters say they are protecting, defending, and strengthening MY marriage.
Now, California does have a domestic partnership law, but that does not cover contingencies that spouses take for granted.
The line of attack I am frankly surprised that supporters have not used is that if we allow two people of the same sex to get married, why should not more of any sex? (bigamy, polygamy)
That might be opening the floodgates!
Regardless, beyond being what I consider an abuse of amending the Constitution, I fail to see how this "protects" marriage for anything but discrimination.
I say NO.
Prop 9 is the Victim's Right Act -- I say YES.
Again, this issue is not something that will be debated on it's merits; you will feel it is good or not. Even the Con arguments in the Voter Information Guide acknowledge it is "well-meaning" and only feel situations covered by this are already covered by Prop 8 in 1982.
I have not compared the two word for word -- but going solely by the wording of this Act, I approve.
Proposition 10 is the Alternative Fuel Vehicles law.
I have to come down on the nay side. This bill appears to be aimed at non-hybrid (gasoline/electric) types of vehicles. Although perhaps good in the long range view, I think this gives too much to that spectrum of vehicles that the market is already discounting. I would prefer to see the subsidies and benefits to hybrids -- which have already made some inroads on consumer choices. I say NO.
Prop 11 is the Redistricting Act.
Finally! I truly enjoy the squawking that both parties are doing against this law.
This would create a commission that mandates inclusion of Democrats, Republicans, AND independant/non-affiliated voters. They could not have been political candidates, a lobbyist, or large political donor within the last ten years.
They would be charged with drawing the congressional districts every ten years. No more gerrymandering!
I say, wholeheartedly, YES.
Proposition 12 is the Veterans' Bond Act.
This allows up to 3600 veterans the opportunity to receive loans for home purchases. Since 1921, this program, when funded, has been totally self-supporting.
The only anti-12 argument presented is that we should limit it to veterans who served in combat, instead of all veterans.
I say YES.
And there you have it. VOTE!
Regards,
Trond
Friday, October 17, 2008
Dendreon -- a sell?
Ming asked about my thoughts regarding an analyst who initiated coverage on Dendreon (DNDN) at a Sell.
Mike Huckman from CNBC wrote about it here: http://www.cnbc.com/id/27216583/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
First, Huckman does a decent job of describing the situation. Let me be quite clear here – the only reason I bring up Huckman is that he references the report, which I have not seen directly.
The analyst, Joe Pantginis from the firm Merriman Curhan Ford, makes several statements that are either false, misleading, or simply humorous.
Let’s start with funny. Here’s a quote I especially loved:
“"We believe a positive...outcome could significantly drive the stock forward. (But) we believe this singular event does not warrant owning the shares (except for very short-term oriented investors who want to bear the risk)."
Why in the world is any investor considering biotech stocks unless they are able to bear risks? And if he believes a positive outcome would be a “significant “ driver, why doesn’t that warrant owning shares?
Let’s review the interim results: They found a 20% reduction in risk of death by taking Provenge. Prior trials had similar results at similar timepoints.
And with a positive result, share price would advance.
And that timepoint is less than a year away.
… And yet, he recommends not only holding, but selling. Yikes.
Elsewhere, Pantginis advises there is potential competition from Cell Genesys (CEGE), a different immunotherapeutic vaccine called GVAX. Too bad just yesterday, CEGE announced they would be abandoning their Phase III trial with GVAX (http://www.cnbc.com/id/27214656/?for=cnbc).
He also advised that the price would be prohibitive, and threw out $75,000 for the course of treatment. Now, I cannot state what the cost would be – the company has NEVER addressed this question. But to be in line with Taxotere (chemo – really the only other choice for patients at this time) the price would be closer to $30 - $45 thousand instead. Add in the clear efficaciousness over Taxotere and I think price is not really an issue, anyway.
Too, he complains that Dendreon would have a hard time partnering ex-US. Let’s see – in April Takeda paid $50M upfront for Rest-Of-World rights to GVAX, with $270M in milestone payments – plus royalties on sales. Schering Plough paid Novacea $65M upfront and $350 in milestones + royalties for Asentar.
Hmmmm… both Asentar and GVAX are dead in the water now.
Provenge is THE ONLY immunotherapeutic left in Phase III trials for late stage prostate cancer – and yet partnering is hard? Big pharma is DYING to find compounds to acquire right now.
Here’s another quote, "We believe the stock has been too emotionally charged from both an investor and political standpoint and we would avoid the shares at this time."
Here’s a newsflash to Pantginis. Drugs don’t care if people love them or hate them. They work or don’t work. And if Provenge does work, then the stock will take off.
The really amusing thing is that Pantginis evidently admits that the IMPACT trial has a 50/50 shot at success. On failure, he says the stock would trade down 60-70%, and does not say what success would do to the share price. I think anyone looking at the price history pre-FDA 2007 would admit the stock will immediately hit the $20s if the final is statistically significant. I would say a $5 stock, at a literal 50/50 chance where the downside brings you to $2 and the upside is at $20+, deserves a modest investment. And that is even before you consider his estimate is pretty conservative.
Regards,
Trond
Mike Huckman from CNBC wrote about it here: http://www.cnbc.com/id/27216583/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
First, Huckman does a decent job of describing the situation. Let me be quite clear here – the only reason I bring up Huckman is that he references the report, which I have not seen directly.
The analyst, Joe Pantginis from the firm Merriman Curhan Ford, makes several statements that are either false, misleading, or simply humorous.
Let’s start with funny. Here’s a quote I especially loved:
“"We believe a positive...outcome could significantly drive the stock forward. (But) we believe this singular event does not warrant owning the shares (except for very short-term oriented investors who want to bear the risk)."
Why in the world is any investor considering biotech stocks unless they are able to bear risks? And if he believes a positive outcome would be a “significant “ driver, why doesn’t that warrant owning shares?
Let’s review the interim results: They found a 20% reduction in risk of death by taking Provenge. Prior trials had similar results at similar timepoints.
And with a positive result, share price would advance.
And that timepoint is less than a year away.
… And yet, he recommends not only holding, but selling. Yikes.
Elsewhere, Pantginis advises there is potential competition from Cell Genesys (CEGE), a different immunotherapeutic vaccine called GVAX. Too bad just yesterday, CEGE announced they would be abandoning their Phase III trial with GVAX (http://www.cnbc.com/id/27214656/?for=cnbc).
He also advised that the price would be prohibitive, and threw out $75,000 for the course of treatment. Now, I cannot state what the cost would be – the company has NEVER addressed this question. But to be in line with Taxotere (chemo – really the only other choice for patients at this time) the price would be closer to $30 - $45 thousand instead. Add in the clear efficaciousness over Taxotere and I think price is not really an issue, anyway.
Too, he complains that Dendreon would have a hard time partnering ex-US. Let’s see – in April Takeda paid $50M upfront for Rest-Of-World rights to GVAX, with $270M in milestone payments – plus royalties on sales. Schering Plough paid Novacea $65M upfront and $350 in milestones + royalties for Asentar.
Hmmmm… both Asentar and GVAX are dead in the water now.
Provenge is THE ONLY immunotherapeutic left in Phase III trials for late stage prostate cancer – and yet partnering is hard? Big pharma is DYING to find compounds to acquire right now.
Here’s another quote, "We believe the stock has been too emotionally charged from both an investor and political standpoint and we would avoid the shares at this time."
Here’s a newsflash to Pantginis. Drugs don’t care if people love them or hate them. They work or don’t work. And if Provenge does work, then the stock will take off.
The really amusing thing is that Pantginis evidently admits that the IMPACT trial has a 50/50 shot at success. On failure, he says the stock would trade down 60-70%, and does not say what success would do to the share price. I think anyone looking at the price history pre-FDA 2007 would admit the stock will immediately hit the $20s if the final is statistically significant. I would say a $5 stock, at a literal 50/50 chance where the downside brings you to $2 and the upside is at $20+, deserves a modest investment. And that is even before you consider his estimate is pretty conservative.
Regards,
Trond
Friday, October 10, 2008
California Propositions 1 - 3
Well,
I have read through the Information Guide for Props 1 through 3 so far.
Proposition 1: High Speed Rail
$9.95B for a network of high speed electric trains.
First -- can I say it is highly annoying to read the arguments FOR any bond measure that is paid back through the General Fund that shout "WITHOUT RAISING TAXES". While it is true that a specific amount is not listed to be taxed on any particular group, to pay the P&I installments on the bond either something else must be cut OR additional revenue needs to be raised. And the only way of raising revenue for the General Fund is really to raise taxes.
I like the idea of the bond overall -- and I think this will need to be done at some point within 10 to 15 years. The additional money spent would mostly go to construction and engineering firms, which would provide jobs.
But -- we need local INTRACITY options for commuters before we need INTERCITY options. The amounts raised are not enough to actually fully do what they want to do. And we simply can't afford more expensive projects like this in a bad economy and in a time of spiraling state deficits.
I say NO.
Prop 2: Farm Animal Cruelty
Lukewarm -- not much analysis here. I am not in general a tree-hugger or worry too much about animals I intend on eating. This pretty much will fall under where you stand on animals.
Yet -- I see potential for healthier animals with this in the Code. The price of eggs may rise by about $.01 per egg, and I'm okoay with that. I find it disingenuous for the AGAINST crowd to argue that there would be a higher risk of disease.
I say YES.
Prop 3: Children's Hospital Bond
$980M for construction, expansion, and equipping of children's hospitals.
Again, as with Prop 1, my overall argument against this is that we simply cannot spend more at the moment. Most bond issues have good intentions, yet if we really want a balanced budget and cut spending, we have to say NO sometimes.
There are some great points to make for this issue -- and adding capacity for hospitals is definitely needed. But again, it is a question of what we can afford right now.
I say NO.
I'll cover more Propositions in the next few days...
Regards,
Trond
I have read through the Information Guide for Props 1 through 3 so far.
Proposition 1: High Speed Rail
$9.95B for a network of high speed electric trains.
First -- can I say it is highly annoying to read the arguments FOR any bond measure that is paid back through the General Fund that shout "WITHOUT RAISING TAXES". While it is true that a specific amount is not listed to be taxed on any particular group, to pay the P&I installments on the bond either something else must be cut OR additional revenue needs to be raised. And the only way of raising revenue for the General Fund is really to raise taxes.
I like the idea of the bond overall -- and I think this will need to be done at some point within 10 to 15 years. The additional money spent would mostly go to construction and engineering firms, which would provide jobs.
But -- we need local INTRACITY options for commuters before we need INTERCITY options. The amounts raised are not enough to actually fully do what they want to do. And we simply can't afford more expensive projects like this in a bad economy and in a time of spiraling state deficits.
I say NO.
Prop 2: Farm Animal Cruelty
Lukewarm -- not much analysis here. I am not in general a tree-hugger or worry too much about animals I intend on eating. This pretty much will fall under where you stand on animals.
Yet -- I see potential for healthier animals with this in the Code. The price of eggs may rise by about $.01 per egg, and I'm okoay with that. I find it disingenuous for the AGAINST crowd to argue that there would be a higher risk of disease.
I say YES.
Prop 3: Children's Hospital Bond
$980M for construction, expansion, and equipping of children's hospitals.
Again, as with Prop 1, my overall argument against this is that we simply cannot spend more at the moment. Most bond issues have good intentions, yet if we really want a balanced budget and cut spending, we have to say NO sometimes.
There are some great points to make for this issue -- and adding capacity for hospitals is definitely needed. But again, it is a question of what we can afford right now.
I say NO.
I'll cover more Propositions in the next few days...
Regards,
Trond
Wednesday, October 8, 2008
Upcoming topics and Dendreon interim news
Good morning,
Here's a quick list of topics I want to address in the next few days to weeks:
Californian Propositions that are on the ballot in Nov.
Market makers
Short selling
Presidential candidate claims
Elan (earnings call in late Oct.)
Stocks I like right now
Budgets (personal finance, not the boondoggle we call the federal budget!)
Please - if you want a particular topic addressed, leave a comment or email me at Trond24@gmail.com. Thanks to Ming for the CA Prop question.
On to Dendreon!
On Monday morning (10/6/08) I listened to the conference call CEO Mitchell Gold gave, regarding the interim results on the Provenge trial (called IMPACT).
The independent data monitoring committee (IDMC) recommended that the trial be continued, noting it did NOT meet the criteria to end the trial early, yet also advising a couple things that are extremely important.
First, there are NO safety concerns. This is important for two reasons.
A competitor, Cell Genesys, had a trial halted early for their prostate cancer vaccine GVAX in late August. The IDMC for that trial found more deaths in the drug arm of the trial than the placebo arm! The two drugs have different methods of action in the particulars, but since they are both immunotherapeutic vaccines, any kind of safety profile issues would be fodder for naysayers.
Second, this group of patients are end-stage, terminal prostate cancer victims. They tend to be older, with compromised immune systems anyway. The only drug approved for this stage of cancer is Taxotere, which is a chemo drug with side-effects so harsh that nearly 50% of patients elect NOT to go through the regimen.
This safety profile, by the way, mirrors prior trials -- following infusions some patients develop mild flu-like symptoms for a 2 or 3 day period.
The second finding by the IDMC was something that they did not have to release, but I am glad they did. They reported that the treatment arm had a 20% reduction of risk of death over the placebo arm. This also mirrors prior trial results for this time period, and, as Gold would later say, prior trials also saw the treatment effect increase over time.
Now, in allowing the company to have an interim look at the data, they take a minor penalty against statistical significance in the final look. Instead of 95% confidence, they may have to hit 96% (numbers are total WAGs, by the way). Plus, the interim confidence level has a MUCH higher bar -- might need 99.1% for example. Gold said that to meet success in the final, the treatment arm would have to have a 22% reduction of risk of death.
Now, most people would say, "Wow, only going from 20% to 22% -- what a slam dunk!" However, keep two things in mind. It may "only" be 2%, but that is a 10% change from 20 to 22%. Also, the final numbers INCLUDE the numbers that got us to 20%. So the later deaths have to be much more powerful statistically to get us over the hurdle.
That said, again: prior trials also saw the treatment effect increase over time! IMPACT is consistent with those prior trials, Gold added several times.
And finally, my goodness! TWENTY PERCENT MORE OF POVENGE USERS WERE ALIVE THAN PLACEBO. And -- the placebo group included Taxotere users -- the standard of care right now. We beat out the only competitor around, by 20%.
The share price bounced between 6 and 9 most of the day -- and although Tuesday gave back most of the gains, I do not see going back below $4.50 or so anytime prior to the final.
The final is now projected to be "mid 2009", changed from prior guidance of simply "second half of 2009." So I would guess the final event to be hit somewhere in June/July and real data by August/September. Less than one year to go! Short term, we look to see their trp-p8 small molecule in human trials before year end, and although remote, possibly a partnership agreement for ex-US rights to Provenge given the strong Provenge interim results.
Regards,
Trond
Here's a quick list of topics I want to address in the next few days to weeks:
Californian Propositions that are on the ballot in Nov.
Market makers
Short selling
Presidential candidate claims
Elan (earnings call in late Oct.)
Stocks I like right now
Budgets (personal finance, not the boondoggle we call the federal budget!)
Please - if you want a particular topic addressed, leave a comment or email me at Trond24@gmail.com. Thanks to Ming for the CA Prop question.
On to Dendreon!
On Monday morning (10/6/08) I listened to the conference call CEO Mitchell Gold gave, regarding the interim results on the Provenge trial (called IMPACT).
The independent data monitoring committee (IDMC) recommended that the trial be continued, noting it did NOT meet the criteria to end the trial early, yet also advising a couple things that are extremely important.
First, there are NO safety concerns. This is important for two reasons.
A competitor, Cell Genesys, had a trial halted early for their prostate cancer vaccine GVAX in late August. The IDMC for that trial found more deaths in the drug arm of the trial than the placebo arm! The two drugs have different methods of action in the particulars, but since they are both immunotherapeutic vaccines, any kind of safety profile issues would be fodder for naysayers.
Second, this group of patients are end-stage, terminal prostate cancer victims. They tend to be older, with compromised immune systems anyway. The only drug approved for this stage of cancer is Taxotere, which is a chemo drug with side-effects so harsh that nearly 50% of patients elect NOT to go through the regimen.
This safety profile, by the way, mirrors prior trials -- following infusions some patients develop mild flu-like symptoms for a 2 or 3 day period.
The second finding by the IDMC was something that they did not have to release, but I am glad they did. They reported that the treatment arm had a 20% reduction of risk of death over the placebo arm. This also mirrors prior trial results for this time period, and, as Gold would later say, prior trials also saw the treatment effect increase over time.
Now, in allowing the company to have an interim look at the data, they take a minor penalty against statistical significance in the final look. Instead of 95% confidence, they may have to hit 96% (numbers are total WAGs, by the way). Plus, the interim confidence level has a MUCH higher bar -- might need 99.1% for example. Gold said that to meet success in the final, the treatment arm would have to have a 22% reduction of risk of death.
Now, most people would say, "Wow, only going from 20% to 22% -- what a slam dunk!" However, keep two things in mind. It may "only" be 2%, but that is a 10% change from 20 to 22%. Also, the final numbers INCLUDE the numbers that got us to 20%. So the later deaths have to be much more powerful statistically to get us over the hurdle.
That said, again: prior trials also saw the treatment effect increase over time! IMPACT is consistent with those prior trials, Gold added several times.
And finally, my goodness! TWENTY PERCENT MORE OF POVENGE USERS WERE ALIVE THAN PLACEBO. And -- the placebo group included Taxotere users -- the standard of care right now. We beat out the only competitor around, by 20%.
The share price bounced between 6 and 9 most of the day -- and although Tuesday gave back most of the gains, I do not see going back below $4.50 or so anytime prior to the final.
The final is now projected to be "mid 2009", changed from prior guidance of simply "second half of 2009." So I would guess the final event to be hit somewhere in June/July and real data by August/September. Less than one year to go! Short term, we look to see their trp-p8 small molecule in human trials before year end, and although remote, possibly a partnership agreement for ex-US rights to Provenge given the strong Provenge interim results.
Regards,
Trond
Wednesday, October 1, 2008
And more on the bailout...
Whew -- lot to talk about today.
First -- more comments. Ming says, "How much faith can one have in a government that encourages recklessness and irresponsibility... There are banks that are out there that are doing fine in this "crisis", why? because they weren't reckless and minimized their risk. As long as some of the banks are able to survive, the remaining ones need to go, even it wipes out the stockholders. (Sorry stocks are a gamble, always have been, always will be)"
You know what? I agree for the most part. The government is very much guilty of encouraging reckless behaviour. The tax code gives free reign to hedge funds, entitlements are out of control, pork is out of control*1, and Congresspeople actually left Washington on Monday after killing the first bill so they could go home and campaign, instead of staying around to fix the "worst crisis since the Great Depression". The FED and SEC and FDA are all
bureaucracies that put their own agendas before the public's.
Also correct is that some banks should certainly go under if they cannot compete -- that is absolutely the risk stockholder face.
(I do NOT agree that stocks are a gamble. The market can act like a casino, especially to short timers who go "all in" or misuse options. But I don't think ANYONE would say Warren Buffet is a gambler. *grin*)
I actually think the worst offenders are WE the people ourselves (in the overall sense, not you, or me, personally, of course). As Ming put it in an email, the sheer chuztpah of the folks who took mortgages they either did not understand the terms of OR couldn't repay, OR both! And to compound their sin, they then used their homes as an ATM -- buying cars and material goods on the soaring equity -- only to see it crash and walk away, leaving $750K mortgages on homes now worth $300K. And elected officials wouldn't keep enlarging entitlement programs if we didn't have our hands out. We need to look in the mirror and realize the present is a direct reflection of our past behaviour.
That said, I am seeing more and more clearly that a bailout/rescue is needed. Yes, it would be healthy for the economy in some respects to have a severe correction; some corporations ought to be bought out by others. But the staggering loss of jobs, mass foreclosures that would blight neighborhoods, and human cost argue to me that something is needed on the federal level.
Ming -- is it "fair"**2 to those who kept their debts reasonable, and lived within their means, to see those who did not saved? Of course not! But at some point fairness goes out the window to prevent a national disaster.
We should take this time however, to really look at what led us here and how to prevent similar situations in the future. It sounds like the mark-to-market rule is being suspended temporarily. The SEC supposedly is extending the no-short-selling ban on the financial companies***3 until Oct 17. We need plenty more of these kinds of actions -- I strongly encourage people to let their congresspeople know exactly what they want NOW -- they actually seem to be listening, for the moment.
The VP debates are tomorrow at 6 PDT. Watch them and learn more about the views of whoever is to be our future vice-president!
Regards,
Trond
---
* The current bailout bill passed tonight by the Senate used to be 3 pages. Now it is something like 456 pages, and 200 pages of that is pure pork, as an incentive to get votes. Among other things, THEY ARE REVOKING A $.39 TAX ON CHILDRENS' BOW AND ARROW, ARROW SHAFTS. Which Senator's kid uses arrows in bulk? This one move loses $200K in estimated revenue a year. Obama and McCain****4 both voted for the bailout.
** I don't think it "fair" that my tax dollars go to subsidize Ted Turner's peanut farm, for example.
*** And why the HELL is it limited to 700 odd "financial" companies (of which IBM and GE now qualify!!)?? If the SEC is now FINALLY acknowledging that short selling is harmful (thank you Patrick Byrne!) then the Equal Protection clause, and well as "fairness" demands all companies should be similarly protected.
**** There goes his argument that he never votes for pork. :-)
First -- more comments. Ming says, "How much faith can one have in a government that encourages recklessness and irresponsibility... There are banks that are out there that are doing fine in this "crisis", why? because they weren't reckless and minimized their risk. As long as some of the banks are able to survive, the remaining ones need to go, even it wipes out the stockholders. (Sorry stocks are a gamble, always have been, always will be)"
You know what? I agree for the most part. The government is very much guilty of encouraging reckless behaviour. The tax code gives free reign to hedge funds, entitlements are out of control, pork is out of control*1, and Congresspeople actually left Washington on Monday after killing the first bill so they could go home and campaign, instead of staying around to fix the "worst crisis since the Great Depression". The FED and SEC and FDA are all
bureaucracies that put their own agendas before the public's.
Also correct is that some banks should certainly go under if they cannot compete -- that is absolutely the risk stockholder face.
(I do NOT agree that stocks are a gamble. The market can act like a casino, especially to short timers who go "all in" or misuse options. But I don't think ANYONE would say Warren Buffet is a gambler. *grin*)
I actually think the worst offenders are WE the people ourselves (in the overall sense, not you, or me, personally, of course). As Ming put it in an email, the sheer chuztpah of the folks who took mortgages they either did not understand the terms of OR couldn't repay, OR both! And to compound their sin, they then used their homes as an ATM -- buying cars and material goods on the soaring equity -- only to see it crash and walk away, leaving $750K mortgages on homes now worth $300K. And elected officials wouldn't keep enlarging entitlement programs if we didn't have our hands out. We need to look in the mirror and realize the present is a direct reflection of our past behaviour.
That said, I am seeing more and more clearly that a bailout/rescue is needed. Yes, it would be healthy for the economy in some respects to have a severe correction; some corporations ought to be bought out by others. But the staggering loss of jobs, mass foreclosures that would blight neighborhoods, and human cost argue to me that something is needed on the federal level.
Ming -- is it "fair"**2 to those who kept their debts reasonable, and lived within their means, to see those who did not saved? Of course not! But at some point fairness goes out the window to prevent a national disaster.
We should take this time however, to really look at what led us here and how to prevent similar situations in the future. It sounds like the mark-to-market rule is being suspended temporarily. The SEC supposedly is extending the no-short-selling ban on the financial companies***3 until Oct 17. We need plenty more of these kinds of actions -- I strongly encourage people to let their congresspeople know exactly what they want NOW -- they actually seem to be listening, for the moment.
The VP debates are tomorrow at 6 PDT. Watch them and learn more about the views of whoever is to be our future vice-president!
Regards,
Trond
---
* The current bailout bill passed tonight by the Senate used to be 3 pages. Now it is something like 456 pages, and 200 pages of that is pure pork, as an incentive to get votes. Among other things, THEY ARE REVOKING A $.39 TAX ON CHILDRENS' BOW AND ARROW, ARROW SHAFTS. Which Senator's kid uses arrows in bulk? This one move loses $200K in estimated revenue a year. Obama and McCain****4 both voted for the bailout.
** I don't think it "fair" that my tax dollars go to subsidize Ted Turner's peanut farm, for example.
*** And why the HELL is it limited to 700 odd "financial" companies (of which IBM and GE now qualify!!)?? If the SEC is now FINALLY acknowledging that short selling is harmful (thank you Patrick Byrne!) then the Equal Protection clause, and well as "fairness" demands all companies should be similarly protected.
**** There goes his argument that he never votes for pork. :-)
Tuesday, September 30, 2008
Bailout II and certain responses...
Ming asked in comments about the bailout, inflation, and about my proposed mortgage bailout.
I still think the bailout as originally posed was a bad idea. I have not had a chance to read the whole 110-odd pages of it, but there was not enough oversight -- it seemed to give SecTreas almost omnipotent powers and nothing to actually help the people who are in danger of foreclosure.
Do not get me wrong, I think we need something. The short form is (and thanks to a poster on the IV Dendreon message board for putting it so simply):
Widget-maker Mr. Factory needs a loan to add to his production capability. Bank X cannot make the loan because of bad mortgages forcing them writedowns due to the mark-to-market (mtm) rule. Bank Y cannot lend the money to Bank X, even though THEY have the capability due to better loan vetting. Bank Y can't do this because Bank X is high risk paper because of the disclosures forced from mtm. Thus, Mr. Factory cannot expand, and add jobs.
In a nutshell, stagnant production, even in the face of higher demand, and a credit freeze.
WAY OVERSIMPLIFIED. But hopefully you get the picture.
So -- yes, taxpayers get a raw deal, but I think we need an economic show of force -- the economy runs on faith (as does our currency) and the credit freeze has to end. The question is how to do this in a fashion that still gives the taxpayer a chance to not see the money invested as a total loss, and to get the economy stronger.
The inflation question ties right into this. A stronger dollar (gee, maybe even tying the dollar to something real again) would ease commodity price increases. Ending stock shorting and stringent controls on commodity trades would ease prices more, and get people feeling better about the stock market and their retirement accounts. Heating oil season is almost upon us, and while I have no answer specifically of how to moderate that -- I'm sure some bright minds can fnd a way to prevent that from being the next shock on the public.
I personally am a fan of nuclear energy. We need to improve the infrastructure of our energy grid -- we lose too much energy simply creating and transferring it. Solar power may not be feasible everywhere but here in southern California it is criminal NOT to have whatever tax breaks necessary to get people developing and using it.
Overall, I agree with Ming's comments on my mortage plan. My plan as proposed would need EXTENSIVE overhauls -- it was (*blush*) a little bit off the top of my head.
However, some tweaks might get it back in shape. The largest and most deserved criticism is that it rewards people who took equity $ out and raised their mortgage. So we need some sort of limitation on what amount over their original mortgage can be refinanced. Perhaps the higher of what they originally bought it for OR the current appraisal. Remember, the whole point of MY bailout is not to reward the companies who packaged and underwrote the CDOs, but to simply allow real homeowners a way to keep their home and avoid foreclosure. The amount over what is refinanced up to wht is owed would be eaten by the taxpayer -- but with some of those bad loans off the books, the credit freeze would thaw more quickly. It is not perfect, but no bailout CAN be perfect. I do see much pain ahead if there is not an answer to some of these issues soon.
On a totally different topic, Elan announced their earnings call will be in late October. We will get to see how the two PML cases afftected Tysabri sales and uptake. My conjecture, from hearing from several practicing neurologists, is that there was VERY LITTLE drop-outs and we will actually still see a new gain of patients. My present-value discounted share price of Elan, just from Tysabri sales projected through 2011, indicate a price of somewhere around $18 to $20 today. Seeing as we are at $10ish, I think it is a screaming buy.
Sometime in October we will also find out if Dendreon's Provenge passed the interim look successfully or not. As a reminder, the interim peek must meet an extremely high statistical significance barrier. This is a good thing -- you don't want companies able to halt trials and start marketing drugs until thoroughly vetted. But with Provenge, we already have two completed Phase III trials, one with startlingly significant results. Analysts seem to be pretty much disregarding any chance of an interim success -- but I think there are better than 60% odds of a successful interim. I say this because the company got the FDA to agree to amend the SPA for the trial, increasing the interim death events and lowering the final number. They admitted this lowered the power of the final, if it is needed. I don't think they would have pushed for something that lowered (even slightly) the chances of the final unless it truly has a decent chance at the interim.
Vexingly, that means there is a 40% chance of a failure at the interim and we may see sub $3 if that happens. I good tactic might be to buy the shares at $5.70 and sell the $10 or $15 May 2009 calls. You will make 20% or so for 8-9 months on the calls and by mid next year the stock should recover should the interim fail. If successful, you get the premium and get called away next May at the $10 or $15 mark -- doubling or tripling your money. A 2 or 3 bagger at best and hardly any downside risk at worst.
The other good news? Dendreon announced at a presentation that they intend to file an Investigational New Drug (IND) application for their TRP-P8 small-molecule by year end. It is intended to treat prostate, breast, ovarian cancers and melanoma. Totally different method of action from their active cellular immunotherapies such as Provenge, so they are not a "one-trick pony" anymore.
Regards,
Trond
I still think the bailout as originally posed was a bad idea. I have not had a chance to read the whole 110-odd pages of it, but there was not enough oversight -- it seemed to give SecTreas almost omnipotent powers and nothing to actually help the people who are in danger of foreclosure.
Do not get me wrong, I think we need something. The short form is (and thanks to a poster on the IV Dendreon message board for putting it so simply):
Widget-maker Mr. Factory needs a loan to add to his production capability. Bank X cannot make the loan because of bad mortgages forcing them writedowns due to the mark-to-market (mtm) rule. Bank Y cannot lend the money to Bank X, even though THEY have the capability due to better loan vetting. Bank Y can't do this because Bank X is high risk paper because of the disclosures forced from mtm. Thus, Mr. Factory cannot expand, and add jobs.
In a nutshell, stagnant production, even in the face of higher demand, and a credit freeze.
WAY OVERSIMPLIFIED. But hopefully you get the picture.
So -- yes, taxpayers get a raw deal, but I think we need an economic show of force -- the economy runs on faith (as does our currency) and the credit freeze has to end. The question is how to do this in a fashion that still gives the taxpayer a chance to not see the money invested as a total loss, and to get the economy stronger.
The inflation question ties right into this. A stronger dollar (gee, maybe even tying the dollar to something real again) would ease commodity price increases. Ending stock shorting and stringent controls on commodity trades would ease prices more, and get people feeling better about the stock market and their retirement accounts. Heating oil season is almost upon us, and while I have no answer specifically of how to moderate that -- I'm sure some bright minds can fnd a way to prevent that from being the next shock on the public.
I personally am a fan of nuclear energy. We need to improve the infrastructure of our energy grid -- we lose too much energy simply creating and transferring it. Solar power may not be feasible everywhere but here in southern California it is criminal NOT to have whatever tax breaks necessary to get people developing and using it.
Overall, I agree with Ming's comments on my mortage plan. My plan as proposed would need EXTENSIVE overhauls -- it was (*blush*) a little bit off the top of my head.
However, some tweaks might get it back in shape. The largest and most deserved criticism is that it rewards people who took equity $ out and raised their mortgage. So we need some sort of limitation on what amount over their original mortgage can be refinanced. Perhaps the higher of what they originally bought it for OR the current appraisal. Remember, the whole point of MY bailout is not to reward the companies who packaged and underwrote the CDOs, but to simply allow real homeowners a way to keep their home and avoid foreclosure. The amount over what is refinanced up to wht is owed would be eaten by the taxpayer -- but with some of those bad loans off the books, the credit freeze would thaw more quickly. It is not perfect, but no bailout CAN be perfect. I do see much pain ahead if there is not an answer to some of these issues soon.
On a totally different topic, Elan announced their earnings call will be in late October. We will get to see how the two PML cases afftected Tysabri sales and uptake. My conjecture, from hearing from several practicing neurologists, is that there was VERY LITTLE drop-outs and we will actually still see a new gain of patients. My present-value discounted share price of Elan, just from Tysabri sales projected through 2011, indicate a price of somewhere around $18 to $20 today. Seeing as we are at $10ish, I think it is a screaming buy.
Sometime in October we will also find out if Dendreon's Provenge passed the interim look successfully or not. As a reminder, the interim peek must meet an extremely high statistical significance barrier. This is a good thing -- you don't want companies able to halt trials and start marketing drugs until thoroughly vetted. But with Provenge, we already have two completed Phase III trials, one with startlingly significant results. Analysts seem to be pretty much disregarding any chance of an interim success -- but I think there are better than 60% odds of a successful interim. I say this because the company got the FDA to agree to amend the SPA for the trial, increasing the interim death events and lowering the final number. They admitted this lowered the power of the final, if it is needed. I don't think they would have pushed for something that lowered (even slightly) the chances of the final unless it truly has a decent chance at the interim.
Vexingly, that means there is a 40% chance of a failure at the interim and we may see sub $3 if that happens. I good tactic might be to buy the shares at $5.70 and sell the $10 or $15 May 2009 calls. You will make 20% or so for 8-9 months on the calls and by mid next year the stock should recover should the interim fail. If successful, you get the premium and get called away next May at the $10 or $15 mark -- doubling or tripling your money. A 2 or 3 bagger at best and hardly any downside risk at worst.
The other good news? Dendreon announced at a presentation that they intend to file an Investigational New Drug (IND) application for their TRP-P8 small-molecule by year end. It is intended to treat prostate, breast, ovarian cancers and melanoma. Totally different method of action from their active cellular immunotherapies such as Provenge, so they are not a "one-trick pony" anymore.
Regards,
Trond
Thursday, September 25, 2008
Bailout and mark-to-market
Here’s the reason all these institutions are failing. Recent changes in the way that financial companies have to account for the loans on their books require them to value their debt at a “mark-to-market.”
This is a fancy way to say that whatever the market value of the debt is, that is what they have to say its worth. Now that the housing market is on the skids, a high risk, non-performing loan a bank made for $600,000 might only be sold for $400,000. Thus, that “loses” a third of its worth.
Remember that these are not really individual loans that we are talking here, but the CDOs that were packaged together and sold as asset-backed securities. But most people can more easily picture it in individual terms.
I do not support the government directly bailing out public companies. However, to prevent massive foreclosures and the resulting REAL pain from homeowners (yes, even silly ones who took on much more debt than they can repay), here’s an idea.
Until June 30, 2009, allow the government to refinance any home loan at today’s market value. The terms are really simple: 6% interest for ANY credit score, at 30 years, plus allowing up to 12 payments to be interest-only (pushing the loan out as many months).
We as taxpayers would eat a large chunk of change immediately; the loan mentioned above would cost $600,000 and we would only make P&I back slowly. But the taxpayers would recoup some costs over time and may even make money. With amount of bad debt of their backs, banks would not experience the credit freeze that they see now.
Part and parcel of this would be to change the mark-to-market rule. And hey, let’s throw in SEC rules to prevent ANY short selling while we’re at it.
Regards,
Trond
This is a fancy way to say that whatever the market value of the debt is, that is what they have to say its worth. Now that the housing market is on the skids, a high risk, non-performing loan a bank made for $600,000 might only be sold for $400,000. Thus, that “loses” a third of its worth.
Remember that these are not really individual loans that we are talking here, but the CDOs that were packaged together and sold as asset-backed securities. But most people can more easily picture it in individual terms.
I do not support the government directly bailing out public companies. However, to prevent massive foreclosures and the resulting REAL pain from homeowners (yes, even silly ones who took on much more debt than they can repay), here’s an idea.
Until June 30, 2009, allow the government to refinance any home loan at today’s market value. The terms are really simple: 6% interest for ANY credit score, at 30 years, plus allowing up to 12 payments to be interest-only (pushing the loan out as many months).
We as taxpayers would eat a large chunk of change immediately; the loan mentioned above would cost $600,000 and we would only make P&I back slowly. But the taxpayers would recoup some costs over time and may even make money. With amount of bad debt of their backs, banks would not experience the credit freeze that they see now.
Part and parcel of this would be to change the mark-to-market rule. And hey, let’s throw in SEC rules to prevent ANY short selling while we’re at it.
Regards,
Trond
Byrne on the bailout
Patrick Byrne, President of Overstock and one of the first to publicly talk about the dangers of naked short selling (3+ years ago!!) commented last night about the proposed bailout. There is a link at the end to sign an e-petition if these are things you agree with.
Please take 1 minute to sign! You will get an email that you have to respond to, to confirm your signature. Thanks!
-Trond
SALT LAKE CITY, Sept. 24 /PRNewswire-FirstCall/ -- Overstock.com, Inc. (Nasdaq: OSTK) chairman and CEO Patrick M. Byrne comments on President Bush's September 24, 2008 speech outlining the President's market rescue plan.
Dr. Byrne commented: "This bailout is necessary to save the bacchanal that is our US financial system. However, at the core of the administration's plan is the assumption that Wall Street is worth saving. It is not. For years Wall Street has bossed Washington, DC around like they're hired flunkies, while preying on Main Street businesses and investors.
The federal government should use this opportunity to extract from Wall Street concessions that could never be extracted were Washington in its customary subordinate position. "If American taxpayers are to bailout the Power Elite, they should attach conditions. Taxpayers should share in any upside, and gaping flaws in the current system should be fixed. Towards that end, I believe that any bailout legislation should include at least the following protections:
1. Taxpayers need to share in the upside if the bailout works, to compensate them for the risk that the administration is forcing them to take. This could be accomplished through warrants on shares in the firms being bailed out, such as those Mr. Buffett extracted from Goldman Sachs.
2. The government should impose a tax on those that benefit most from bailout -- Wall Street itself. Perhaps a 0.25% transaction tax on all securities trades is in order? Such a tax would be insignificant to investors, while be largely borne by those that are merely speculators - including those that churn trades in an attempt to manipulate the markets.
3. Bailout or none, the government must fix underlying problems in our capital market. The fixes includes:
a. Reforming our stock settlement system so that trades actually settle promptly, precisely as Congress stipulated in 1934. This can be accomplished by putting in place a market-wide mandatory pre-borrow requirement (like the SEC did in the 30-day July 15, 2008 emergency order that protected the 19 financial institutions);
b. Creating the obligation that if a naked short seller fails to deliver a share, the broker-dealer must force a mandatory buy-in (as is done in civilized countries, such as Canada);
c. Tracking trades cradle-to-grave (rather than net blocks of trades against each other), so that it is obvious who the naked short sellers are and the total amounts they are stealing;
d. Providing regular, timely disclosure of when and how many shares have failed to deliver;
e. Enforcing the rules, including significant monetary penalties and jail time.
"Keynes said that an ocean of productivity can support a bubble of speculation, but an ocean of speculation cannot support a bubble of productivity. Washington has been captured by speculators at the expense of producers.
I have long been talking about systemic risk and potential financial crisis (see http://www.youtube.com/watch?v=SIHw7C73s3E for a three- minute video from as early as October 2005). I am proposing specific steps to fix the system. For those that agree with these fixes which protect Main Street Americans, I ask you to sign the electronic petition at http://mainstreetamericans.info."
Please take 1 minute to sign! You will get an email that you have to respond to, to confirm your signature. Thanks!
-Trond
SALT LAKE CITY, Sept. 24 /PRNewswire-FirstCall/ -- Overstock.com, Inc. (Nasdaq: OSTK) chairman and CEO Patrick M. Byrne comments on President Bush's September 24, 2008 speech outlining the President's market rescue plan.
Dr. Byrne commented: "This bailout is necessary to save the bacchanal that is our US financial system. However, at the core of the administration's plan is the assumption that Wall Street is worth saving. It is not. For years Wall Street has bossed Washington, DC around like they're hired flunkies, while preying on Main Street businesses and investors.
The federal government should use this opportunity to extract from Wall Street concessions that could never be extracted were Washington in its customary subordinate position. "If American taxpayers are to bailout the Power Elite, they should attach conditions. Taxpayers should share in any upside, and gaping flaws in the current system should be fixed. Towards that end, I believe that any bailout legislation should include at least the following protections:
1. Taxpayers need to share in the upside if the bailout works, to compensate them for the risk that the administration is forcing them to take. This could be accomplished through warrants on shares in the firms being bailed out, such as those Mr. Buffett extracted from Goldman Sachs.
2. The government should impose a tax on those that benefit most from bailout -- Wall Street itself. Perhaps a 0.25% transaction tax on all securities trades is in order? Such a tax would be insignificant to investors, while be largely borne by those that are merely speculators - including those that churn trades in an attempt to manipulate the markets.
3. Bailout or none, the government must fix underlying problems in our capital market. The fixes includes:
a. Reforming our stock settlement system so that trades actually settle promptly, precisely as Congress stipulated in 1934. This can be accomplished by putting in place a market-wide mandatory pre-borrow requirement (like the SEC did in the 30-day July 15, 2008 emergency order that protected the 19 financial institutions);
b. Creating the obligation that if a naked short seller fails to deliver a share, the broker-dealer must force a mandatory buy-in (as is done in civilized countries, such as Canada);
c. Tracking trades cradle-to-grave (rather than net blocks of trades against each other), so that it is obvious who the naked short sellers are and the total amounts they are stealing;
d. Providing regular, timely disclosure of when and how many shares have failed to deliver;
e. Enforcing the rules, including significant monetary penalties and jail time.
"Keynes said that an ocean of productivity can support a bubble of speculation, but an ocean of speculation cannot support a bubble of productivity. Washington has been captured by speculators at the expense of producers.
I have long been talking about systemic risk and potential financial crisis (see http://www.youtube.com/watch?v=SIHw7C73s3E for a three- minute video from as early as October 2005). I am proposing specific steps to fix the system. For those that agree with these fixes which protect Main Street Americans, I ask you to sign the electronic petition at http://mainstreetamericans.info."
Wednesday, September 17, 2008
Trond's World returns!
Hi there all,
Long time no post – I am swamped at work and a little weary of the overall market slump. When the overall market is against you and you are a perma-bull, then you do three things.
First, double check your stocks to ensure nothing has changed. If there are still the compelling reasons to own them as when you bought them in the first place, then you’re okay.
Now, IF you own them in a taxable account and you truly feel it may be quite some time before they come around, then you may want to sell some shares, take the tax loss, and wait 31 days to repurchase them. (31 days will maneuver you around the IRS “wash sale” rules)
Second, simply be patient. In my experience, it is nearly exactly when everyone gives up, that the market rebounds. You only have money in the stock market that is long term anyways, right? *grin*
Finally, when something you have your eyes on has dropped and dropped, and you still feel it is compelling enough, BUY. You can wait forever, trying to get the exact bottom and then when things do turn around, you put off buying because you perversely WANT it to go down again so you can buy near the low point.
Warren Buffett has famously said, “Be fearful when others are greedy, and greedy when others are fearful.” Fear runs rampant right now – so it may be time to cast around for bargains.
Note: I would still stay away from real estate, financials, and insurance stocks right now – I think there is still some pain left to come.
I’m glad the SEC has finally (sort of) cracked down on naked short selling today, but there is still some business to take care of. I’d like to see the uptick rule replaced – heck – I’d like to see ALL short selling disallowed. It creates artificial liquidity (= supply) which by nature dampens stock prices. But it’s a step in the right direction.
Finally, it has been too long since I’ve done anything with the Port24. Everything is depressed enough that I dislike selling calls – to get any premium, I risk getting called away at a price far below what I paid. I will hold what I have for a recovery, and actually engaged in my #3 point above – I bought some more today!
600 Elan at $10.32, 1500 Sangamo at $6.36, and 3000 ArQule at $2.91.
My cash is around $3470 and my portfolio is down a whopping 30% at this point.
I see a modest rebound for Elan, and shortly – there is an MS convention starting today and we should see some news on the recent PML cases from Europe. From everything I’ve heard and read, patients are NOT running away from Tysabri. Oct/Nov news of patient counts will probably come as a surprise to most analysts.
Regards,
Trond
Long time no post – I am swamped at work and a little weary of the overall market slump. When the overall market is against you and you are a perma-bull, then you do three things.
First, double check your stocks to ensure nothing has changed. If there are still the compelling reasons to own them as when you bought them in the first place, then you’re okay.
Now, IF you own them in a taxable account and you truly feel it may be quite some time before they come around, then you may want to sell some shares, take the tax loss, and wait 31 days to repurchase them. (31 days will maneuver you around the IRS “wash sale” rules)
Second, simply be patient. In my experience, it is nearly exactly when everyone gives up, that the market rebounds. You only have money in the stock market that is long term anyways, right? *grin*
Finally, when something you have your eyes on has dropped and dropped, and you still feel it is compelling enough, BUY. You can wait forever, trying to get the exact bottom and then when things do turn around, you put off buying because you perversely WANT it to go down again so you can buy near the low point.
Warren Buffett has famously said, “Be fearful when others are greedy, and greedy when others are fearful.” Fear runs rampant right now – so it may be time to cast around for bargains.
Note: I would still stay away from real estate, financials, and insurance stocks right now – I think there is still some pain left to come.
I’m glad the SEC has finally (sort of) cracked down on naked short selling today, but there is still some business to take care of. I’d like to see the uptick rule replaced – heck – I’d like to see ALL short selling disallowed. It creates artificial liquidity (= supply) which by nature dampens stock prices. But it’s a step in the right direction.
Finally, it has been too long since I’ve done anything with the Port24. Everything is depressed enough that I dislike selling calls – to get any premium, I risk getting called away at a price far below what I paid. I will hold what I have for a recovery, and actually engaged in my #3 point above – I bought some more today!
600 Elan at $10.32, 1500 Sangamo at $6.36, and 3000 ArQule at $2.91.
My cash is around $3470 and my portfolio is down a whopping 30% at this point.
I see a modest rebound for Elan, and shortly – there is an MS convention starting today and we should see some news on the recent PML cases from Europe. From everything I’ve heard and read, patients are NOT running away from Tysabri. Oct/Nov news of patient counts will probably come as a surprise to most analysts.
Regards,
Trond
Tuesday, July 29, 2008
Elan stumbles
Hi all,
Where to begin tonight? I have to admit I am a little glum, just from the share price point of view. Elan presented the detailed results from their Phase II trial tonight at ICAD – the International Conference on Alzheimer’s Disease – this is one of the two largest AD symposiums in the world (other one is the AAN). In June they had released summary results and by all indications it was a total success.
The trial was for their drug AAB-001 and involved 240 patients. 4 different doses were given, and half got the drug and half got placebo. So really, 30 people got the drug at each dose. Overall, they missed statistical significance on both the cognitive and functional endpoints for the study.
So why do I say it was a success?
First, Phase II trials are still mostly concerned with safety and determining dosing strength, and secondarily with efficacy. After looking through the results, they discovered that the non-carriers of a certain gene (APOe4) got statistically significant cognitive AND functional results from the drug, and even the carriers “trended” towards significance. Carriers of that gene, by the way, have already been proven to be a higher risk to develop AD, so it is not just out of left field to latch on to that subgroup.
How about safety? The largest problem for the carrier group at the highest dose was vascular edema (VE), which is a temporary swelling of the brain. None of the 12 affected patients were harmed and all recovered AND continued in the trial at a lower dose. However, because they “switched” mid-trial, their results were not counted, which hurt the overall trial – 12 extra patients in the denominator but not counted in the numerator! Add to that, the lowest dose was also found in the Phase 1 results to not have much if any impact, but they stayed with that dose in the Phase II trial to confirm – another 30 patients who really did not count except to hurt the overall study.
Yet even with those hiccups, they STILL found significant improvement over placebo in the non-carrier group.
Elan started a Phase III trial last December – 4000 patients worldwide; 2000 in the US and 2000 in Europe. Each of these have 1000 carriers and 1000 non-carriers, so even with the carrier reactions, they still saw enough significance to have them be half of the participants! This is an 18 months trial, again with both cognitive (measurement of mental decline) and functional (how do they actually function in the real world) endpoints.
So – tonight.
They gave all this and the actual numbers and P-values (basically the probability that the result achieved was real and not just a fluke) and some extra safety info. 3 patients given the drug died. Sounds bad, but the trial doctors were all unanimous in that the drug had no affect on those deaths – if they were mugged, they’d still be reported as having died during the trial. Yet the very first headline I saw from Reuters was that “Patients died in Elan’s Alzheimer’s trial”.
The share price was around $34 and sank during after-hours trading down to $23.
The CEO will be speaking right after market open tomorrow on CNBC, and I hope to hear something about pricing and when they might potentially file for an early FDA approval. If not, we may see low $20s for awhile.
All that said, I am still a staunch supporter. I think the drug works, (and with a medium strength dose even for the carriers) and in the worst case there is only 20 or so months for the trial to end. Even if only the non-carriers get approved, that is still tens of billions of profit, which would make it the best selling drug ever, by multiples.
Even without AAB-001, they have Tysabri and their nanotechnology drug delivery unit, which combined would value the company at around $35 per share. They still have a world class pipeline with other drugs for AD, Parkinson’s disease, and diabetes.
I think this is a world-class buying opportunity.
Regards,
Trond
Where to begin tonight? I have to admit I am a little glum, just from the share price point of view. Elan presented the detailed results from their Phase II trial tonight at ICAD – the International Conference on Alzheimer’s Disease – this is one of the two largest AD symposiums in the world (other one is the AAN). In June they had released summary results and by all indications it was a total success.
The trial was for their drug AAB-001 and involved 240 patients. 4 different doses were given, and half got the drug and half got placebo. So really, 30 people got the drug at each dose. Overall, they missed statistical significance on both the cognitive and functional endpoints for the study.
So why do I say it was a success?
First, Phase II trials are still mostly concerned with safety and determining dosing strength, and secondarily with efficacy. After looking through the results, they discovered that the non-carriers of a certain gene (APOe4) got statistically significant cognitive AND functional results from the drug, and even the carriers “trended” towards significance. Carriers of that gene, by the way, have already been proven to be a higher risk to develop AD, so it is not just out of left field to latch on to that subgroup.
How about safety? The largest problem for the carrier group at the highest dose was vascular edema (VE), which is a temporary swelling of the brain. None of the 12 affected patients were harmed and all recovered AND continued in the trial at a lower dose. However, because they “switched” mid-trial, their results were not counted, which hurt the overall trial – 12 extra patients in the denominator but not counted in the numerator! Add to that, the lowest dose was also found in the Phase 1 results to not have much if any impact, but they stayed with that dose in the Phase II trial to confirm – another 30 patients who really did not count except to hurt the overall study.
Yet even with those hiccups, they STILL found significant improvement over placebo in the non-carrier group.
Elan started a Phase III trial last December – 4000 patients worldwide; 2000 in the US and 2000 in Europe. Each of these have 1000 carriers and 1000 non-carriers, so even with the carrier reactions, they still saw enough significance to have them be half of the participants! This is an 18 months trial, again with both cognitive (measurement of mental decline) and functional (how do they actually function in the real world) endpoints.
So – tonight.
They gave all this and the actual numbers and P-values (basically the probability that the result achieved was real and not just a fluke) and some extra safety info. 3 patients given the drug died. Sounds bad, but the trial doctors were all unanimous in that the drug had no affect on those deaths – if they were mugged, they’d still be reported as having died during the trial. Yet the very first headline I saw from Reuters was that “Patients died in Elan’s Alzheimer’s trial”.
The share price was around $34 and sank during after-hours trading down to $23.
The CEO will be speaking right after market open tomorrow on CNBC, and I hope to hear something about pricing and when they might potentially file for an early FDA approval. If not, we may see low $20s for awhile.
All that said, I am still a staunch supporter. I think the drug works, (and with a medium strength dose even for the carriers) and in the worst case there is only 20 or so months for the trial to end. Even if only the non-carriers get approved, that is still tens of billions of profit, which would make it the best selling drug ever, by multiples.
Even without AAB-001, they have Tysabri and their nanotechnology drug delivery unit, which combined would value the company at around $35 per share. They still have a world class pipeline with other drugs for AD, Parkinson’s disease, and diabetes.
I think this is a world-class buying opportunity.
Regards,
Trond
Sunday, July 27, 2008
Port 24 Update - July expiration
Well, I am super busy at work right now and will be through mid August. So this will be a quickie post.
I was exercised on the Cardiome calls and kept my SuperGen and NVidia stock. I sold SuperGen on 7/25 at a loss -- the Dacogen trial was bad and I just don't see enough in the pipeline to keep the stock here. NVidia I will definely keep, although I am selling calls way below where I bought. Also sold calls (on 7/25/08) on Arena, Syneron, Taser, and calls on half my Neurocrine and Sangamo holdings.
My Elan holdings have no calls against them and I fully expect to sell some calls next Wednesday or so for either the $40s or $45s -- they release their detailed Alzheimer's Phase II results on 7/29 and I truly expect it to knock the socks off of Wall Street.
Dendreon announced last week that the interim results for the Provenge IMPACT trial will be available in October. Thus, my five August $7.50 calls will *probably* expire -- I am hoping for total success in the trial and so my five November calls at $12.50 may well be called away.
Taser had bad earnings, but selling calls at $5 to make some money -- same with Neurocrine but I have a bad feeling I will regret selling the 5s.
My current holdings are listed below: their value as-of 7/25 is $96,312 which along with recent cash update at $11,006 puts me at $107,270. That is a 7.27% return so far through 2.5 months -- annualized at about 35%.
Regards,
Trond
Holdings:
2000 NBIX (-10), 1000 ELN, 2000 DNDN (-10), 1200 TASR (-12), 2000 ARNA (-20), 1000 SGMO (-5), 400 NVDA (-4), 400 ELOS (-4)
I was exercised on the Cardiome calls and kept my SuperGen and NVidia stock. I sold SuperGen on 7/25 at a loss -- the Dacogen trial was bad and I just don't see enough in the pipeline to keep the stock here. NVidia I will definely keep, although I am selling calls way below where I bought. Also sold calls (on 7/25/08) on Arena, Syneron, Taser, and calls on half my Neurocrine and Sangamo holdings.
My Elan holdings have no calls against them and I fully expect to sell some calls next Wednesday or so for either the $40s or $45s -- they release their detailed Alzheimer's Phase II results on 7/29 and I truly expect it to knock the socks off of Wall Street.
Dendreon announced last week that the interim results for the Provenge IMPACT trial will be available in October. Thus, my five August $7.50 calls will *probably* expire -- I am hoping for total success in the trial and so my five November calls at $12.50 may well be called away.
Taser had bad earnings, but selling calls at $5 to make some money -- same with Neurocrine but I have a bad feeling I will regret selling the 5s.
My current holdings are listed below: their value as-of 7/25 is $96,312 which along with recent cash update at $11,006 puts me at $107,270. That is a 7.27% return so far through 2.5 months -- annualized at about 35%.
Regards,
Trond
Holdings:
2000 NBIX (-10), 1000 ELN, 2000 DNDN (-10), 1200 TASR (-12), 2000 ARNA (-20), 1000 SGMO (-5), 400 NVDA (-4), 400 ELOS (-4)
Tuesday, July 15, 2008
Early IRA withdrawals - 72(t) Distributions
Well, I am not in a place where I'm able to take early distributions yet, but I came across a nifty way to take distributions without the 10% penalty before age 59 1/2 if you are so inclined.
Note: PLEASE do not do this simply to get at some money early!! But, if you are in a sweet spot and have a couple million in an IRA and still have a few years until 59.5, read on!
72(t) Distributions
First, please note that you still get taxed at your marginal rate on the amount of the distribution. You are only saving yourself the 10% early withdrawal penalty!
Second, you have three methods of determining how much you withdraw -- you cannot just take any old amount.
Third, once you start taking these withdrawals, you have to continue for either five years or until you reach age 59 1/2 -- whichever in LONGER.
The three methods are:
1) Balance divided by your life expectancy.
2) Balance divided by an annuity factor.
3) Balance amortized across your life expectancy with an pre-specified growth rate.
Method 1 results in the smallest annual payment. 2 and 3 seem to usually come pretty close to the same amount, and they can be more than half again the amount from #1.
As always, consult a tax adviser and consider reading the tax code yourself (you were trying to go to sleep,right?). There is a calculator here (http://www.dinkytown.net/java/Retire72T.html) that allows you to see how much you could take now. Have fun!
Regards,
Trond
Note: PLEASE do not do this simply to get at some money early!! But, if you are in a sweet spot and have a couple million in an IRA and still have a few years until 59.5, read on!
72(t) Distributions
First, please note that you still get taxed at your marginal rate on the amount of the distribution. You are only saving yourself the 10% early withdrawal penalty!
Second, you have three methods of determining how much you withdraw -- you cannot just take any old amount.
Third, once you start taking these withdrawals, you have to continue for either five years or until you reach age 59 1/2 -- whichever in LONGER.
The three methods are:
1) Balance divided by your life expectancy.
2) Balance divided by an annuity factor.
3) Balance amortized across your life expectancy with an pre-specified growth rate.
Method 1 results in the smallest annual payment. 2 and 3 seem to usually come pretty close to the same amount, and they can be more than half again the amount from #1.
As always, consult a tax adviser and consider reading the tax code yourself (you were trying to go to sleep,right?). There is a calculator here (http://www.dinkytown.net/java/Retire72T.html) that allows you to see how much you could take now. Have fun!
Regards,
Trond
Port 24
Quickie post -- used up the rest of my cash this morning with 400 more Elan at $33.54. That puts me at $95.92 in cash and the following positions:
2000 SUPG (-20), 2000 NBIX, 1000 ELN, 2000 DNDN (-10), 1200 TASR, 2000 ARNA, 1000 SGMO, 500 CRME (-5), 400 NVDA (-4), 400 ELOS.
Cardiome should be exercised Friday, and SuperGen will be freed up. Elan should be pushing $40 or so by the first of August and I will either sell some shares outright or sell $40/$45 calls for August or Sept.
Regards,
Trond
2000 SUPG (-20), 2000 NBIX, 1000 ELN, 2000 DNDN (-10), 1200 TASR, 2000 ARNA, 1000 SGMO, 500 CRME (-5), 400 NVDA (-4), 400 ELOS.
Cardiome should be exercised Friday, and SuperGen will be freed up. Elan should be pushing $40 or so by the first of August and I will either sell some shares outright or sell $40/$45 calls for August or Sept.
Regards,
Trond
Friday, July 11, 2008
I can't resist -- one more DeepCapture story about JP Morgan and Bear Stearns...
Totally plagarized...
--------------------
Get 'em fellas!!
JP Morgan CEO is Crazy, Too. Time to Subpoena CNBC
July 9th, 2008 by Mark Mitchell
Certain journalists and convicted criminals with ties to hedge funds have suggested that we at Deep Capture are crazy because we believe some short-sellers deliberately destroy public companies for profit.
Last night, JP Morgan CEO Jamie Dimon was interviewed by Charlie Rose.
Rose said, “[Bear Stearns CEO] Alan Schwartz is quoted as saying.. that he thought [the demise of Bear Stearns] was premeditated [by short-sellers].
Dimon responded: “I would say where there is smoke, there’s fire. If someone knowingly starts a rumor or passes on a rumor, they should go to jail…This is even worse than insider trading. This is deliberate and malicious destruction of value and people’s lives. They shouldn’t go to jail for a short period of time. So if I was the SEC I’d find out who made the money and I’d investigate–emails, phone records, you name it–and I’d find out….There’s enough smoke around that I think there should be a full investigation…”
So now the CEO of JP Morgan is crazy, too. So is former Bear Stearns CEO Alan Schwartz. Lehman Brothers CEO Richard Fuld said something similar, so he must be a crackpot. The SEC itself claims to have begun an investigation. They’re all nuts.
Anyway, permit us to suggest an easy way to get this investigation moving: Send a subpoena to CNBC reporter Mark Faber.
On March 13 and March 14, Faber told CNBC viewers that a hedge fund manager – “a friend” whom he “trusts” – told him that Goldman Sachs had refused to accept Bear Stearn’s credit. This information was false. It was a deliberate, malicious rumor delivered to a friendly journalist in order to destroy Bear Stearns.
Find out who Faber’s hedge fund friend is. Case solved.
This would not be the first time that Faber reported misinformation in service to a hedge fund friend. He used to do it for Jim Cramer, back before Cramer became CNBC’s leading “journalist” – back when Cramer was running his own hedge fund. A former employee of Cramer’s hedge fund has written a book, “Trading with the Enemy,” in which he describes Cramer feeding Faber tips and illegally trading ahead of Faber’s reports on CNBC.
It is no small coincidence that a clique of journalists connected to Cramer regularly write false or misleading hatchet jobs on companies targeted by short-sellers connected to Cramer. And it is no coincidence that these same hedge funds have deliberately and maliciously sought to destroy dozens of public companies and people’s lives by circulating rumors, issuing bogus “independent financial research,” clogging Internet message boards with false information, filing bogus class-action lawsuits, getting the SEC and other government agencies to conduct dead-end investigations, and hiring convicted felons to harass CEOs. (And that’s not all; see “The Story of Deep Capture” for the gory details.)
It is also worth noting that in almost all of the companies targeted by these people, somebody has sold massive amounts of phantom stock to further drive down prices. Two companies targeted by these people are Lehman Brothers and Bear Stearns. Both have been victimized by phantom stock sellers.
We’d say somebody should investigate this. But that would be crazy.
http://www.deepcapture.com/
--------------------
Get 'em fellas!!
JP Morgan CEO is Crazy, Too. Time to Subpoena CNBC
July 9th, 2008 by Mark Mitchell
Certain journalists and convicted criminals with ties to hedge funds have suggested that we at Deep Capture are crazy because we believe some short-sellers deliberately destroy public companies for profit.
Last night, JP Morgan CEO Jamie Dimon was interviewed by Charlie Rose.
Rose said, “[Bear Stearns CEO] Alan Schwartz is quoted as saying.. that he thought [the demise of Bear Stearns] was premeditated [by short-sellers].
Dimon responded: “I would say where there is smoke, there’s fire. If someone knowingly starts a rumor or passes on a rumor, they should go to jail…This is even worse than insider trading. This is deliberate and malicious destruction of value and people’s lives. They shouldn’t go to jail for a short period of time. So if I was the SEC I’d find out who made the money and I’d investigate–emails, phone records, you name it–and I’d find out….There’s enough smoke around that I think there should be a full investigation…”
So now the CEO of JP Morgan is crazy, too. So is former Bear Stearns CEO Alan Schwartz. Lehman Brothers CEO Richard Fuld said something similar, so he must be a crackpot. The SEC itself claims to have begun an investigation. They’re all nuts.
Anyway, permit us to suggest an easy way to get this investigation moving: Send a subpoena to CNBC reporter Mark Faber.
On March 13 and March 14, Faber told CNBC viewers that a hedge fund manager – “a friend” whom he “trusts” – told him that Goldman Sachs had refused to accept Bear Stearn’s credit. This information was false. It was a deliberate, malicious rumor delivered to a friendly journalist in order to destroy Bear Stearns.
Find out who Faber’s hedge fund friend is. Case solved.
This would not be the first time that Faber reported misinformation in service to a hedge fund friend. He used to do it for Jim Cramer, back before Cramer became CNBC’s leading “journalist” – back when Cramer was running his own hedge fund. A former employee of Cramer’s hedge fund has written a book, “Trading with the Enemy,” in which he describes Cramer feeding Faber tips and illegally trading ahead of Faber’s reports on CNBC.
It is no small coincidence that a clique of journalists connected to Cramer regularly write false or misleading hatchet jobs on companies targeted by short-sellers connected to Cramer. And it is no coincidence that these same hedge funds have deliberately and maliciously sought to destroy dozens of public companies and people’s lives by circulating rumors, issuing bogus “independent financial research,” clogging Internet message boards with false information, filing bogus class-action lawsuits, getting the SEC and other government agencies to conduct dead-end investigations, and hiring convicted felons to harass CEOs. (And that’s not all; see “The Story of Deep Capture” for the gory details.)
It is also worth noting that in almost all of the companies targeted by these people, somebody has sold massive amounts of phantom stock to further drive down prices. Two companies targeted by these people are Lehman Brothers and Bear Stearns. Both have been victimized by phantom stock sellers.
We’d say somebody should investigate this. But that would be crazy.
http://www.deepcapture.com/
Finally - Port24 Update
Let's see where we're at, about two months into the Portfolio.
On 7/3/08 I had bought 400 Syneron for 15.04 and 400 more Elan for 33.70. So, I now have the following stocks (number in parentheses are the number of calls sold against them)
2000 SUPG (-20), 2000 NBIX, 600 ELN, 2000 DNDN (-10), 1200 TASR, 2000 ARNA, 1000 SGMO, 500 CRME (-5), 400 NVDA (-4), 400 ELOS
Cash balance is at $13,518.90, and the total market value is $100,875.92. That is a .87% return so far, which is obviously below my target. In my defense, I still have a number of July calls to sell -- which I hope to do today (time permitting at lunch!).
Supergen, Nvidia, and Taser are my biggest disappointments so far; Supergen missed on a clinical trial for Dacogen, Nvidia had a horrible quarter, and Taser lost the first lawsuit (out of 71 verdicts so far). Honestly, I will probably buy back the Supergen calls at a profit, and sell Supergen and Taser at a loss. I will make a final determination next week...
Elan is the biggest winner so far, having bought two sets of Elan that I've kept at $27.30 and $33.70, and the price now being $36.82. I am looking to crest $40 at the end of the month and depending on a spike, if any, following the ICAD results I will probably sell more calls on these shares at the next-higher $5 exercise price.
Regards,
Trond
On 7/3/08 I had bought 400 Syneron for 15.04 and 400 more Elan for 33.70. So, I now have the following stocks (number in parentheses are the number of calls sold against them)
2000 SUPG (-20), 2000 NBIX, 600 ELN, 2000 DNDN (-10), 1200 TASR, 2000 ARNA, 1000 SGMO, 500 CRME (-5), 400 NVDA (-4), 400 ELOS
Cash balance is at $13,518.90, and the total market value is $100,875.92. That is a .87% return so far, which is obviously below my target. In my defense, I still have a number of July calls to sell -- which I hope to do today (time permitting at lunch!).
Supergen, Nvidia, and Taser are my biggest disappointments so far; Supergen missed on a clinical trial for Dacogen, Nvidia had a horrible quarter, and Taser lost the first lawsuit (out of 71 verdicts so far). Honestly, I will probably buy back the Supergen calls at a profit, and sell Supergen and Taser at a loss. I will make a final determination next week...
Elan is the biggest winner so far, having bought two sets of Elan that I've kept at $27.30 and $33.70, and the price now being $36.82. I am looking to crest $40 at the end of the month and depending on a spike, if any, following the ICAD results I will probably sell more calls on these shares at the next-higher $5 exercise price.
Regards,
Trond
Monday, July 7, 2008
Various tidbits...
Well, okay so blog writing has to take a backseat to family, holidays, and work. I'll be better this coming week.
I wrote down two trades last Thursday but haven't had a chance to update my spreadsheet yet. I bought Elan (ELN) around $33.80 and Syneron Medical (ELOS) around $15ish. I will update early this week!
I also have some IRA info about taking penalty-free withdrawals BEFORE age 59 1/2 that may interest some people.
Hope everyone had a wonderful July Fourth!
Regards,
Trond
I wrote down two trades last Thursday but haven't had a chance to update my spreadsheet yet. I bought Elan (ELN) around $33.80 and Syneron Medical (ELOS) around $15ish. I will update early this week!
I also have some IRA info about taking penalty-free withdrawals BEFORE age 59 1/2 that may interest some people.
Hope everyone had a wonderful July Fourth!
Regards,
Trond
Thursday, June 26, 2008
June Update for Port 24
June expiration came and went -- hoo boy do I wish I hadn't been conservative on the last batch of Elan calls!
The good news is that I made just over $6,000 in call premium -- although some of that is through future expiration months. I made around 3.4% for just this month, easily surpassing my 2% goal. Most of my Elan and all my Wyeth was called away.
The bad news is that Taser and Sangamo lost quite a bit of actual share price. So now I have to make the decision whether to hold, and sell calls quite a bit out-of-the-money (for much less than my 2%/month goal), wait to see if they gain some back, or simply sell for the loss and put the money to work in a hopefully better place. I haven't decided for sure yet, but I am fairly sure I'll be holding on to Sangamo and selling the Taser.
With the money raised by the exercise of Elan and Wyeth, I have today bought 500 Cardiome @ 9.19 (-5 @ $1 at $10 July strike) and 400 Nvidia @ 19.28 (-4 @ .70 at $20 July strike).
Regards,
Trond
The good news is that I made just over $6,000 in call premium -- although some of that is through future expiration months. I made around 3.4% for just this month, easily surpassing my 2% goal. Most of my Elan and all my Wyeth was called away.
The bad news is that Taser and Sangamo lost quite a bit of actual share price. So now I have to make the decision whether to hold, and sell calls quite a bit out-of-the-money (for much less than my 2%/month goal), wait to see if they gain some back, or simply sell for the loss and put the money to work in a hopefully better place. I haven't decided for sure yet, but I am fairly sure I'll be holding on to Sangamo and selling the Taser.
With the money raised by the exercise of Elan and Wyeth, I have today bought 500 Cardiome @ 9.19 (-5 @ $1 at $10 July strike) and 400 Nvidia @ 19.28 (-4 @ .70 at $20 July strike).
Regards,
Trond
Wednesday, June 25, 2008
Websites
The time has come for me to explain why I placed some additional websites off to the side.
In no particular order...
The BMW Method:
No, this is NOT the car. Back when I read the Motley Fool and subscribed to its message boards (oh -- back in the good ol' days before they became a newsletter driven rag... *grin*) the BMW Method board was my favorite hangout.
(The New Paradigms board was good too -- that was where I first heard mention of Dendreon)
Here's another link that explains the methodology (http://bmwmethod.com/about.php) but in a nutshell, BMW observed how the CAGR (Compound Annual Growth Rate) of large, stable, well-managed companies tends to stay at a historical average over long periods of time. The price in the short term fluctuates wildly -- both to the high side and to the low. Using his graphs, it is visually VERY clear to see when a stock is at a compelling buy price, and likewise, when it may be time to sell.
Note - this is NOT charting or technical analysis -- but simply taking the idea of buying low and selling high into a framework of how a company is performing right now.
As an example, the Tylenol scare from Johnson & Johnson would have seen the stock price far below the long term CAGR curve... and after a little due diligence to see that the company's response was a logical and good move, and that the rest of the company's product sales were unaffected, a buy would have been in order. One wonders how some of the present day banking stocks appear on the graphs right now... but I personally would hold off for a couple more months on these financial-type stocks as I think we have some more pain and possibly consolidation to endure first.
Investor Village:
Yes, this is a stock message board. It comes with the obligatory warning that you encounter all sort of rude and idiotic posters, along with obviously paid shills to either pump or pan the stocks. But for all that, you can meet some truly amazing thinkers, scientists, and satirists.
Rule of thumb: when you read the posts on a stock board, do not post yourself for a while; absorb the interactions of the prolific posters and their styles. You don't have to copy them -- but at least understand who are the well known people. If you disagree with someone popular just to have fun, you will probably start a flame war and have people put you on ignore. Yes, it's high school all over again, and things frequently degenerate into stupid arguments.
On the plus side, you will learn some amazing things. Two of the boards I frequent are the Elan and Dendreon boards. I, who if the truth be known, abhored the life sciences in school, have learned much about Multiple Sclerosis, Alzheimer's Disease, and prostate cancer -- and can speak fairly fluently about those ills and the method of action (MOA) of various drugs to treat them. I know how FDA clinical trials are designed, and what kinds of statistical bars are set for them. And, I truly *enjoy* talking about those kinds of things now.
Of course you still have to do your own due diligence, but you can also learn things about the companies you follow that are not really a part of any news item you might read until the stock price has already reacted. For example, the Elan board dissected everything known about the Phase II Alzheimer's trial results (that were released in mid June) and in the majority, hit nearly every major aspect of the summary results squarely on the head -- which in turn meant that those who understood it would most likely be good news were already buying more shares before the release.
(It's no secret that the board consensus is that the full results to be released at the end of July are going to be stellar and bring the stock to even new heights)
As further examples, from the Elan board I have learned that the company has nearly $3 BILLION in losses over the last few years that they can use to write down future profits, meaning enormous tax savings.
And that Ireland treats royalty income ... (*ahem*) ... royally when it comes to taxes -- and they constructed their Tysabri contract with Biogen so that non-US sales are all treated as royalties.
And that they have the ability to simply say, "Now" to Eli Lilly and from that point on, they get to share 50% in costs and revenues for a different, gamma secretase-based Alzheimer's treatment that looks to be very promising also.
On the IV message boards, there are a number of nice features. You can sort by the "most recommended" posts so that you see the truly GOOD posts first and do not have to wade through fluff. You can ignore idiotic posters so that you don't even see their posts. It's easy to add boards and navigate around the site.
I am going to skip a number of people who deserve a mention, but if you look at the Elan board, look for posts from Liposghost, Jivetalkin, Doodah, Pinvestment, and OKZ. On the Dendreon board, Ocyan is the king of the science, and MingtheMerciless is worth reading for his sense of humor.
Marketocracy:
This one is easy and short -- you can create your own virtual mutual fund. To be ranked, you have to follow some simple rules that professional money managers have to follow too -- and here's the kicker: the 100 best portfolio managers actually get paid by the site, which has its own mutual funds based off those portfolios. Fun!
Frugal Upstate:
I've plugged this before, but this blog is written by one of my best friends, who happens to have a wonderful site about living frugally. The point isn't to *not* spend money, but to choose what you are spending your money on, and to enable the lifestyle where you can afford the things you truly want.
The Sanity Check and Deep Capture:
I actually think Deep Capture should be required reading before investing money in individual stocks. I don't want to sound like a conspiracy theorist, but it is totally obvious to me that hedge funds are an enormous threat to small companies, and especially biotechs. The ability to "sell short" shares of a company -- regardless of whether it is "naked shorting" or legal -- caps the stock price of companies that you and I invest in. The SEC and some of the media are unwilling to look at some of the facts and do their job.
Here are a couple examples:
The company Taser has about 60 million registered shares. At a recent annual meeting -- 80 million votes were cast.
Another company, (and the name escapes me at the moment) had one investor buy up the number of registered shares. He watched in amazement as thousands of shares continued trading on the open market over the next few weeks.
... And yet, total silence on the part of the media, Deeply Captured...
The Sanity Check is a blog by the anonymous tipper (called Bobo) who alerted Overstock CEO Patrick Byrne to the naked shorting campaign against his company, and who figures prominently in the Deep Capture story.
Please -- read Deep Capture for yourself and let me know what you think!
Regards,
Trond
In no particular order...
The BMW Method:
No, this is NOT the car. Back when I read the Motley Fool and subscribed to its message boards (oh -- back in the good ol' days before they became a newsletter driven rag... *grin*) the BMW Method board was my favorite hangout.
(The New Paradigms board was good too -- that was where I first heard mention of Dendreon)
Here's another link that explains the methodology (http://bmwmethod.com/about.php) but in a nutshell, BMW observed how the CAGR (Compound Annual Growth Rate) of large, stable, well-managed companies tends to stay at a historical average over long periods of time. The price in the short term fluctuates wildly -- both to the high side and to the low. Using his graphs, it is visually VERY clear to see when a stock is at a compelling buy price, and likewise, when it may be time to sell.
Note - this is NOT charting or technical analysis -- but simply taking the idea of buying low and selling high into a framework of how a company is performing right now.
As an example, the Tylenol scare from Johnson & Johnson would have seen the stock price far below the long term CAGR curve... and after a little due diligence to see that the company's response was a logical and good move, and that the rest of the company's product sales were unaffected, a buy would have been in order. One wonders how some of the present day banking stocks appear on the graphs right now... but I personally would hold off for a couple more months on these financial-type stocks as I think we have some more pain and possibly consolidation to endure first.
Investor Village:
Yes, this is a stock message board. It comes with the obligatory warning that you encounter all sort of rude and idiotic posters, along with obviously paid shills to either pump or pan the stocks. But for all that, you can meet some truly amazing thinkers, scientists, and satirists.
Rule of thumb: when you read the posts on a stock board, do not post yourself for a while; absorb the interactions of the prolific posters and their styles. You don't have to copy them -- but at least understand who are the well known people. If you disagree with someone popular just to have fun, you will probably start a flame war and have people put you on ignore. Yes, it's high school all over again, and things frequently degenerate into stupid arguments.
On the plus side, you will learn some amazing things. Two of the boards I frequent are the Elan and Dendreon boards. I, who if the truth be known, abhored the life sciences in school, have learned much about Multiple Sclerosis, Alzheimer's Disease, and prostate cancer -- and can speak fairly fluently about those ills and the method of action (MOA) of various drugs to treat them. I know how FDA clinical trials are designed, and what kinds of statistical bars are set for them. And, I truly *enjoy* talking about those kinds of things now.
Of course you still have to do your own due diligence, but you can also learn things about the companies you follow that are not really a part of any news item you might read until the stock price has already reacted. For example, the Elan board dissected everything known about the Phase II Alzheimer's trial results (that were released in mid June) and in the majority, hit nearly every major aspect of the summary results squarely on the head -- which in turn meant that those who understood it would most likely be good news were already buying more shares before the release.
(It's no secret that the board consensus is that the full results to be released at the end of July are going to be stellar and bring the stock to even new heights)
As further examples, from the Elan board I have learned that the company has nearly $3 BILLION in losses over the last few years that they can use to write down future profits, meaning enormous tax savings.
And that Ireland treats royalty income ... (*ahem*) ... royally when it comes to taxes -- and they constructed their Tysabri contract with Biogen so that non-US sales are all treated as royalties.
And that they have the ability to simply say, "Now" to Eli Lilly and from that point on, they get to share 50% in costs and revenues for a different, gamma secretase-based Alzheimer's treatment that looks to be very promising also.
On the IV message boards, there are a number of nice features. You can sort by the "most recommended" posts so that you see the truly GOOD posts first and do not have to wade through fluff. You can ignore idiotic posters so that you don't even see their posts. It's easy to add boards and navigate around the site.
I am going to skip a number of people who deserve a mention, but if you look at the Elan board, look for posts from Liposghost, Jivetalkin, Doodah, Pinvestment, and OKZ. On the Dendreon board, Ocyan is the king of the science, and MingtheMerciless is worth reading for his sense of humor.
Marketocracy:
This one is easy and short -- you can create your own virtual mutual fund. To be ranked, you have to follow some simple rules that professional money managers have to follow too -- and here's the kicker: the 100 best portfolio managers actually get paid by the site, which has its own mutual funds based off those portfolios. Fun!
Frugal Upstate:
I've plugged this before, but this blog is written by one of my best friends, who happens to have a wonderful site about living frugally. The point isn't to *not* spend money, but to choose what you are spending your money on, and to enable the lifestyle where you can afford the things you truly want.
The Sanity Check and Deep Capture:
I actually think Deep Capture should be required reading before investing money in individual stocks. I don't want to sound like a conspiracy theorist, but it is totally obvious to me that hedge funds are an enormous threat to small companies, and especially biotechs. The ability to "sell short" shares of a company -- regardless of whether it is "naked shorting" or legal -- caps the stock price of companies that you and I invest in. The SEC and some of the media are unwilling to look at some of the facts and do their job.
Here are a couple examples:
The company Taser has about 60 million registered shares. At a recent annual meeting -- 80 million votes were cast.
Another company, (and the name escapes me at the moment) had one investor buy up the number of registered shares. He watched in amazement as thousands of shares continued trading on the open market over the next few weeks.
... And yet, total silence on the part of the media, Deeply Captured...
The Sanity Check is a blog by the anonymous tipper (called Bobo) who alerted Overstock CEO Patrick Byrne to the naked shorting campaign against his company, and who figures prominently in the Deep Capture story.
Please -- read Deep Capture for yourself and let me know what you think!
Regards,
Trond
Tuesday, June 17, 2008
Alzheimer's relief?
Well, vindication is sweet.
I've been singing Elan's praises for over 2 years now -- starting at around $13 a share in early 2006. (Too bad I didn't see it in 2005 for $3 a share!!!)
If you haven't seen the news (although early news items were unwarrantably negatively slanted) one of the more even-handed articles is shown as a link below.
http://www.reuters.com/article/marketsNews/idINL1769229220080617?rpc=44
If you don't want to wait for it -- basically Elan's Phase II Alzheimer's Disease trial results (the summary info, at least) were released today -- full details will be released at the ICAD meeting in late July. (ICAD is the International Conference on Alzheimer's Disease).
Those results show that based on a gene, you could be helped a great deal by this drug, called AAB-001. People who do NOT carry the APOE gene had improvements in cognition (on two different scales) and also improvements in daily function. The gene carriers did not meet statistical significance. That isn't the whole story, either, as some who carry the gene encountered Vasogenic Edema -- temporary swelling within the brain -- and left the trial, which hurt the trial as they still counted against the participants in the study.
Elan had seen interim data last summer and based off that peek, started a Phase III trial which kicked off December of 2007.
That Phase III trial has two cohorts with carriers and two cohorts with non-carriers (one of each in the US and one external to the US). Each cohort has 1000 patients expected to be enrolled -- and the carrier group has a lower dosing amount scheduled to see if that helps the VE.
Largely unknown at this point, all cohorts are EACH powered to be a pivotal trial by the FDA, and after 6 months of safety data, Elan could file a BLA (biologic license application) for the drug.
I have several other points about Elan (Tysabri, nanotechnology, $3B of losses to carry forward, Ireland's favorable tax treatment of royalty income, multiple other Alzheimer's treatments in the works) but for now -- I truly hope for AD patients that this moves forward, and quickly.
This post is dedicated to my maternal grandfather, Carl H. Carlson, who suffered from Alzheimer's.
Regards,
Trond
I've been singing Elan's praises for over 2 years now -- starting at around $13 a share in early 2006. (Too bad I didn't see it in 2005 for $3 a share!!!)
If you haven't seen the news (although early news items were unwarrantably negatively slanted) one of the more even-handed articles is shown as a link below.
http://www.reuters.com/article/marketsNews/idINL1769229220080617?rpc=44
If you don't want to wait for it -- basically Elan's Phase II Alzheimer's Disease trial results (the summary info, at least) were released today -- full details will be released at the ICAD meeting in late July. (ICAD is the International Conference on Alzheimer's Disease).
Those results show that based on a gene, you could be helped a great deal by this drug, called AAB-001. People who do NOT carry the APOE gene had improvements in cognition (on two different scales) and also improvements in daily function. The gene carriers did not meet statistical significance. That isn't the whole story, either, as some who carry the gene encountered Vasogenic Edema -- temporary swelling within the brain -- and left the trial, which hurt the trial as they still counted against the participants in the study.
Elan had seen interim data last summer and based off that peek, started a Phase III trial which kicked off December of 2007.
That Phase III trial has two cohorts with carriers and two cohorts with non-carriers (one of each in the US and one external to the US). Each cohort has 1000 patients expected to be enrolled -- and the carrier group has a lower dosing amount scheduled to see if that helps the VE.
Largely unknown at this point, all cohorts are EACH powered to be a pivotal trial by the FDA, and after 6 months of safety data, Elan could file a BLA (biologic license application) for the drug.
I have several other points about Elan (Tysabri, nanotechnology, $3B of losses to carry forward, Ireland's favorable tax treatment of royalty income, multiple other Alzheimer's treatments in the works) but for now -- I truly hope for AD patients that this moves forward, and quickly.
This post is dedicated to my maternal grandfather, Carl H. Carlson, who suffered from Alzheimer's.
Regards,
Trond
Tuesday, June 10, 2008
Let's talk Covered Calls
Well I realized I've been mouthing off about the Portfolio 24 and the wonders of covered calls -- and haven't really explained what they ARE to newcomers.
Options experts can tune out for a couple paragraphs here -- with the knowledge that I do admit upfront that selling puts has the same risk/reward profile, and slightly less commissions. But -- keep in mind that most people reading this probably don't have the upfront capital or time or specialized charting techniques to find good put possibilities.
Let's get the basics out of the way.
There are two kinds of option contracts -- calls and puts.
Buying a call allows you the right to buy a stock at a certain price, by a certain date. Selling a call obliges you sell that stock to the call buyer at that certain price.
Buying a put allows you the right to sell a stock at a certain price, by a certain date. Finally, selling a put obliges you to buy that stock from the put buyer at that certain price.
Note that buyers have rights while sellers have obligations. Exercising a call means that the option buyer forces the option seller to consummate the deal.
That "certain price" is called the strike price, and the "certain date" is called the exercise date -- the third Friday of the month.
Ordinarily, option contracts are for bundles of 100 shares. But the prices are quoted at a per share basis. So if you see a premium price of $1.00, the contract would actually cost $100 plus whatever commission your brokerage charges.
So -- when you buy a call, you pay a premium for the right to purchase the stock by the exercise date for the strike price. Let's look at a concrete example.
Elan (ticker ELN) closed today at $24.65. The June
2008 exercise date call for a $25.00 strike price (I abbreviate this at the Jun08 $25 - ticker ELNFE) could be bought for $2.20. So if you buy three contracts, you pay $2.20 * 100 * 3 + commission ... at Scottrade this would cost you $670.75.
So you've spent $670 bucks -- let's look at the negative first. If the stock closes below $25 on June 20 (11 trading days from now) then you lose the entire amount. Ouch! (note -- I am not a huge fan of buying calls -- you have to be right in both the timeframe AND the price direction of a stock) The good news is that as Elan goes above $25, your option starts having intrinsic value -- for example if Elan is at $26, then a $25 call would be worth $1 intrinsically, since you could buy the call and then exercise and sell the shares on the market for $26.
So after the shares hit $27.20, you have all profit (you bought the calls for $2.20, so $2.20 + $25 strike price = $27.20. Excluding commisions, of course!) Keep in mind that the longer the option has until the exercise date, the more extrinsic (time) value the option will have, too. Remember, you bought the call when Elan was below $25 -- so all $2.20 was time value. So if the price zoomed tomorrow from $24.65 to $27.20, the option would not only be worth the $2.20
-- it would still have some time value too -- maybe being worth around $3.50 or so. You can also sell the option before the exercise date -- if you buy 3 contracts for $670 and sell them for $3.50 * 100 * 3
(- commission) = $1039.25 then you've made $370 off that $670 in one day! That, my friends, is the lure of options -- they are HIGHLY leveraged.
The exact terminology you use to trade options is very important. When you start your trade, either buying OR selling your call, you buy-to-open, or sell-to-open, respectively. Then when you end your transaction, either selling the call you bought, or buying back the call you sold, you buy-to-close or sell-to-close. If you buy-to-open, and then want to end it, but choose to sell-to-open, then you have two open transactions still!!
Okay, let's go over selling calls, and why I think they are a phenomenal method of generating returns.
Let's stay with Elan.
The Jun08 $25 sells for $1.90 (just like you have to buy a stock at a higher "ask" price than you could sell - "bid" - it for, option contracts generally have a pretty wide spread). Normally, if I were selling the call, I would set a limit trade for a little above the bid price -- maybe $2.00 in this case. You run the risk of not having the trade go through, but you also get a higher price if it goes through -- and usually during a trading day it will fluctuate a fair amount! Let's say this goes through at $1.90 though -- those same 3 contracts will give me an extra $1.90
* 100 * 3 (minus commission) = ~$560. Note -- whether exercised or not, I keep this premium of $560.
Okay -- before going through the rest of the example, I'm going to throw one more term at you. I always do Covered Calls. Remember, if you sell a call, you HAVE to sell the shares to the call buyer at the exercise price, if they choose to exercise it. If you are selling "naked" calls, then imagine this scenario.
You sold 3 $25 Elan calls at $1.90, and the stock skyrockets to $40. The call buyer exercises, and you have to buy 300 shares of Elan at the current $40 per share and then turn around and sell the shares to the call buyer at $25. You LOSE ($40 - 25 + 1.90) * 300 = $5070 (plus whatever commissions you are forced to pay)!!!
A covered call, on the other hand, means that you buy (or previously own) the stock, prior to selling the calls. You are "covered" against having to buy them at market price.
So let's see what happens to me, buying 300 shares at
$24.65 and selling 3 calls at $1.90. First I buy the 300 shares for $7,402 (remember your commission
costs!) and gain $560 premium from selling the 3 calls. 560/7402 = 7.5% return for the next 11 days!
(that translates into an annualized return of 250%, but who's counting? *grin*) And that $560 stays with me no matter what.
If Elan is below $25 on June 20, then I keep not only the $560 but my 300 shares (and probably turn around and sell the July $25 or $30 calls for more premium).
Do note that if the stock tanks to $15, then it is VERY small consolation to still have 300 shares of a
$15 stock that you bought 11 days ago for $25. So there is some risk here. This strategy is meant for stocks that you wouldn't mind holding onto for a while anyways, even it does go down!
Now, if Elan is above $25 on June 20, then my shares will be exercised away from me. The call buyer will force me to sell the 300 shares at $25.00, which means I get credited $7,500 (minus commission) = $7483.00.
That means I spent $7402, made $560, and made $7483 =
$641 for 11 days worth of work. That is 641/7402 = 8.66% return -- just imagine doing that 12 months in a row and you are looking at 100+% returns.
PLEASE DON'T EXPECT 100% RETURNS. Really. That is one example, and to get such high premiums usually means there is quite a bit of risk too. I think you can get 2% a month without undue risk, but nothing is ever certain. Except, err... taxes.
Let's talk about taxes. To avoid very complex reporting requirements, follow these guidelines:
Do not sell calls more than 2 strike prices below what the share price is.
Do not sell for a loss and then buy again -- wash sale rules apply to options too.
If you sell January options less than 60 days before the exercise date, let them expire or buy them back at a gain.
In future posts I will share some ideas, in as real time as I can, for situations that I think are ripe for selling covered calls. And of course, my Portfolio 24 can be tracked as I always post the trades within a day and keep track of commissions within it.
Lastly, if you decide covered calls are for you, please do several “dry runs” first – write down what you think might be a good trade and wait to see if everything happens as you expect. Your real money accounts are NOT a good place to learn!
Regards,
Trond
Options experts can tune out for a couple paragraphs here -- with the knowledge that I do admit upfront that selling puts has the same risk/reward profile, and slightly less commissions. But -- keep in mind that most people reading this probably don't have the upfront capital or time or specialized charting techniques to find good put possibilities.
Let's get the basics out of the way.
There are two kinds of option contracts -- calls and puts.
Buying a call allows you the right to buy a stock at a certain price, by a certain date. Selling a call obliges you sell that stock to the call buyer at that certain price.
Buying a put allows you the right to sell a stock at a certain price, by a certain date. Finally, selling a put obliges you to buy that stock from the put buyer at that certain price.
Note that buyers have rights while sellers have obligations. Exercising a call means that the option buyer forces the option seller to consummate the deal.
That "certain price" is called the strike price, and the "certain date" is called the exercise date -- the third Friday of the month.
Ordinarily, option contracts are for bundles of 100 shares. But the prices are quoted at a per share basis. So if you see a premium price of $1.00, the contract would actually cost $100 plus whatever commission your brokerage charges.
So -- when you buy a call, you pay a premium for the right to purchase the stock by the exercise date for the strike price. Let's look at a concrete example.
Elan (ticker ELN) closed today at $24.65. The June
2008 exercise date call for a $25.00 strike price (I abbreviate this at the Jun08 $25 - ticker ELNFE) could be bought for $2.20. So if you buy three contracts, you pay $2.20 * 100 * 3 + commission ... at Scottrade this would cost you $670.75.
So you've spent $670 bucks -- let's look at the negative first. If the stock closes below $25 on June 20 (11 trading days from now) then you lose the entire amount. Ouch! (note -- I am not a huge fan of buying calls -- you have to be right in both the timeframe AND the price direction of a stock) The good news is that as Elan goes above $25, your option starts having intrinsic value -- for example if Elan is at $26, then a $25 call would be worth $1 intrinsically, since you could buy the call and then exercise and sell the shares on the market for $26.
So after the shares hit $27.20, you have all profit (you bought the calls for $2.20, so $2.20 + $25 strike price = $27.20. Excluding commisions, of course!) Keep in mind that the longer the option has until the exercise date, the more extrinsic (time) value the option will have, too. Remember, you bought the call when Elan was below $25 -- so all $2.20 was time value. So if the price zoomed tomorrow from $24.65 to $27.20, the option would not only be worth the $2.20
-- it would still have some time value too -- maybe being worth around $3.50 or so. You can also sell the option before the exercise date -- if you buy 3 contracts for $670 and sell them for $3.50 * 100 * 3
(- commission) = $1039.25 then you've made $370 off that $670 in one day! That, my friends, is the lure of options -- they are HIGHLY leveraged.
The exact terminology you use to trade options is very important. When you start your trade, either buying OR selling your call, you buy-to-open, or sell-to-open, respectively. Then when you end your transaction, either selling the call you bought, or buying back the call you sold, you buy-to-close or sell-to-close. If you buy-to-open, and then want to end it, but choose to sell-to-open, then you have two open transactions still!!
Okay, let's go over selling calls, and why I think they are a phenomenal method of generating returns.
Let's stay with Elan.
The Jun08 $25 sells for $1.90 (just like you have to buy a stock at a higher "ask" price than you could sell - "bid" - it for, option contracts generally have a pretty wide spread). Normally, if I were selling the call, I would set a limit trade for a little above the bid price -- maybe $2.00 in this case. You run the risk of not having the trade go through, but you also get a higher price if it goes through -- and usually during a trading day it will fluctuate a fair amount! Let's say this goes through at $1.90 though -- those same 3 contracts will give me an extra $1.90
* 100 * 3 (minus commission) = ~$560. Note -- whether exercised or not, I keep this premium of $560.
Okay -- before going through the rest of the example, I'm going to throw one more term at you. I always do Covered Calls. Remember, if you sell a call, you HAVE to sell the shares to the call buyer at the exercise price, if they choose to exercise it. If you are selling "naked" calls, then imagine this scenario.
You sold 3 $25 Elan calls at $1.90, and the stock skyrockets to $40. The call buyer exercises, and you have to buy 300 shares of Elan at the current $40 per share and then turn around and sell the shares to the call buyer at $25. You LOSE ($40 - 25 + 1.90) * 300 = $5070 (plus whatever commissions you are forced to pay)!!!
A covered call, on the other hand, means that you buy (or previously own) the stock, prior to selling the calls. You are "covered" against having to buy them at market price.
So let's see what happens to me, buying 300 shares at
$24.65 and selling 3 calls at $1.90. First I buy the 300 shares for $7,402 (remember your commission
costs!) and gain $560 premium from selling the 3 calls. 560/7402 = 7.5% return for the next 11 days!
(that translates into an annualized return of 250%, but who's counting? *grin*) And that $560 stays with me no matter what.
If Elan is below $25 on June 20, then I keep not only the $560 but my 300 shares (and probably turn around and sell the July $25 or $30 calls for more premium).
Do note that if the stock tanks to $15, then it is VERY small consolation to still have 300 shares of a
$15 stock that you bought 11 days ago for $25. So there is some risk here. This strategy is meant for stocks that you wouldn't mind holding onto for a while anyways, even it does go down!
Now, if Elan is above $25 on June 20, then my shares will be exercised away from me. The call buyer will force me to sell the 300 shares at $25.00, which means I get credited $7,500 (minus commission) = $7483.00.
That means I spent $7402, made $560, and made $7483 =
$641 for 11 days worth of work. That is 641/7402 = 8.66% return -- just imagine doing that 12 months in a row and you are looking at 100+% returns.
PLEASE DON'T EXPECT 100% RETURNS. Really. That is one example, and to get such high premiums usually means there is quite a bit of risk too. I think you can get 2% a month without undue risk, but nothing is ever certain. Except, err... taxes.
Let's talk about taxes. To avoid very complex reporting requirements, follow these guidelines:
Do not sell calls more than 2 strike prices below what the share price is.
Do not sell for a loss and then buy again -- wash sale rules apply to options too.
If you sell January options less than 60 days before the exercise date, let them expire or buy them back at a gain.
In future posts I will share some ideas, in as real time as I can, for situations that I think are ripe for selling covered calls. And of course, my Portfolio 24 can be tracked as I always post the trades within a day and keep track of commissions within it.
Lastly, if you decide covered calls are for you, please do several “dry runs” first – write down what you think might be a good trade and wait to see if everything happens as you expect. Your real money accounts are NOT a good place to learn!
Regards,
Trond
Saturday, June 7, 2008
Retiring on 70% of your income
One person commented on my most recent 401(k) post (thanks, Ming!).
Although the main point of that entry was a way to jazz up the returns within your defined contribution plan (allocate most of your contributions towards stock mutual funds, and transfer more in during down stock market periods), I mentioned that most people underestimate the amount of money they will need in retirement: those assuming they could retire on 70% to 80% of their pre-retirement income could be in for a nasty shock. Ming took exception to this.
(I love comments, by the way, positive or negative – please keep them coming!)
His arguments make sense, by the way, for him. One's income and lifesytyle are so personal that you can't pigeonhole everything into nice, neat packages and say, “Voila, here's your plan!” Everyone's idea of what the ideal retirement situation will be different, and there is no “right” or “wrong.” Depending on expectations and what makes you comfortable, you might need thousands a month more, or less, than someone else in your golden years. The two things I would consider sad, though. are to have the amount in your retirement fund limit what you want to do, or to run out before you die.
Comment:
****
I'd have to say to a certain extent I disagree.
When you retire, you'll typically need less than what you need now. Especially if you've purchased a home. I honestly don't expect to continue giving my mortgage company any more money after I've paid off my mortgage. Honestly, my mortgage is about 30% of my current living expense, so I don't believe my standard of living would be lower when I retire at only 70% of my current income. And I can see the justification for people believing that they can live off 70% of their current income too.
Personally, I don't know if I'd stay in California eiher. I could easily move to another state where there is little or no property tax (ie. TX) or where there is no sales tax (ie. OR). I could even move up to Alaska (AK) where the US govt would give me a stipend to live there and make my home up there. Though I don't know if I could handle so many months with no sun light.
Now in terms of medical expenses, we'll just put a couple of democrats like Hiliary or Obama in office and all our medical expenses will be covered... or we could simply move to Canada.
****
So – the major points are 1) owning one's home will decrease your expenses 2) moving to lower income/tax advantaged locations 3) universal healthcare.
Let's deal with #3 first – and although I recognize the humor, let's treat this seriously. I don't have exact numbers in front of me but Medicare cost about 1/3 of a TRILLION dollars in 2006. I would submit that expanding Medicare to everyone, and having it cover “everything” will cost $4+ trillion dollars. With the US Gross Domestic Product at around $13T, I just don't see this happening. Even expanding it slightly will increase taxes for most of us.
(For a good read on both Social Security and Medicare funding, read http://www.arlingtoninstitute.org/wbp/economic-collapse/438#)
Regarding #1, of course you won't be paying off the mortgage forever. Here a couple thoughts, however.
Once the mortgage payment is gone, so is that sweet interest deduction. Do me a favor and recalculate what your taxes would have been this last year without that! And I keep harping on it – but taxes in general will be going up in the future!
Okay, so you're still looking at much more disposable income once the mortgage is gone. Recall my other point; once you are not spending 8+ hours a day at a job, you will want to DO something with that time. Recreational activities will become a larger percentage of your expenses – maybe not 30% but a good chunk of it. Will you enjoy dining out more? Travel? That hobby you always wanted to try your hand at?
Finally, as you get older, and assuming you stay in your house, will you need to spend some money to remodel your house to make it more comfortable and safer?
On #2, there are two points worth mentioning.
The first relates back to your mortgage – now you're selling your house here. When you buy your retirement home, is it a small condo in North Dakota? Or somewhere really nice, with lots of amenities and by the coast in a place where you still pay a “sunshine tax”? If you opt for luxury, you may end up, if not with a new mortgage, then perhaps with not quite the nest egg you thought you had in home equity.
The second is that there really is no such thing as a free lunch. If you move to a state with no income tax, then property taxes or rent is going to kill you. If there is no sales tax, then odds are that you'll see a hefty income tax.
Yes, if you are spending a good percentage now on your mortgage, then you may not need to replace all your income when you retire. But let's shift our focus to instead talk about that retirement and the "bucket" concept.
Ideally you will have multiple “buckets” to dip money out of at retirement. Having different income streams allows you some flexibility in managing income, taxes, and even inheritance issues.
Although the main point of that entry was a way to jazz up the returns within your defined contribution plan (allocate most of your contributions towards stock mutual funds, and transfer more in during down stock market periods), I mentioned that most people underestimate the amount of money they will need in retirement: those assuming they could retire on 70% to 80% of their pre-retirement income could be in for a nasty shock. Ming took exception to this.
(I love comments, by the way, positive or negative – please keep them coming!)
His arguments make sense, by the way, for him. One's income and lifesytyle are so personal that you can't pigeonhole everything into nice, neat packages and say, “Voila, here's your plan!” Everyone's idea of what the ideal retirement situation will be different, and there is no “right” or “wrong.” Depending on expectations and what makes you comfortable, you might need thousands a month more, or less, than someone else in your golden years. The two things I would consider sad, though. are to have the amount in your retirement fund limit what you want to do, or to run out before you die.
Comment:
****
I'd have to say to a certain extent I disagree.
When you retire, you'll typically need less than what you need now. Especially if you've purchased a home. I honestly don't expect to continue giving my mortgage company any more money after I've paid off my mortgage. Honestly, my mortgage is about 30% of my current living expense, so I don't believe my standard of living would be lower when I retire at only 70% of my current income. And I can see the justification for people believing that they can live off 70% of their current income too.
Personally, I don't know if I'd stay in California eiher. I could easily move to another state where there is little or no property tax (ie. TX) or where there is no sales tax (ie. OR). I could even move up to Alaska (AK) where the US govt would give me a stipend to live there and make my home up there. Though I don't know if I could handle so many months with no sun light.
Now in terms of medical expenses, we'll just put a couple of democrats like Hiliary or Obama in office and all our medical expenses will be covered... or we could simply move to Canada.
****
So – the major points are 1) owning one's home will decrease your expenses 2) moving to lower income/tax advantaged locations 3) universal healthcare.
Let's deal with #3 first – and although I recognize the humor, let's treat this seriously. I don't have exact numbers in front of me but Medicare cost about 1/3 of a TRILLION dollars in 2006. I would submit that expanding Medicare to everyone, and having it cover “everything” will cost $4+ trillion dollars. With the US Gross Domestic Product at around $13T, I just don't see this happening. Even expanding it slightly will increase taxes for most of us.
(For a good read on both Social Security and Medicare funding, read http://www.arlingtoninstitute.org/wbp/economic-collapse/438#)
Regarding #1, of course you won't be paying off the mortgage forever. Here a couple thoughts, however.
Once the mortgage payment is gone, so is that sweet interest deduction. Do me a favor and recalculate what your taxes would have been this last year without that! And I keep harping on it – but taxes in general will be going up in the future!
Okay, so you're still looking at much more disposable income once the mortgage is gone. Recall my other point; once you are not spending 8+ hours a day at a job, you will want to DO something with that time. Recreational activities will become a larger percentage of your expenses – maybe not 30% but a good chunk of it. Will you enjoy dining out more? Travel? That hobby you always wanted to try your hand at?
Finally, as you get older, and assuming you stay in your house, will you need to spend some money to remodel your house to make it more comfortable and safer?
On #2, there are two points worth mentioning.
The first relates back to your mortgage – now you're selling your house here. When you buy your retirement home, is it a small condo in North Dakota? Or somewhere really nice, with lots of amenities and by the coast in a place where you still pay a “sunshine tax”? If you opt for luxury, you may end up, if not with a new mortgage, then perhaps with not quite the nest egg you thought you had in home equity.
The second is that there really is no such thing as a free lunch. If you move to a state with no income tax, then property taxes or rent is going to kill you. If there is no sales tax, then odds are that you'll see a hefty income tax.
Yes, if you are spending a good percentage now on your mortgage, then you may not need to replace all your income when you retire. But let's shift our focus to instead talk about that retirement and the "bucket" concept.
Ideally you will have multiple “buckets” to dip money out of at retirement. Having different income streams allows you some flexibility in managing income, taxes, and even inheritance issues.
- First, looking at social security, benefits are taxable at 50, 85, or 100% of your payments, depending on your filing status and other taxable income. Given the size of the deficit and the disregard we've paid the trust fund, I think you have to plan on having payments highly means-tested and overall benefits reduced within the next twenty years or so.
- Most people will have some sort of funds within either traditional IRAs or 401(k)s. This too will be counted as taxable income – and again I think you have to at least plan for higher tax rates in the future. However, this portion of your funds is at least to a large degree under your control (most people do not fully fund their 401(k) or IRA at the legal limits). This portion may be one of the largest percentages of your assets at retirement.
- Roth IRA / 401(k)s – the golden goose. PLEASE fund this at the maximum allowed. I truly expect Congress to stop allowing these at some point when they realize they've given away the farm – I only hope they grandfather in existing balances.
- Pensions or other defined benefit plans seem to be going by the wayside. Too many seem to be slashing expected benefits, or coverages for me to be confident in them for the long term.
- Finally, if you have a large amount stashed away on non-retirements funds, congratulations! Being able to cash in a $20,000 CD every year to aid in your expenses, or sell some stocks from your brokerage account to help a child's down payment on their first home is wonderful. Again, I unfortunately just don't see most people having this option, as saving and investing INSTEAD of consuming doesn't seem to come naturally to most of us.
Some of these are beyond our control, such as Social Security. Some, such as brokerage accounts or CDs, are up to you to take the first step. The old saw "He didn't plan to fail -- he just failed to plan" comes to mind. Take the time now to review your budget and decide where you can free up money to invest in your future -- because it will only be as good as YOU make it.
Regards,
Trond
Thursday, June 5, 2008
Rebuttal on Sangamo (SGMO)
On May 29 I posted about Sangamo Biosciences. A comment on that post alluded to an analyst (Jonathan Aschoff) who issued a Sell rating and several negative comments about the company.
I pointed out that JA works for a botique analyst firm that seems to specialize in hatchet jobs. He was actually fined and fired (oh ,sorry, left the firm) from a prior job for impersonating a doctor when trying to get information on a clinical trial.
Further, that analyst issued the reccommendation without having even talked to anyone at Sangamo -- and a careful reading of the article shows it is nearly all opinion and scarce on fact.
Today I see an update from GARP research that refutes JA. It reads in part:
"Last week, an analyst initiated coverage on SGMO with a Sell rating in a report that we feel offers inaccurate conclusions.
Key points:
• After reviewing the scientific literature and discussing the questions raised a practicing diabetologist and others, we do not concur with these pessimistic ideas. We detail our case with (somewhat technical) point-by-point rebuttals, offer our own perspective, and maintain our Buy rating on SGMO shares. "
...
and ends with:
"Risks
As a development-stage biotechnology company, Sangamo Biosciences is a risky investment. This is partly mitigated by management’s careful monitoring of the company’s spending, by the utility of the technology for many non-therapeutic purposes, and by the attractiveness to potential partners of the ZFP and ZFN approaches to genetic engineering. Assuming certain milestone payments are earned, GARP estimates Sangamo’s burn rate for 2008-2010 at about $28 million per year. With about $73 million of net cash in the bank at the close of 1Q08, Sangamo has the resources to operate for nearly three years without additional financing, according to our estimate. However, ambitious clinical trial plans may deplete this hoard more rapidly. As with all early-stage clinical therapies, unforeseen problems could delay any of Sangamo’s programs. If patients experience severe adverse events that are related to ZFP therapy itself, this approach to gene therapy could be crippled. Sangamo’s capitalization is too low to enable it to take any of its clinical programs through expensive Phase III trials by itself. Meanwhile, doubts about ZFPs could hamstring the search for suitable pharma partners. Through 2011, revenues will spring from partners’ licensing, milestone, and royalty payments, rather than from sales of therapeutic products. "
If anyone would like the full article, please email me at Trond24@gmail.com
The company is presenting tomorrow at the Canaccord Adams Diabetes and Obesity Conference and throughout the weekend at the American Diabetes Association 68th Annual Scientific Sessions, both in San Francisco. Today the share price is up about 6% -- I expect to see it very volatile but up to $16 - $20 by year's end.
Regards,
Trond
I pointed out that JA works for a botique analyst firm that seems to specialize in hatchet jobs. He was actually fined and fired (oh ,sorry, left the firm) from a prior job for impersonating a doctor when trying to get information on a clinical trial.
Further, that analyst issued the reccommendation without having even talked to anyone at Sangamo -- and a careful reading of the article shows it is nearly all opinion and scarce on fact.
Today I see an update from GARP research that refutes JA. It reads in part:
"Last week, an analyst initiated coverage on SGMO with a Sell rating in a report that we feel offers inaccurate conclusions.
Key points:
• After reviewing the scientific literature and discussing the questions raised a practicing diabetologist and others, we do not concur with these pessimistic ideas. We detail our case with (somewhat technical) point-by-point rebuttals, offer our own perspective, and maintain our Buy rating on SGMO shares. "
...
and ends with:
"Risks
As a development-stage biotechnology company, Sangamo Biosciences is a risky investment. This is partly mitigated by management’s careful monitoring of the company’s spending, by the utility of the technology for many non-therapeutic purposes, and by the attractiveness to potential partners of the ZFP and ZFN approaches to genetic engineering. Assuming certain milestone payments are earned, GARP estimates Sangamo’s burn rate for 2008-2010 at about $28 million per year. With about $73 million of net cash in the bank at the close of 1Q08, Sangamo has the resources to operate for nearly three years without additional financing, according to our estimate. However, ambitious clinical trial plans may deplete this hoard more rapidly. As with all early-stage clinical therapies, unforeseen problems could delay any of Sangamo’s programs. If patients experience severe adverse events that are related to ZFP therapy itself, this approach to gene therapy could be crippled. Sangamo’s capitalization is too low to enable it to take any of its clinical programs through expensive Phase III trials by itself. Meanwhile, doubts about ZFPs could hamstring the search for suitable pharma partners. Through 2011, revenues will spring from partners’ licensing, milestone, and royalty payments, rather than from sales of therapeutic products. "
If anyone would like the full article, please email me at Trond24@gmail.com
The company is presenting tomorrow at the Canaccord Adams Diabetes and Obesity Conference and throughout the weekend at the American Diabetes Association 68th Annual Scientific Sessions, both in San Francisco. Today the share price is up about 6% -- I expect to see it very volatile but up to $16 - $20 by year's end.
Regards,
Trond
Subscribe to:
Posts (Atom)
