Long time readers and friends know, I love me some Dendreon.
I started reading up on Provenge back in 2006, was just about "all-in" in 2007 during the FDA's Advisory Committee meeting that okayed it, and watched in horror as the FDA then gave the company a Complete Response Letter (CRL) a month later.
I sold some over the next couple years, but was again an active investor in 2010 when they finally got approval. I sold some in the $50s, more in the $40s, and finally sold the very last amount (save one single Jan 2012 call option) around $35, last November. I stay on top of the company news, however, and consider myself a Dendreonaire.
It is with awe and a sickening feeling, then, to see the after hours cratering of the stock price, following the Q2 earnings call. A transcript of that call can be found here: http://seekingalpha.com/article/284445-dendreon-corp-s-ceo-discusses-q2-2011-results-earnings-call-transcript
Let me sum up the entire issue in one paragraph, if I may. Provenge costs $93,000 for a one month round of therapy (3 infusions). Prescribing doctors make about $6K for themselves, but have to "eat" the entire $93K on a credit line or their own resources until they get reimbursed by insurance/Medicare. Up until extremely late June, there was a question of whether Medicare would cover Provenge (and while it did get a determination for coverage, that fact isn't even posted on the proper website yet!). Thus, for cash flow purposes, few urology or oncology practices could prescribe more than 1 patient at a time. Moreover, due to manufacturing limitations and the scale/cost of the one approved plant through most of this period, the company was unwilling to push large scale scripts yet.
All of the preceding hopefully explains the carnage in the stock price. At the end of after hours trading, it was around $13.70 - down from a regular session closing price of $35!
So the proper question now is, what to do: buy, sell, or hold?
The price tomorrow? It could well be $10, or it could be $17.
I would suggest that if one has no position, and a holding period of a half year or more, this is an excellent time to buy, if within the range above.
If you own shares currently, I'd hold on, all else being equal.
I feel, given the facts known now, that the company will recover from this, and end the year 2011 over $20. It may be 2013 before we see the $40s again, but for an extremely long term p-o-v, I believe this is a solid company that should be a core position.
Regards,
Trond
Showing posts with label Provenge. Show all posts
Showing posts with label Provenge. Show all posts
Wednesday, August 3, 2011
Friday, April 30, 2010
Dendreon's conference call
Yesterday at 11:30 PDT, Dendreon hosted a conference call to discuss Provenge's approval. You can access a replay at www.Dendreon.com, and I urge you to listen if you want to continue holding your shares long term, as I intend to do with a majority of mine.
Dendreon now has to morph from an R&D company to a commercial enterprise. They seem to have a good start and an extremely capable management staff. A few highlights frm the call:
Pricing: They announced an infusion will be $31,000. That means a standard regimen of treatment will be $93,000, to the high side of previously assumed guidance.
No Rest-Of-World partnership: they truly intend to go it alone. While this has the potential for pitfalls, in the long term if they avoid a buyout they truly could be the "next Amgen" of biotech.
People will probably comment on the 2,000 patients they said can treat i the next twelve months, but how many will have caught the very optimistic comment that following all three plants coming on line at 100%, they "can meet demand"?
All in all, a great call. Sell some if you must, but hold on to some. I think there are great things in store for this not-so-little company.
Regards,
Trond
Dendreon now has to morph from an R&D company to a commercial enterprise. They seem to have a good start and an extremely capable management staff. A few highlights frm the call:
Pricing: They announced an infusion will be $31,000. That means a standard regimen of treatment will be $93,000, to the high side of previously assumed guidance.
No Rest-Of-World partnership: they truly intend to go it alone. While this has the potential for pitfalls, in the long term if they avoid a buyout they truly could be the "next Amgen" of biotech.
People will probably comment on the 2,000 patients they said can treat i the next twelve months, but how many will have caught the very optimistic comment that following all three plants coming on line at 100%, they "can meet demand"?
All in all, a great call. Sell some if you must, but hold on to some. I think there are great things in store for this not-so-little company.
Regards,
Trond
Thursday, April 29, 2010
Provenge Approved!!!!
Trading halted - Reuters and CNBC saying approved.
What a long, long road.
Regards,
Trond
What a long, long road.
Regards,
Trond
Thursday, November 5, 2009
Valuing biotechs
FezHenry asks how I come up with the valuations for the biotechs I suggested. That is a fair question, and not an easy one to answer.
When you have companies that make products, have revenue, and (gasp) actual profits, then the task can be a bit easier. There are a number of metrics such as price-to-earnings (P/E), or price-to-sales, that you can use to compare a company against another within the industry and see which is a better deal. I am suspicious of these metrics, by the way, on the whole, because earnings are massaged quite a bit, and even sales can be "managed" from quarter to quarter. But at least there are real numbers to work with!
Biotechs that have no products available for sale yet are much trickier. Look at BioCryst (BCRX) which today announced its first order for the IV version of its swine flu drug peramivir. The pricing was MUCH more aggressive than the Street expected and the stock responded with a 15% gain on the day! At this point, forecasting more sales really depends on how much more the government will stockpile, whether doctors start prescribing it off its emergency-use label, if and when the other countries that have negotiated with the company (Israel, China, e.g.) start ordering, and perhaps most immediately important - whether Japan gives its emergency use authorization and they get an order for 500,00 to 1M doses. That would be a $1B order minimum, or $200M at its Shionogi royalty rate - one order alone that is half its market cap! Can you say hello $20s or $30s, from it's $11.39 today? (and yes, I have a little BCRX in my IRA - not a lot but I think this one, too, will do well in the next year)
Back to the actual question though.
Let's take Dendreon for an example, simply because I can do these numbers in my sleep. Provenge is not approved yet, so we have no real metrics. We don't even have a good price point on them - Dr. Gold has stated the one plant they have now, at full capacity, can produce $500M to $1B of sales. It however, is only 25% built out presently... and to complicate matters, they are planning two new plants, each of which will produce 3/4 of the NJ facility.
Now, you probably should also look at the number of patients a year who will get prostate cancer, at the phase at which this will be prescribed (post-androgen therapy) and make an estimate of the market penetration, and then figure the number of patients who actually get the drug multiplied by the cost per treatment. Suffice it to say I believe within 5 years, these three plants will all be at full capacity. (1+3/4+3/4) plants at $500M to $1B gives you a range of revenue of $1.25B to $2.5B ( you can usually also figure in modest price increases per year, but I'm ignoring that, for now). You can use the midpoint, but I like to assume the low point as a reality check. So $1.25B of sales is our first checkpoint.
Now you can apply some other metrics. Five-to-seven times sales is one rule of thumb for projected market cap. So using 5 * 1.25 gives us a $6.25B market cap, 5 years out. Our market cap now is about $3.2B so it's nearly a double - call it $55 from today's $27.78.
But wait!
We now need to discount back to the present, adjusting for risk. I have assumed approval and I have assumed revenues into the future (they will not be making $1.25B next year). At least I assumed the lower levels for the other choices! We can say there is a 10% risk that Provenge is not approved, or has a delay. There may be a 15% discount per year into the future revenue stream. All told that $55 in the future may only be worth $32 or so today. Still a nice 10 to 15% discount to today's price! And please note if I use the midpoints of revenue and times sales, we would arrive at a market cap of $11.25B - or a share price of $90 or so. Discounted that would be $60ish, compared to today's $27.78 - nice! I like to be conservative but I also like to see what might be in store.
You can also use the P/E ratio, once you estimate sales, to arrive at a price. At $1.25B (again, the low point in assumptions) in sales, the margins should be around 25% so there would be $312M in profit. I am going to assume they will issue more shares within 5 years and there will be 150M shares outstanding. That would be over $2 per share in earnings, and with an assumed x25 earnings multiple, we arrive at $50 per share - slightly less than my $55 from the times-sales estimate.
Note all these example all estimate ONLY United States revenue. Dendreon is actively seeking a rest-of-world partner - where they will collect a royalty on ex-US sales. These royalties will have an effect on the bottom line, perhaps as much as 20-25% of the US revenue.
They also have other immunotherapeutics in their pipeline that will follow Provenge, all based off the same method of action. They have learned HOW to construct trials for cancer vaccines, and their agents for breast, ovarian, kidney, colon, and lung cancers should move along more quickly through trials than Provenge did. This will become a growth stock once investors realize cancer may become a manageable disease through these immunotherapeutics.
Whew - lecture on Dendreon is now over. The take away from this lesson should be that there are a HUGE number of assumptions that go into any kind of estimate like this. Patient count, adoption rate, pricing, earnings, competition, production capacity - any of these could be off by factors of 50% or more! My usual method is to try to use the low points of most ranges to come up with a basement level price, and then start tweaking numbers, as not ALL categories will be at the lowest possible point. If the basement price looks attractive compared to today's price, though, you just may have a winner.
Too, the companies do not have to succeed in the end, for the stock to move in the next year or so. Each of these are "story stocks", where there is news coming out in a specific time frame. I actually think my 50-100% price rise will be accomplished BEFORE the actual news. I want to buy in to companies where there is some reason to believe the drugs work, let the pre-announcement excitement build, and then sell some-to-most of the position before the actual news. If GNVC hits $1.50 next spring, I will sell about half of my holdings and then let the rest ride into the interim results.
I have a lot more work to do on some of these models, but I will say that GNVC and SGMO look incredibly mispriced right now, based on potential sales. GNVC could be worth $30+, from today's $0.93 - but the trial itself still may go for 2 years, with a year plus from then for approval, and ramp up. Are you willing to buy $1,000 now, for $30,000 in seven years? SGMO could be a paradigm changer - where every company that wants to modify a single gene has to pay a royalty to Sangamo. In ten years, they may have 1,000 contracts for $10K to $50K each, as a yearly income stream along with their own drug sales from the trials they are running now.
Biotechs may be pie-in-the-sky, but several will pan out, into gold. There WILL be the next Amgen, the next Genentech... I think a couple of the names I've thrown out there may just be those companies.
Regards,
Trond
When you have companies that make products, have revenue, and (gasp) actual profits, then the task can be a bit easier. There are a number of metrics such as price-to-earnings (P/E), or price-to-sales, that you can use to compare a company against another within the industry and see which is a better deal. I am suspicious of these metrics, by the way, on the whole, because earnings are massaged quite a bit, and even sales can be "managed" from quarter to quarter. But at least there are real numbers to work with!
Biotechs that have no products available for sale yet are much trickier. Look at BioCryst (BCRX) which today announced its first order for the IV version of its swine flu drug peramivir. The pricing was MUCH more aggressive than the Street expected and the stock responded with a 15% gain on the day! At this point, forecasting more sales really depends on how much more the government will stockpile, whether doctors start prescribing it off its emergency-use label, if and when the other countries that have negotiated with the company (Israel, China, e.g.) start ordering, and perhaps most immediately important - whether Japan gives its emergency use authorization and they get an order for 500,00 to 1M doses. That would be a $1B order minimum, or $200M at its Shionogi royalty rate - one order alone that is half its market cap! Can you say hello $20s or $30s, from it's $11.39 today? (and yes, I have a little BCRX in my IRA - not a lot but I think this one, too, will do well in the next year)
Back to the actual question though.
Let's take Dendreon for an example, simply because I can do these numbers in my sleep. Provenge is not approved yet, so we have no real metrics. We don't even have a good price point on them - Dr. Gold has stated the one plant they have now, at full capacity, can produce $500M to $1B of sales. It however, is only 25% built out presently... and to complicate matters, they are planning two new plants, each of which will produce 3/4 of the NJ facility.
Now, you probably should also look at the number of patients a year who will get prostate cancer, at the phase at which this will be prescribed (post-androgen therapy) and make an estimate of the market penetration, and then figure the number of patients who actually get the drug multiplied by the cost per treatment. Suffice it to say I believe within 5 years, these three plants will all be at full capacity. (1+3/4+3/4) plants at $500M to $1B gives you a range of revenue of $1.25B to $2.5B ( you can usually also figure in modest price increases per year, but I'm ignoring that, for now). You can use the midpoint, but I like to assume the low point as a reality check. So $1.25B of sales is our first checkpoint.
Now you can apply some other metrics. Five-to-seven times sales is one rule of thumb for projected market cap. So using 5 * 1.25 gives us a $6.25B market cap, 5 years out. Our market cap now is about $3.2B so it's nearly a double - call it $55 from today's $27.78.
But wait!
We now need to discount back to the present, adjusting for risk. I have assumed approval and I have assumed revenues into the future (they will not be making $1.25B next year). At least I assumed the lower levels for the other choices! We can say there is a 10% risk that Provenge is not approved, or has a delay. There may be a 15% discount per year into the future revenue stream. All told that $55 in the future may only be worth $32 or so today. Still a nice 10 to 15% discount to today's price! And please note if I use the midpoints of revenue and times sales, we would arrive at a market cap of $11.25B - or a share price of $90 or so. Discounted that would be $60ish, compared to today's $27.78 - nice! I like to be conservative but I also like to see what might be in store.
You can also use the P/E ratio, once you estimate sales, to arrive at a price. At $1.25B (again, the low point in assumptions) in sales, the margins should be around 25% so there would be $312M in profit. I am going to assume they will issue more shares within 5 years and there will be 150M shares outstanding. That would be over $2 per share in earnings, and with an assumed x25 earnings multiple, we arrive at $50 per share - slightly less than my $55 from the times-sales estimate.
Note all these example all estimate ONLY United States revenue. Dendreon is actively seeking a rest-of-world partner - where they will collect a royalty on ex-US sales. These royalties will have an effect on the bottom line, perhaps as much as 20-25% of the US revenue.
They also have other immunotherapeutics in their pipeline that will follow Provenge, all based off the same method of action. They have learned HOW to construct trials for cancer vaccines, and their agents for breast, ovarian, kidney, colon, and lung cancers should move along more quickly through trials than Provenge did. This will become a growth stock once investors realize cancer may become a manageable disease through these immunotherapeutics.
Whew - lecture on Dendreon is now over. The take away from this lesson should be that there are a HUGE number of assumptions that go into any kind of estimate like this. Patient count, adoption rate, pricing, earnings, competition, production capacity - any of these could be off by factors of 50% or more! My usual method is to try to use the low points of most ranges to come up with a basement level price, and then start tweaking numbers, as not ALL categories will be at the lowest possible point. If the basement price looks attractive compared to today's price, though, you just may have a winner.
Too, the companies do not have to succeed in the end, for the stock to move in the next year or so. Each of these are "story stocks", where there is news coming out in a specific time frame. I actually think my 50-100% price rise will be accomplished BEFORE the actual news. I want to buy in to companies where there is some reason to believe the drugs work, let the pre-announcement excitement build, and then sell some-to-most of the position before the actual news. If GNVC hits $1.50 next spring, I will sell about half of my holdings and then let the rest ride into the interim results.
I have a lot more work to do on some of these models, but I will say that GNVC and SGMO look incredibly mispriced right now, based on potential sales. GNVC could be worth $30+, from today's $0.93 - but the trial itself still may go for 2 years, with a year plus from then for approval, and ramp up. Are you willing to buy $1,000 now, for $30,000 in seven years? SGMO could be a paradigm changer - where every company that wants to modify a single gene has to pay a royalty to Sangamo. In ten years, they may have 1,000 contracts for $10K to $50K each, as a yearly income stream along with their own drug sales from the trials they are running now.
Biotechs may be pie-in-the-sky, but several will pan out, into gold. There WILL be the next Amgen, the next Genentech... I think a couple of the names I've thrown out there may just be those companies.
Regards,
Trond
Friday, June 19, 2009
Dendreon - title character at Deep Capture
"Then, on April 28, at 11:22 am — just hours before Dendreon’s triumph in Chicago – an anonymous message board author on Yahoo! Finance posted this message: “HIGH PROBABILITY OF MASSIVE BEAR RAID…DNDN [Dendreon] could easily drop 50% on a massive bear raid…its coming today@12:30 pm central.”
Just minutes before 12:30 pm central, Dendreon’s stock price began to fall. It didn’t just fall–it nosedived from $24 to under $8 … in 75 seconds. That’s correct, during a period of 75 seconds, more than 4,000 trades were placed, totaling 3 million shares, or about 50% of Dendreon’s (spectacularly high) average daily volume. Given that the message board poster knew what was coming, it is a safe bet that this was a coordinated, illegal naked short selling attack. And just in case you still didn’t get this – it caused Dendreon’s share price to lose more than 65% of its value – in just 75 seconds flat."
http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-1-of-15/
Wow is all I can say. I know almost all of this from following the stock in the last 2 1/2 years, but it is an amazing story.
Regards,
Trond
Just minutes before 12:30 pm central, Dendreon’s stock price began to fall. It didn’t just fall–it nosedived from $24 to under $8 … in 75 seconds. That’s correct, during a period of 75 seconds, more than 4,000 trades were placed, totaling 3 million shares, or about 50% of Dendreon’s (spectacularly high) average daily volume. Given that the message board poster knew what was coming, it is a safe bet that this was a coordinated, illegal naked short selling attack. And just in case you still didn’t get this – it caused Dendreon’s share price to lose more than 65% of its value – in just 75 seconds flat."
http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-1-of-15/
Wow is all I can say. I know almost all of this from following the stock in the last 2 1/2 years, but it is an amazing story.
Regards,
Trond
Friday, June 5, 2009
Dendreon: "Riskless"?
When Dendreon received the FDA's Complete Response Letter in May 2007, there were two things that were said to be the reason for the non-approval of Provenge.
One was that they needed more clinical trial data; and the at-the-time ongoing IMPACT trial was going to fulfill that need.
The second was a Form 483 from the CMC section. Basically, something in the manufacturing part wasn't up to snuff.
In April we learned that the IMPACT trial succeeded, and wildly so. Unfortunately, the company was never very forthright on exactly what caused the Form 483. They said it was something that could be corrected; but as investors in Discovery Labs (DSCO) know, that is cold comfort: DSCO has now received THREE 483s and is still not approved.
Yesterday Deutche Bank upgraded Dendreon, saying their research indicated the 483 was for two main reasons: barcoding and documentation issues. If this is true, then these truly are easily fixed things and there would be NO remaining regulatory risks for Dendreon.
Regards,
Trond
Deutche:
We believe CMC issues will likely not delay FDA approval. There is some concern remaining CMC issues related to Provenge could delay approval. One investor concern is that there is risk to the Provenge manufacturing process, which could translate into a delay in FDA approval. This concern stems from the FDA’s 2007 complete response letter, in which additional information with respect to the chemistry manufacturing and controls (CMC) section of the BLA was requested.
Management believes it has addressed the issues brought up in the 483. While Dendreon expects it will have another inspection, the company does believe it has addressed the issues raised in the original 483 issued following a PAI (pre-approval inspection) in 2007. It has stated that it has kept the manufacturing facility in Morris Plains, NJ “PAI validated”, meaning that the company has been running it at lower levels so that it remains a validated class 100 space and meets a number of specifications. The company has also stated that it has had preliminary discussions with the agency on most of the 483 issues. Key issues described in the 483 related to bar-coding samples & documenting rules In our view, the issues raised in the 483 from the inspection that took place from February 12 to February 17 appear very mild. We believe the most important comment on the 483 was related to the request for more data on the handling of multiple samples in the same room as well as quality control steps used for maintaining the identity of the samples (i.e. bar codes).
The rest of the issues relate primarily to Standard Operating Procedure (SOP) documents that
basically describe various rules for certain procedures (the inspectors believed certain additions needed to be made in the documents). We believe that the issues raised in the 483 were likely easily addressed by the company, as in various conversations with management it has discussed using a bar-code system. A detailed list of issues raised in the 483 is available in the figure on the next page. In our opinion, there is likely little risk to manufacturing process for BLA approval
The manufacturing process and control systems for Provenge have been in place for many years and have been utilized during the clinical trial (over 1000 patient samples have been made in clinical trials). We believe the company has likely addressed any outstanding issues the FDA had in the original 483 because it has had time to do so and because the issues seem relatively easy to fix. Dendreon has had the advantage of having the FDA review its CMC section before and has had two years to implement any issues raised. What else gives us confidence? Many steps of the process are not unique to Provenge. The FDA has had experience managing patient-specific products such as diagnostic tests that have quality control measures in place that are similar to those for Provenge. The leukapheresis process is also well known by the FDA and many centers conduct the process on a daily basis for other procedures. Diagnostic testing frequently uses bar coding and quality assurance procedures to keep samples from getting mixed up. Finally, the antigen activation steps that take place at the NJ facility are not that complex, in our view. We believe the greatest challenge will be scaling up the process in time for launch and getting more physicians set up with infusion ability (to be discussed in a later section) Given patient awareness and lack of other therapies, we believe many patients will want Provenge. In addition to the ~30,000 new patients with metastatic disease every year, there are approximately ~70,000 existing metastatic patients who may want therapy. We believe the current plant will only provide for ~10,000 patients at peak and may only be able to supply ~2500 patients in the first 6-9 months of launch.
One was that they needed more clinical trial data; and the at-the-time ongoing IMPACT trial was going to fulfill that need.
The second was a Form 483 from the CMC section. Basically, something in the manufacturing part wasn't up to snuff.
In April we learned that the IMPACT trial succeeded, and wildly so. Unfortunately, the company was never very forthright on exactly what caused the Form 483. They said it was something that could be corrected; but as investors in Discovery Labs (DSCO) know, that is cold comfort: DSCO has now received THREE 483s and is still not approved.
Yesterday Deutche Bank upgraded Dendreon, saying their research indicated the 483 was for two main reasons: barcoding and documentation issues. If this is true, then these truly are easily fixed things and there would be NO remaining regulatory risks for Dendreon.
Regards,
Trond
Deutche:
We believe CMC issues will likely not delay FDA approval. There is some concern remaining CMC issues related to Provenge could delay approval. One investor concern is that there is risk to the Provenge manufacturing process, which could translate into a delay in FDA approval. This concern stems from the FDA’s 2007 complete response letter, in which additional information with respect to the chemistry manufacturing and controls (CMC) section of the BLA was requested.
Management believes it has addressed the issues brought up in the 483. While Dendreon expects it will have another inspection, the company does believe it has addressed the issues raised in the original 483 issued following a PAI (pre-approval inspection) in 2007. It has stated that it has kept the manufacturing facility in Morris Plains, NJ “PAI validated”, meaning that the company has been running it at lower levels so that it remains a validated class 100 space and meets a number of specifications. The company has also stated that it has had preliminary discussions with the agency on most of the 483 issues. Key issues described in the 483 related to bar-coding samples & documenting rules In our view, the issues raised in the 483 from the inspection that took place from February 12 to February 17 appear very mild. We believe the most important comment on the 483 was related to the request for more data on the handling of multiple samples in the same room as well as quality control steps used for maintaining the identity of the samples (i.e. bar codes).
The rest of the issues relate primarily to Standard Operating Procedure (SOP) documents that
basically describe various rules for certain procedures (the inspectors believed certain additions needed to be made in the documents). We believe that the issues raised in the 483 were likely easily addressed by the company, as in various conversations with management it has discussed using a bar-code system. A detailed list of issues raised in the 483 is available in the figure on the next page. In our opinion, there is likely little risk to manufacturing process for BLA approval
The manufacturing process and control systems for Provenge have been in place for many years and have been utilized during the clinical trial (over 1000 patient samples have been made in clinical trials). We believe the company has likely addressed any outstanding issues the FDA had in the original 483 because it has had time to do so and because the issues seem relatively easy to fix. Dendreon has had the advantage of having the FDA review its CMC section before and has had two years to implement any issues raised. What else gives us confidence? Many steps of the process are not unique to Provenge. The FDA has had experience managing patient-specific products such as diagnostic tests that have quality control measures in place that are similar to those for Provenge. The leukapheresis process is also well known by the FDA and many centers conduct the process on a daily basis for other procedures. Diagnostic testing frequently uses bar coding and quality assurance procedures to keep samples from getting mixed up. Finally, the antigen activation steps that take place at the NJ facility are not that complex, in our view. We believe the greatest challenge will be scaling up the process in time for launch and getting more physicians set up with infusion ability (to be discussed in a later section) Given patient awareness and lack of other therapies, we believe many patients will want Provenge. In addition to the ~30,000 new patients with metastatic disease every year, there are approximately ~70,000 existing metastatic patients who may want therapy. We believe the current plant will only provide for ~10,000 patients at peak and may only be able to supply ~2500 patients in the first 6-9 months of launch.
Wednesday, April 29, 2009
Dendreon wins! SEC loses...
I cannot wait until I can retire with enough cash stored under my mattress.
But first! Dendreon presented the IMPACT data yesterday and it pretty much validated everything they said about Provenge. Longer survival. In a patient population where the average placebo life expectancy was 21.7 months, Provenge conferred an extra 4.1 months... nearly 20% longer life. And at the 3 year mark, 38% of Provenge patients were still alive versus only 21% of placebo.
In the 93 seconds before trading was halted before the data presentation, the share price was manipulated down from $25 to $7.50, closing before halt at $11 something! A lot of short-sellers managed to cover at a good price. Investing primarily in micro and small cap biotechs as I do, I wish I could say this was extra-ordinary but ... it isn't. The SEC needs to do it's job and stop this crap from happening.
It's a great day for prostate cancer patients. Congratulations to Dendreon!
Regards,
Trond
But first! Dendreon presented the IMPACT data yesterday and it pretty much validated everything they said about Provenge. Longer survival. In a patient population where the average placebo life expectancy was 21.7 months, Provenge conferred an extra 4.1 months... nearly 20% longer life. And at the 3 year mark, 38% of Provenge patients were still alive versus only 21% of placebo.
In the 93 seconds before trading was halted before the data presentation, the share price was manipulated down from $25 to $7.50, closing before halt at $11 something! A lot of short-sellers managed to cover at a good price. Investing primarily in micro and small cap biotechs as I do, I wish I could say this was extra-ordinary but ... it isn't. The SEC needs to do it's job and stop this crap from happening.
It's a great day for prostate cancer patients. Congratulations to Dendreon!
Regards,
Trond
Friday, April 17, 2009
Volatility, Dendreon, and Elan
Well let's tackle the day.
On my QQQQ volatility play a couple posts ago, I had bought 2 April $30 calls for $310 total and sold 3 April $31 puts for $350. Yesterday the calls would have been sold for $660, while the puts were worthless, and held for today in case the market tanks (which does not look like it will happen). So this play was an exact net gain of zero, taking commissions into account.
A couple notes on this. The 2x3 nature is an odd play. If it doubles to the calls, it may or may not be profitable. If it doubled to the puts, I would have had an easy 25% or more return. I only gave myself two weeks on this one, and typically I'd go for the "month out" expiration rather than the upcoming one. Finally, playing the QQQQ is probably a mistake, as there is QID and QLD; exchange traded funds which double the percentage returns of the QQQQ. So utilizing options, a double is more easily found.
Dendreon:
They will be presenting the IMPACT Provenge results at the American Urological Association meeting on April 28th. The CEO has said the results are "robust" and "unambiguous", so I have no doubt they easily cleared the 22% HR needed for statistical significance.
Elan:
Biogen announced earnings last night and said Tysabri growth was in line with expectations -- neither bad nor great. They now have about 39,800 patients worldwide -- if they are going to hit 100K patients by the end of 2010 then we really need a kickstart in the next couple quarters -- but it probably will not happen. Who cares? Slow and steady growth is fine for me -- and we are past the "blockbuster" status of $1B in sales now. Bring on 75K patients!
Regards,
Trond
On my QQQQ volatility play a couple posts ago, I had bought 2 April $30 calls for $310 total and sold 3 April $31 puts for $350. Yesterday the calls would have been sold for $660, while the puts were worthless, and held for today in case the market tanks (which does not look like it will happen). So this play was an exact net gain of zero, taking commissions into account.
A couple notes on this. The 2x3 nature is an odd play. If it doubles to the calls, it may or may not be profitable. If it doubled to the puts, I would have had an easy 25% or more return. I only gave myself two weeks on this one, and typically I'd go for the "month out" expiration rather than the upcoming one. Finally, playing the QQQQ is probably a mistake, as there is QID and QLD; exchange traded funds which double the percentage returns of the QQQQ. So utilizing options, a double is more easily found.
Dendreon:
They will be presenting the IMPACT Provenge results at the American Urological Association meeting on April 28th. The CEO has said the results are "robust" and "unambiguous", so I have no doubt they easily cleared the 22% HR needed for statistical significance.
Elan:
Biogen announced earnings last night and said Tysabri growth was in line with expectations -- neither bad nor great. They now have about 39,800 patients worldwide -- if they are going to hit 100K patients by the end of 2010 then we really need a kickstart in the next couple quarters -- but it probably will not happen. Who cares? Slow and steady growth is fine for me -- and we are past the "blockbuster" status of $1B in sales now. Bring on 75K patients!
Regards,
Trond
Tuesday, April 14, 2009
Dendreon passes with flying colors
Dendreon's IMPACT trial met "unambiguous" statistical significance.
That's enough for me... lots of details out there remain to be shown at the AUA meeting on 4/28, but they passed. They will resubmit the BLA in the fourth quarter - no other real news.
Congratulations to Dendreon, and to cancer patients. Bring on the pipeline!
Regards,
Trond
That's enough for me... lots of details out there remain to be shown at the AUA meeting on 4/28, but they passed. They will resubmit the BLA in the fourth quarter - no other real news.
Congratulations to Dendreon, and to cancer patients. Bring on the pipeline!
Regards,
Trond
Friday, April 10, 2009
Updates - Dendreon and Elan
Well, I am going to cheat and basically cut & paste an email I just sent to a few folks:
Dendreon:
Here we go!! We’ll know the final results by the 28th at the latest. We’re at $6.30 now and it’ll be:
a repeat of 2007, going to $20 or so (on a statistically significant results)
bouncing around between $4 and $10 (if the results are very close to stat sig – they’ve indicated they will refile anyways, if this happens)
drop to $1 or so (if a large miss). I do not see this happening at all because 6 months ago the interim already showed a 20% reduction of risk of death from the drug – and they only need a 22% reduction at the final.
I personally think it’ll be a pretty good result. If we see $20+, you may want to sell half of what you have and let the rest stay for approval.
Elan:
Earnings call are coming up -- BIIB on the 16th and Elan on the 22nd. So we'll know Tysabri numbers. Last known is 37,100 worldwide at the end of 2008. I am actually unsure if this includes the 600 in trials or if it's only commercial? I suspect it is total, as all other reports show it that way.
IF we return to close to 200/week net adds, this would be about 2,400 new patients and put us just shy of 40K. So I view anything north of 40K as pretty spectacular. One thing to keep in mind is that the EU is pretty fragmented and each county has to approve Tysabri and the insurance costs individually. So uptake is slower but starts gathering steam a few quarters after each country finally approves it. We're close to snowballing territory, I think ... may be 1 or 2 more quarters though.
AAB-001 - probably no news. More details of how they are approaching the 2 mg dose of non-carriers that they dropped, but that is just noise. I don't expect anything until end of this year, IF they take an interim and it's good. Still remotely possible that they file a BLA at the end of the year based on the non-carrier phase II results and 6-9 months safety data from the III. I doubt this now, as the dropped 2 mg group was because of vascular edema. Too much safety noise and the 2.0 mg group taken out would be post-hoc. Bummer!
Sale of the company? Partial sale? I don't think they'd release that at an earnings call. I unfortunately still think we'll see a buyout before years end simply because the market cap is too attractive.
I bought more last week at $5.67. It may bounce around but I don’t think it’ll go lower than $4, and I think we’ll start seeing it go up again IF Tysabri numbers start increasing at an increasing rate again (which I view as likely).
Regards,
Trond
Dendreon:
Here we go!! We’ll know the final results by the 28th at the latest. We’re at $6.30 now and it’ll be:
a repeat of 2007, going to $20 or so (on a statistically significant results)
bouncing around between $4 and $10 (if the results are very close to stat sig – they’ve indicated they will refile anyways, if this happens)
drop to $1 or so (if a large miss). I do not see this happening at all because 6 months ago the interim already showed a 20% reduction of risk of death from the drug – and they only need a 22% reduction at the final.
I personally think it’ll be a pretty good result. If we see $20+, you may want to sell half of what you have and let the rest stay for approval.
Elan:
Earnings call are coming up -- BIIB on the 16th and Elan on the 22nd. So we'll know Tysabri numbers. Last known is 37,100 worldwide at the end of 2008. I am actually unsure if this includes the 600 in trials or if it's only commercial? I suspect it is total, as all other reports show it that way.
IF we return to close to 200/week net adds, this would be about 2,400 new patients and put us just shy of 40K. So I view anything north of 40K as pretty spectacular. One thing to keep in mind is that the EU is pretty fragmented and each county has to approve Tysabri and the insurance costs individually. So uptake is slower but starts gathering steam a few quarters after each country finally approves it. We're close to snowballing territory, I think ... may be 1 or 2 more quarters though.
AAB-001 - probably no news. More details of how they are approaching the 2 mg dose of non-carriers that they dropped, but that is just noise. I don't expect anything until end of this year, IF they take an interim and it's good. Still remotely possible that they file a BLA at the end of the year based on the non-carrier phase II results and 6-9 months safety data from the III. I doubt this now, as the dropped 2 mg group was because of vascular edema. Too much safety noise and the 2.0 mg group taken out would be post-hoc. Bummer!
Sale of the company? Partial sale? I don't think they'd release that at an earnings call. I unfortunately still think we'll see a buyout before years end simply because the market cap is too attractive.
I bought more last week at $5.67. It may bounce around but I don’t think it’ll go lower than $4, and I think we’ll start seeing it go up again IF Tysabri numbers start increasing at an increasing rate again (which I view as likely).
Regards,
Trond
Saturday, April 4, 2009
Dendreon on the Move
Yesterday was kind of fun.
Dendreon was plodding along in the morning... somewhere around $4.30 or so. I was wondering if THIS would be the day that it might move another 20 or 30 cents upwards. We're IN April, and we are expected to get the final results of the IMPACT trial for Provenge sometime in April...
A little blurb appears, saying that Dendreon has a slot at the American Urological Association annual seminar on April 28, under a late-breaking news application. No big deal, right? That's by the end of April... no biggie, they'd announce a PR about results and then present at a major conference.
Half an hour later WHAM. The stock jumps to $5.20 and starts climbing -- about another dollar in 2 minutes. Kind of fun to refresh the screen and see the stock going up a dime every time you refresh. It was like in 2007, the day after the FDA's Advisory Committee met and voted that Provenge was safe by a 17-0 and substantially effective by a 13-4 margin. I'd refresh the screen then, and we were up a dollar!
We closed at 5.99. Again ... will we keep the gains? Keep going? Drop back? I have no clue. But as we get closer to the end of the month, expect more volatility! Me? I'm keeping most of my shares.
Regards,
Trond
Dendreon was plodding along in the morning... somewhere around $4.30 or so. I was wondering if THIS would be the day that it might move another 20 or 30 cents upwards. We're IN April, and we are expected to get the final results of the IMPACT trial for Provenge sometime in April...
A little blurb appears, saying that Dendreon has a slot at the American Urological Association annual seminar on April 28, under a late-breaking news application. No big deal, right? That's by the end of April... no biggie, they'd announce a PR about results and then present at a major conference.
Half an hour later WHAM. The stock jumps to $5.20 and starts climbing -- about another dollar in 2 minutes. Kind of fun to refresh the screen and see the stock going up a dime every time you refresh. It was like in 2007, the day after the FDA's Advisory Committee met and voted that Provenge was safe by a 17-0 and substantially effective by a 13-4 margin. I'd refresh the screen then, and we were up a dollar!
We closed at 5.99. Again ... will we keep the gains? Keep going? Drop back? I have no clue. But as we get closer to the end of the month, expect more volatility! Me? I'm keeping most of my shares.
Regards,
Trond
Wednesday, April 1, 2009
Making money off volatility
Markets go up, markets go down. What if there was a way to make some scratch simply off the movement, regardless of the direction?
I did a trade last week, that worked out fairly well, netting me about a 20% return in less than one week. The only danger in this strategy is that we have an extended "flatline" in the market. Given the issues the stock market has to face these days (will the FASB rescind mark-to-market? Will they nationalize banks? Are pension funds going to go belly up from private equity deals gone bad? Will the SEC restore the uptick rule? Is inflation coming? Will muni bonds get destroyed if cities follow Vallejo into bankruptancy? Are unemployment numbers going up?) I feel it is safe to say that one way or another, market will move up a fair amount OR down a fair amount. You need about a 3 or 4% index move within a month for this strategy to work -- I feel comfortable saying that will occur!
I will present my trade and then present another for consideration. In one month or less, I will revisit this trade and show its value -- positive or negative.
Lets review some facts about options.
Calls are an option type that when bought, allow you the opportunity to buy a certain number of shares at a certain price, by a certain date. (when sold, it obligates you to sell that certain number of shares at a certain price, by a certain date)
Puts are the reverse -- when bought, they allow you the opportunity to sell a certain number of shares at a certain price, by a certain date. And conversely, selling the same obligates you to buy those shares, etc. etc.
Very simple example -- my favorite stock of the moment is Dendreon, and it trades at about $4.20 a share right now. By the end of April, they will announce final IMPACT trial results for their prostate cancer vaccine Provenge, and the stock will VERY LIKELY be either much highr or much lower. If I buy a call option contract for the May 2009 $10 strike (ticker UKOEB), I would pay $112 (plus commission). That contract allows me to buy 100 shares of DNDN for $10 per share anytime on or before May 15. Why on earth would I PAY money to buy a stock at a higher price than I could pay right now? Because I don't actually have to spend the $420 right now to buy those 100 shares -- and I expect IMPACT to be successful and the share price to be much higher than $10 before May 15!
Let's take the worst case scenario first: IMPACT fails, and the stock craters (or more precisely, it does not go above $10). In that case, I have spent my $112 for naught.
In the great case, let's say IMPACT is a stunning success and the stock goes to $25. (it did precisely that 2 years ago, before the FDA said, finish this trial to see if you can replicate the results) Buying 100 shares would then cost $2500, but my option contract allows me to buy those 100 shares at $10 each, or for $1000. Really, it would be for $1112; the stock price plus what I paid for the option, plus commissions... but then I could turn around and sell those 100 shares for the $2500. So -- I would have made $2500 - 1112 = $1,388, all for my original $112.
One extra nice thing about options is that you don't actually have to exercise the option (trade it in for the stock) -- the option price for a $10 call for a stock trading at $25 would be slightly higher than $15. So I could simply sell the call (that I bought for $112) for around $1500. Of course, if the stock is only at $12, the option is only worth $200 and so the profit goes way down. It is simply leverage -- controlling 100 shares at a time.
So: buying calls indicates you want the stock to go up. Buying puts is the reverse -- you want the stock to go down. A relatively small move in the underlying stock can move the option a bit less, but with your leverage it works to your favor.
My trade from last week was against the Nasdaq 100 tracking stock, ticker QQQQ. It was at $29.56 and I did NOT know whether the Nasdaq was going up, or if it was going down. BUT -- with all the "stuff" happening in the world, I was pretty confident that it would go up OR down more than 3% within a month.
So I bought two April $29 calls AND two April $30 puts. The two calls cost about $290 and did the two puts cost about $320. Within 4 days, the Nasdaq had gone up to about $30.60 (less than a 4% move) and the two calls were worth $580. The puts, however, had gone down in value to about $165. I then sold BOTH my calls AND my puts... netting me, after all commissions, about $120. Having spent just over $600 on the entry, there is my 20% return.
The reason this is successful is because the successful side just about doubles, while the losing side only halves. Another trick would be if you can make 125% on the successful side (and sell it) and keep the other side open. If the market goes back the other way, you can then sell that back fora smaller loss (or wow -- maybe even a gain also!) -- but the trick here is that once you have a TOTAL gain of 20%+, you close it out and lock it in.
So here is the trade to follow for the next few weeks:
The QQQQ closed tonight (4/1/09) at $30.77. For this trade I'll still buy the April contracts, although I suppose we can also track the May amounts to see where that leads us. Ideally I'd like it to be at either an even dollar amount (say, $31 -- and then I'd buy the $30 calls and the $32 puts) or halfway in between ($30.50 - and I'd buy the $30 calls and the $31 puts) but I'll make it even on the sides by buying two calls and three puts. I've listed the data below:
Strike Date Strike Price Type Contract Price
April $30 Call $150
April $31 Put $114
May $30 Call $216
May $31 Put $181
So the April strike would cost 2*150+10 + 3*114+10 (I'm including a $10 commission here to make it more realistic). So total "in" costs $662. I'd be looking for 20% profit, or about $135.
The May strike would cost 2*216+10 + 3*181+10, or $995. Profit expected would be $200. In both cases, a 4% move should do the trick, if within a week. Please note that the May strike gives much more upside if you were looking for more than 20% profit, since we have 45 days instead of only 16 more days as in the April case. I expect several rather severe moves up AND down in the next couple months!
Regards,
Trond
I did a trade last week, that worked out fairly well, netting me about a 20% return in less than one week. The only danger in this strategy is that we have an extended "flatline" in the market. Given the issues the stock market has to face these days (will the FASB rescind mark-to-market? Will they nationalize banks? Are pension funds going to go belly up from private equity deals gone bad? Will the SEC restore the uptick rule? Is inflation coming? Will muni bonds get destroyed if cities follow Vallejo into bankruptancy? Are unemployment numbers going up?) I feel it is safe to say that one way or another, market will move up a fair amount OR down a fair amount. You need about a 3 or 4% index move within a month for this strategy to work -- I feel comfortable saying that will occur!
I will present my trade and then present another for consideration. In one month or less, I will revisit this trade and show its value -- positive or negative.
Lets review some facts about options.
Calls are an option type that when bought, allow you the opportunity to buy a certain number of shares at a certain price, by a certain date. (when sold, it obligates you to sell that certain number of shares at a certain price, by a certain date)
Puts are the reverse -- when bought, they allow you the opportunity to sell a certain number of shares at a certain price, by a certain date. And conversely, selling the same obligates you to buy those shares, etc. etc.
Very simple example -- my favorite stock of the moment is Dendreon, and it trades at about $4.20 a share right now. By the end of April, they will announce final IMPACT trial results for their prostate cancer vaccine Provenge, and the stock will VERY LIKELY be either much highr or much lower. If I buy a call option contract for the May 2009 $10 strike (ticker UKOEB), I would pay $112 (plus commission). That contract allows me to buy 100 shares of DNDN for $10 per share anytime on or before May 15. Why on earth would I PAY money to buy a stock at a higher price than I could pay right now? Because I don't actually have to spend the $420 right now to buy those 100 shares -- and I expect IMPACT to be successful and the share price to be much higher than $10 before May 15!
Let's take the worst case scenario first: IMPACT fails, and the stock craters (or more precisely, it does not go above $10). In that case, I have spent my $112 for naught.
In the great case, let's say IMPACT is a stunning success and the stock goes to $25. (it did precisely that 2 years ago, before the FDA said, finish this trial to see if you can replicate the results) Buying 100 shares would then cost $2500, but my option contract allows me to buy those 100 shares at $10 each, or for $1000. Really, it would be for $1112; the stock price plus what I paid for the option, plus commissions... but then I could turn around and sell those 100 shares for the $2500. So -- I would have made $2500 - 1112 = $1,388, all for my original $112.
One extra nice thing about options is that you don't actually have to exercise the option (trade it in for the stock) -- the option price for a $10 call for a stock trading at $25 would be slightly higher than $15. So I could simply sell the call (that I bought for $112) for around $1500. Of course, if the stock is only at $12, the option is only worth $200 and so the profit goes way down. It is simply leverage -- controlling 100 shares at a time.
So: buying calls indicates you want the stock to go up. Buying puts is the reverse -- you want the stock to go down. A relatively small move in the underlying stock can move the option a bit less, but with your leverage it works to your favor.
My trade from last week was against the Nasdaq 100 tracking stock, ticker QQQQ. It was at $29.56 and I did NOT know whether the Nasdaq was going up, or if it was going down. BUT -- with all the "stuff" happening in the world, I was pretty confident that it would go up OR down more than 3% within a month.
So I bought two April $29 calls AND two April $30 puts. The two calls cost about $290 and did the two puts cost about $320. Within 4 days, the Nasdaq had gone up to about $30.60 (less than a 4% move) and the two calls were worth $580. The puts, however, had gone down in value to about $165. I then sold BOTH my calls AND my puts... netting me, after all commissions, about $120. Having spent just over $600 on the entry, there is my 20% return.
The reason this is successful is because the successful side just about doubles, while the losing side only halves. Another trick would be if you can make 125% on the successful side (and sell it) and keep the other side open. If the market goes back the other way, you can then sell that back fora smaller loss (or wow -- maybe even a gain also!) -- but the trick here is that once you have a TOTAL gain of 20%+, you close it out and lock it in.
So here is the trade to follow for the next few weeks:
The QQQQ closed tonight (4/1/09) at $30.77. For this trade I'll still buy the April contracts, although I suppose we can also track the May amounts to see where that leads us. Ideally I'd like it to be at either an even dollar amount (say, $31 -- and then I'd buy the $30 calls and the $32 puts) or halfway in between ($30.50 - and I'd buy the $30 calls and the $31 puts) but I'll make it even on the sides by buying two calls and three puts. I've listed the data below:
Strike Date Strike Price Type Contract Price
April $30 Call $150
April $31 Put $114
May $30 Call $216
May $31 Put $181
So the April strike would cost 2*150+10 + 3*114+10 (I'm including a $10 commission here to make it more realistic). So total "in" costs $662. I'd be looking for 20% profit, or about $135.
The May strike would cost 2*216+10 + 3*181+10, or $995. Profit expected would be $200. In both cases, a 4% move should do the trick, if within a week. Please note that the May strike gives much more upside if you were looking for more than 20% profit, since we have 45 days instead of only 16 more days as in the April case. I expect several rather severe moves up AND down in the next couple months!
Regards,
Trond
Tuesday, March 31, 2009
Inflation?
For all the money the Fed is supposedly pouring into the banking system to "prime the pump", we are acting suspiciously like we're in a deflationary period right now. Commodity prices look like they are finally starting to go up again, however. And although I hear conflicting statements about the velocity of money, at the rate the Fed is going I will agree we will see inflation before long.
What is that going to mean? With the unemployment rate dismal and projected to get worse, housing continuing to fall, and taxes going up (I speak here about the next year, not the next few weeks) I don't think inflation will be anything to write home about. Hyperinflation smiply would not happen.
However, if we do see a recovery at the end of this year, then all bets may be off. We will have expended too much in terms of getting the economy going again to risk cooling it down, and we may see saving accounts yielding 10% again, as they did in the early 80s. You wouldn't even WANT to know what foodstuffs and energy prices would be like. Is there a middle ground? I don;t see how we can have cake and eat it too... there are simply too many sins in our past that we need to expiate before our economy can be considered normal again.
I wish I had a better forecast ... depression or severe inflation. It is still worth hedging into oil or gold -- but not yet. Once gold goes down to $825 or lower, I would consider it - GLD is a decent ETF there. Oil ETFs like USL or UOY are probably a buy here, and very much so if oil goes below $42 a barrel again. We will see the usual spike in oil prices over the summer and that may be the last real trading opportunity we see in anything that is based on normal circumstances. I would stay away from bonds ... especially state or municipal bonds as I fear more cities will follow Vallejo into bankruptancy to get out of their pension obligations. Lastly, if mark-to-market is rescinded and banks go nuts, buy puts against the general banking industry ETFs once the frenzy reaches it's heights. There is still a LOT of crap that needs to be written off.
My one note of happiness today is that Dendreon is now less than one month from disclosing final results for Provenge from the IMPACT trial. They have said "by the end of April" and seem to be in over-delivery mode lately. Definitely a buy at $4.30ish.
Regards,
Trond
What is that going to mean? With the unemployment rate dismal and projected to get worse, housing continuing to fall, and taxes going up (I speak here about the next year, not the next few weeks) I don't think inflation will be anything to write home about. Hyperinflation smiply would not happen.
However, if we do see a recovery at the end of this year, then all bets may be off. We will have expended too much in terms of getting the economy going again to risk cooling it down, and we may see saving accounts yielding 10% again, as they did in the early 80s. You wouldn't even WANT to know what foodstuffs and energy prices would be like. Is there a middle ground? I don;t see how we can have cake and eat it too... there are simply too many sins in our past that we need to expiate before our economy can be considered normal again.
I wish I had a better forecast ... depression or severe inflation. It is still worth hedging into oil or gold -- but not yet. Once gold goes down to $825 or lower, I would consider it - GLD is a decent ETF there. Oil ETFs like USL or UOY are probably a buy here, and very much so if oil goes below $42 a barrel again. We will see the usual spike in oil prices over the summer and that may be the last real trading opportunity we see in anything that is based on normal circumstances. I would stay away from bonds ... especially state or municipal bonds as I fear more cities will follow Vallejo into bankruptancy to get out of their pension obligations. Lastly, if mark-to-market is rescinded and banks go nuts, buy puts against the general banking industry ETFs once the frenzy reaches it's heights. There is still a LOT of crap that needs to be written off.
My one note of happiness today is that Dendreon is now less than one month from disclosing final results for Provenge from the IMPACT trial. They have said "by the end of April" and seem to be in over-delivery mode lately. Definitely a buy at $4.30ish.
Regards,
Trond
Wednesday, February 4, 2009
Great Expectations
First, a little background.
STOCK INVESTING IS NOT A GAME TO ME. I have a day job, two kids, and a wife who equates the stock market to a casino. Two years ago, I let myself accumulate just over 13,000 shares in a little biotech company called Dendreon. At a cost basis of about $4.50 a share, this $60K, spread between my IRA and brokerage account, was a SIGNIFICANT fraction of my assets – a much higher percentage than I, who pride myself on my personal finance knowledge, would ever recommend anyone investing in one risky stock.
Why did I do this? Lots of little reasons… but it boiled down to a couple reasons. I believed in the drug that was up for FDA approval, and it made me feel good to invest in something that has potential to save lives. (Provenge is an immunotherapeutic vaccine for prostate cancer)
Now, built into that “belief” was an enormous amount of due diligence. The final block of shares that I bought was after the FDA released the briefing docs that the Advisory Committee it had convened would be using to aid them in their discussion. Routinely negative and devoted to picking apart data, these briefing docs in Dendreon’s case were actually mildly approving in spots. My expectations were met when the AC voted at the end of the day 17-0 for safety and 13-4 for efficacy. The stock price went from $5ish to nearly $13 the next day, and over the next month hit $25.
And the drug was not even approved yet! The AC vote means nothing – it is simply advisory. But the FDA had never, in the case of a terminal illness with few options, overridden an AC recommendation with rejection. Given my research, the potential market indicated that future sales even discounted back to present value, should yield a share price of around $40 to $50 very soon. Imagine that! Dendreon, within my IRA, was already nearly a quarter of a million dollars. I was having visions of paying off my house within a year from my brokerage account.
My wife started asking, “So when are you going to sell some?” My answer: “After approval.”
The rude awakening came when the FDA did say no, in the form of a Complete Response (or “approvable”) Letter, where the answer was: “Complete the ongoing trial and show us MORE proof”. The stock tumbled back to $7, and then to $5, and has bounced around since then. Me? I mostly got out around $6, as that ongoing trial wasn’t going to end until 2010. My wife still says, “I told you so,” occasionally.
So why dredge this up now? Dendreon amended their agreement on that ongoing trial and final results are now expected by April of this year. I’ve been building my position back up, as I still believe in the drug. However, given the market’s performance in the last year, and my promise to my wife to never concentrate our holdings quite so much again, I don’t have as many shares now as I did then. And I am revisiting my reasons for holding, AND my projected reasons for selling.
I still believe in Provenge. At the “interim” look at the data, it showed a 20% reduction in risk of death compared to the placebo group. In the prior trials, it showed a similar benefit at a similar time point… and later on an increasing benefit over time. There are extremely few and mild side effects, especially compared to the chemo alternative. But recall my second reason for investing – it made me feel “good”. I CANNOT allow myself anymore to use that as a reason for investing – biotech investors in particular are advised to “never fall in love with a stock”. So now that we are getting close to potential approval again, I have to decide when I will sell what percentage of my stake, and at what prices. I need this decided BEFOREHAND, so there is no emotion involved at the time. Note: I am fine with the risks of non-approval with the amount that I hold now! This decision is only for if approved.
My decision? I will sell a quarter of my holdings at $30, and another quarter of what I have remaining at $40. After that, when the company releases pricing and manufacturing capability, I’ll have more data to use to decide where to go from there. But my limit orders to sell are set, and honestly? I slept much better last night.
STOCK INVESTING IS NOT A GAME TO ME. I have a day job, two kids, and a wife who equates the stock market to a casino. Two years ago, I let myself accumulate just over 13,000 shares in a little biotech company called Dendreon. At a cost basis of about $4.50 a share, this $60K, spread between my IRA and brokerage account, was a SIGNIFICANT fraction of my assets – a much higher percentage than I, who pride myself on my personal finance knowledge, would ever recommend anyone investing in one risky stock.
Why did I do this? Lots of little reasons… but it boiled down to a couple reasons. I believed in the drug that was up for FDA approval, and it made me feel good to invest in something that has potential to save lives. (Provenge is an immunotherapeutic vaccine for prostate cancer)
Now, built into that “belief” was an enormous amount of due diligence. The final block of shares that I bought was after the FDA released the briefing docs that the Advisory Committee it had convened would be using to aid them in their discussion. Routinely negative and devoted to picking apart data, these briefing docs in Dendreon’s case were actually mildly approving in spots. My expectations were met when the AC voted at the end of the day 17-0 for safety and 13-4 for efficacy. The stock price went from $5ish to nearly $13 the next day, and over the next month hit $25.
And the drug was not even approved yet! The AC vote means nothing – it is simply advisory. But the FDA had never, in the case of a terminal illness with few options, overridden an AC recommendation with rejection. Given my research, the potential market indicated that future sales even discounted back to present value, should yield a share price of around $40 to $50 very soon. Imagine that! Dendreon, within my IRA, was already nearly a quarter of a million dollars. I was having visions of paying off my house within a year from my brokerage account.
My wife started asking, “So when are you going to sell some?” My answer: “After approval.”
The rude awakening came when the FDA did say no, in the form of a Complete Response (or “approvable”) Letter, where the answer was: “Complete the ongoing trial and show us MORE proof”. The stock tumbled back to $7, and then to $5, and has bounced around since then. Me? I mostly got out around $6, as that ongoing trial wasn’t going to end until 2010. My wife still says, “I told you so,” occasionally.
So why dredge this up now? Dendreon amended their agreement on that ongoing trial and final results are now expected by April of this year. I’ve been building my position back up, as I still believe in the drug. However, given the market’s performance in the last year, and my promise to my wife to never concentrate our holdings quite so much again, I don’t have as many shares now as I did then. And I am revisiting my reasons for holding, AND my projected reasons for selling.
I still believe in Provenge. At the “interim” look at the data, it showed a 20% reduction in risk of death compared to the placebo group. In the prior trials, it showed a similar benefit at a similar time point… and later on an increasing benefit over time. There are extremely few and mild side effects, especially compared to the chemo alternative. But recall my second reason for investing – it made me feel “good”. I CANNOT allow myself anymore to use that as a reason for investing – biotech investors in particular are advised to “never fall in love with a stock”. So now that we are getting close to potential approval again, I have to decide when I will sell what percentage of my stake, and at what prices. I need this decided BEFOREHAND, so there is no emotion involved at the time. Note: I am fine with the risks of non-approval with the amount that I hold now! This decision is only for if approved.
My decision? I will sell a quarter of my holdings at $30, and another quarter of what I have remaining at $40. After that, when the company releases pricing and manufacturing capability, I’ll have more data to use to decide where to go from there. But my limit orders to sell are set, and honestly? I slept much better last night.
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
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
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
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)
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