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
Showing posts with label Tysabri. Show all posts
Showing posts with label Tysabri. Show all posts
Friday, April 17, 2009
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
Wednesday, October 29, 2008
The ups and downs of Elan
Right on the heels of good Tysabri news comes another PML case.
A little background -- Tysabri was pulled from the market in 2005 after just a couple months. 3 patients from the clinical trials developed PML -- which is a usually fatal infection in the brain caused by the JC virus. Somewhere around 80%+ of us have the JC virus dormant in our system, yet our immune system usually prevents it from penetrating the blood-brain barrier.
Of those 3 patients, it was eventually determined that one probably had had MS misdiagnosed, and the other two were in Avonex/Tysabri combined trials. Further, the misdiagnosed patient and one of the two combo therapy patients had had prior doses of MS drugs which weaken the immune system dealing with the blood-brain barrier. (Further background -- Elan's marketing partner, Biogen, happened to be the maker of Avonex and pushed the combo therapy trials in the US).
Tysabri is about twice as effective as the next best therapy at keeping MS patients from having relapses. The patients basically stormed the FDA and made it clear they were willing to take the PML risk to keep Tysabri -- see some of the quotes at the end of this post!
In August of 2006 theFDA voted to allow Tysabri back on the market, with VERY stringent protocols (called the TOUCH system) designed to keep patients who had used certain immuno-suppressing drugs previously, off Tysabri until those drugs had been washed out of the system.
The label on Tysabri says that the risk of PML is 1 in 1000. As of June 2008, about 31,000 patients were on it in non-trial prescriptions. In July, 2008, 2 patients in Europe were disclosed to have PML. Elan promptly cratered from $21ish to around $9.
Those two patients, however, are still alive. One is doing quite well and is home; the other not so well and in the hospital still. That one, had had prior immuno-suppressing drugs also though -- Europe was not bound by the TOUCH protocols. There is a new therapy for PML called plasma exchange (plex) that strips the Tysabri out of the body very quickly, which allows the immune system to ramp up immediately against the JC virus.
So now we have a third post-re-entry case -- Elan fell in after hours trading from $7ish to $5.50.
It appears this patient was in monotherapy too -- which actually bodes well for recovery. We now have 5 MS patients who developed PML -- 2 on mono and 3 on combo. This is out of nearly 40,000 total users -- 35,500 after the 3rd quarter results and 4,000 in the prior trials and marketed in 2005. Unless another 30 people develop PML in the next quarter, the risk is MUCH lower than 1:1000 -- and PML is no longer a near-certain death sentence.
Tysabri, at the forward one-year run rate, JUST became a blockbuster ($1B in sales). This case may dampen some demand, but the growth of new patients is still happening. Both companies agree they will have 100K patients on therapy by 2010, even counting in PML risk and dropouts. If acheived, that would lead Elan to a share price of $18 - 25 within 2 years.
That allows for no potential in the rest of the pipeline - and you heard it here -- we have AAB-001 in Phase III that will affect a subpopulation of Alzheimer's patients better than Aricept. We should learn more about that late next year of 2010 also -- and THAT would be a game changer with sales potential in the tens of billions.
Reagrds,
Trond
Tysabri quotes
Quotes and snippets regarding MS patients about Tysabri. These come from editorials, a bulletin board from the National MS Foundation, and from online MS bulletin boards.
Some of the quotes are in bold. These are my emphasis. [Trond]
My sister has had MS for over 2 decades. She has slowly gotten to the point where she is 100% bed ridden and needs a catheter. She can't even sit in a wheelchair any longer.She took TY 3 times and it was a miracle. I witnessed her walking on her own out to her mail box some 75 yards from her house. She could cook, eat on her own, use the bathroom ALONE for the first time in years. She had regained her life, her dignity, her future.
Bartira Tibertius of Chicago … received Tysabri for a full 28 months as part of a clinical trial. "I was doing great. I even forgot that I was sick," Ms. Tibertius, a language teacher and translator, tells us. "But now I'm getting very, very scared. It's deteriorating and I know that," describing numbness and tingling in her hands, arms, feet and face. As for any possible risks from the drug, she says, "I'm more scared of not having Tysabri than having Tysabri. If you told me the Tysabri would shorten 10 years of my life I would do it. I want quality of life, not quantity.">>
Talked to my sister this AM about the Avonex story. Here's her reply & I quote; "How many relapses did I had when I took Avonex? I won't take that crap ever again. I want to go back on Tysabri." End of quote. Avonex is toast.
I was in my neurologist’s office for an appointment late last winter and there were these people there, laughing, acting, and looking as if there wasn’t a care in the world. I thought it was a little odd. Why were they there? There didn’t look sick. During my appointment, my doctor told me that they were in the Tysabri study and had come in for their treatment. I had to stop the interferon because of liver complications. I had to stop the chemotherapy because of heart complications. I now have to take daily injections of Copaxone, since we were out of choices, and the MS is progressing, my doctor suggested Tysabri. It WAS my only choice. I was waiting for our insurance company’s approval the morning I heard it was being suspended. I was looking forward to a monthly treatment instead of daily injections that have unpleasant and painful side effects. I was looking forward to something that might offer more promise in managing this disease. I was looking forward to a treatment that offered hope that I might be able to return to some type of gainful employment. I went on Social Security Disability a few months later. I ended up with worsening symptoms on top of having to manage daily injection site reactions. The MS may have progressed any way, but who knows, it might not have. I sure would have liked a shot at it!
I was diagnosed with MS on April 10, 1996 (our Anniversary). At that time I experienced numbness in both of my feet. After both an MRI and a spinal tap my neurologist was able to confirm my condition. This was not what we wanted to hear but I was prepared to fight with all that was within me. Since that time my condition has progressed. It has affected my vision, my mobility (I struggle to walk with a walker now), my thought process, my speech, I now am incontinent, and am very tired most of the time. My quality of life is not good. My numbness is to my knees in both legs and is affecting my hands. My struggle to walk and my frequent falling is affecting my back (I now have 3 bulging disks) causing me to be in constant pain. I also deal with muscle spasms in both legs daily which also causes me to fall frequently.My neurologist has tried many treatments along the way which include Avonex, Rebif( which was a terrible experience), steroids, and many other drugs for specific symptoms. With all of this help my MS continues to progress with more and more relapses occurring much more frequently now. In Feb. ’05 I was given my first and only infusion of Tysabri. This was the most positive response I had ever had!! My fatigue was nearly eliminated (I did not have to lie down during the day for a month or more), my walking improved, my muscle spasms were gone, the vision problems were resolving, my thought processes greatly improved, my speech returned to normal (even my singing voice returned), the incontinence problem was much improved and there was once again hope for a quality of life.
"If I have to I'll take her to Europe for Tysabri if they approve it before the f**king FDA gets off their ass."
A little background -- Tysabri was pulled from the market in 2005 after just a couple months. 3 patients from the clinical trials developed PML -- which is a usually fatal infection in the brain caused by the JC virus. Somewhere around 80%+ of us have the JC virus dormant in our system, yet our immune system usually prevents it from penetrating the blood-brain barrier.
Of those 3 patients, it was eventually determined that one probably had had MS misdiagnosed, and the other two were in Avonex/Tysabri combined trials. Further, the misdiagnosed patient and one of the two combo therapy patients had had prior doses of MS drugs which weaken the immune system dealing with the blood-brain barrier. (Further background -- Elan's marketing partner, Biogen, happened to be the maker of Avonex and pushed the combo therapy trials in the US).
Tysabri is about twice as effective as the next best therapy at keeping MS patients from having relapses. The patients basically stormed the FDA and made it clear they were willing to take the PML risk to keep Tysabri -- see some of the quotes at the end of this post!
In August of 2006 theFDA voted to allow Tysabri back on the market, with VERY stringent protocols (called the TOUCH system) designed to keep patients who had used certain immuno-suppressing drugs previously, off Tysabri until those drugs had been washed out of the system.
The label on Tysabri says that the risk of PML is 1 in 1000. As of June 2008, about 31,000 patients were on it in non-trial prescriptions. In July, 2008, 2 patients in Europe were disclosed to have PML. Elan promptly cratered from $21ish to around $9.
Those two patients, however, are still alive. One is doing quite well and is home; the other not so well and in the hospital still. That one, had had prior immuno-suppressing drugs also though -- Europe was not bound by the TOUCH protocols. There is a new therapy for PML called plasma exchange (plex) that strips the Tysabri out of the body very quickly, which allows the immune system to ramp up immediately against the JC virus.
So now we have a third post-re-entry case -- Elan fell in after hours trading from $7ish to $5.50.
It appears this patient was in monotherapy too -- which actually bodes well for recovery. We now have 5 MS patients who developed PML -- 2 on mono and 3 on combo. This is out of nearly 40,000 total users -- 35,500 after the 3rd quarter results and 4,000 in the prior trials and marketed in 2005. Unless another 30 people develop PML in the next quarter, the risk is MUCH lower than 1:1000 -- and PML is no longer a near-certain death sentence.
Tysabri, at the forward one-year run rate, JUST became a blockbuster ($1B in sales). This case may dampen some demand, but the growth of new patients is still happening. Both companies agree they will have 100K patients on therapy by 2010, even counting in PML risk and dropouts. If acheived, that would lead Elan to a share price of $18 - 25 within 2 years.
That allows for no potential in the rest of the pipeline - and you heard it here -- we have AAB-001 in Phase III that will affect a subpopulation of Alzheimer's patients better than Aricept. We should learn more about that late next year of 2010 also -- and THAT would be a game changer with sales potential in the tens of billions.
Reagrds,
Trond
Tysabri quotes
Quotes and snippets regarding MS patients about Tysabri. These come from editorials, a bulletin board from the National MS Foundation, and from online MS bulletin boards.
Some of the quotes are in bold. These are my emphasis. [Trond]
My sister has had MS for over 2 decades. She has slowly gotten to the point where she is 100% bed ridden and needs a catheter. She can't even sit in a wheelchair any longer.She took TY 3 times and it was a miracle. I witnessed her walking on her own out to her mail box some 75 yards from her house. She could cook, eat on her own, use the bathroom ALONE for the first time in years. She had regained her life, her dignity, her future.
Bartira Tibertius of Chicago … received Tysabri for a full 28 months as part of a clinical trial. "I was doing great. I even forgot that I was sick," Ms. Tibertius, a language teacher and translator, tells us. "But now I'm getting very, very scared. It's deteriorating and I know that," describing numbness and tingling in her hands, arms, feet and face. As for any possible risks from the drug, she says, "I'm more scared of not having Tysabri than having Tysabri. If you told me the Tysabri would shorten 10 years of my life I would do it. I want quality of life, not quantity.">>
Talked to my sister this AM about the Avonex story. Here's her reply & I quote; "How many relapses did I had when I took Avonex? I won't take that crap ever again. I want to go back on Tysabri." End of quote. Avonex is toast.
I was in my neurologist’s office for an appointment late last winter and there were these people there, laughing, acting, and looking as if there wasn’t a care in the world. I thought it was a little odd. Why were they there? There didn’t look sick. During my appointment, my doctor told me that they were in the Tysabri study and had come in for their treatment. I had to stop the interferon because of liver complications. I had to stop the chemotherapy because of heart complications. I now have to take daily injections of Copaxone, since we were out of choices, and the MS is progressing, my doctor suggested Tysabri. It WAS my only choice. I was waiting for our insurance company’s approval the morning I heard it was being suspended. I was looking forward to a monthly treatment instead of daily injections that have unpleasant and painful side effects. I was looking forward to something that might offer more promise in managing this disease. I was looking forward to a treatment that offered hope that I might be able to return to some type of gainful employment. I went on Social Security Disability a few months later. I ended up with worsening symptoms on top of having to manage daily injection site reactions. The MS may have progressed any way, but who knows, it might not have. I sure would have liked a shot at it!
I was diagnosed with MS on April 10, 1996 (our Anniversary). At that time I experienced numbness in both of my feet. After both an MRI and a spinal tap my neurologist was able to confirm my condition. This was not what we wanted to hear but I was prepared to fight with all that was within me. Since that time my condition has progressed. It has affected my vision, my mobility (I struggle to walk with a walker now), my thought process, my speech, I now am incontinent, and am very tired most of the time. My quality of life is not good. My numbness is to my knees in both legs and is affecting my hands. My struggle to walk and my frequent falling is affecting my back (I now have 3 bulging disks) causing me to be in constant pain. I also deal with muscle spasms in both legs daily which also causes me to fall frequently.My neurologist has tried many treatments along the way which include Avonex, Rebif( which was a terrible experience), steroids, and many other drugs for specific symptoms. With all of this help my MS continues to progress with more and more relapses occurring much more frequently now. In Feb. ’05 I was given my first and only infusion of Tysabri. This was the most positive response I had ever had!! My fatigue was nearly eliminated (I did not have to lie down during the day for a month or more), my walking improved, my muscle spasms were gone, the vision problems were resolving, my thought processes greatly improved, my speech returned to normal (even my singing voice returned), the incontinence problem was much improved and there was once again hope for a quality of life.
"If I have to I'll take her to Europe for Tysabri if they approve it before the f**king FDA gets off their ass."
Tuesday, October 21, 2008
Tysabri numbers
Color me happy.
Biogen presented their earnings today and part of that was Tysabri numbers.
Background: Biogen is Elan's marketing partner for Tysabri. In late July it was disclosed that 2 patients in Europe had developed PML -- which Tysabri has a black-box label warning for, estimated at 1 in a 1000 chances of contracting.
We went from 31,800 patients at the end of June to 35,500 patients at the end of September. (#s are totals-- 600 of those are in clinical trials). So we gained 11% patients, in a quarter where we lost over half the market cap due to PML fears.
As usual, most PR coverage was negative - even false. For example, Lisa LaMotta, a Forbes Online columnist, wrote the following (as of 10/21/08 at 9:40 PM it still says this -- I fully expect by tomorrow it will be "updated" / edited ... AFTER the immediate damage has been done.
http://www.forbes.com/2008/10/21/biogen-idec-biotech-markets-equity-cx_lal_1021markets24.html?partner=yahootix
Market Scan
Biogen Bitten By Tysabri
Lisa LaMotta, 10.21.08, 3:45 PM ET
"....Biogen Idec reported earnings that beat expectations mostly due to the sale of its two multiple sclerosis drugs, but investors were disappointed by a slight slowdown from the second quarter in the number of patients taking one of them...
...As of the end of September, more than 35,500 patients were on Tysabri,the mulitple sclerosis drug in question, down from 31,800 at the end of the second quarter...."
1) slight slowdown? The RATE OF GROWTH slowed down. but the number of patients increased!
2) use a spell checker if you are going to call yourself a Forbes journalist!!! (sorry, catty, I know)
3) First time I've heard of 35K being lower than 31K.
Almost sounds like she'd written the hit piece first -- intending simply to fill in the expected bad numbers, doesn't it?
Next -- PML risk; rated at 1:1000.
We have 35,000 on therapy now, and 3,000 from before 2006, with a total of 4 patients contracting PML. It sounds to me more like 1 : 10,000.
Elan is around $9 right now, and SO UNDERVALUED by Mr. Market that is scary. Tysabri sales are increasing and we officially hit blockbuster status -- sales of $1B (granted -- projecting forward revenues).
Before the PML scare in July just on Tysabri Elan was valued around $20. (don't get me started on the Alzheimer's drug AAB-001 and its potential -- a massive Phase III trial nearly a year already underway from it's first dosed patient and a statistically significant showing in a subgroup of gene carriers).
It will probably be one more quarter before the market shows Elan any love -- and coincidentally the next quarter which should show a large increase in quarter-over-quarter sales of Tysabri.
So I would not be surprised if Elan bounced between $8 and $11 over the next three months -- but by February of 2009 I fully expect to see Elan at about $14 - 17; a rather sweet return of 50% or so. If an interim look at AAB-001 comes in positive, then the rocketship ignites.
Regards,
Trond
Biogen presented their earnings today and part of that was Tysabri numbers.
Background: Biogen is Elan's marketing partner for Tysabri. In late July it was disclosed that 2 patients in Europe had developed PML -- which Tysabri has a black-box label warning for, estimated at 1 in a 1000 chances of contracting.
We went from 31,800 patients at the end of June to 35,500 patients at the end of September. (#s are totals-- 600 of those are in clinical trials). So we gained 11% patients, in a quarter where we lost over half the market cap due to PML fears.
As usual, most PR coverage was negative - even false. For example, Lisa LaMotta, a Forbes Online columnist, wrote the following (as of 10/21/08 at 9:40 PM it still says this -- I fully expect by tomorrow it will be "updated" / edited ... AFTER the immediate damage has been done.
http://www.forbes.com/2008/10/21/biogen-idec-biotech-markets-equity-cx_lal_1021markets24.html?partner=yahootix
Market Scan
Biogen Bitten By Tysabri
Lisa LaMotta, 10.21.08, 3:45 PM ET
"....Biogen Idec reported earnings that beat expectations mostly due to the sale of its two multiple sclerosis drugs, but investors were disappointed by a slight slowdown from the second quarter in the number of patients taking one of them...
...As of the end of September, more than 35,500 patients were on Tysabri,the mulitple sclerosis drug in question, down from 31,800 at the end of the second quarter...."
1) slight slowdown? The RATE OF GROWTH slowed down. but the number of patients increased!
2) use a spell checker if you are going to call yourself a Forbes journalist!!! (sorry, catty, I know)
3) First time I've heard of 35K being lower than 31K.
Almost sounds like she'd written the hit piece first -- intending simply to fill in the expected bad numbers, doesn't it?
Next -- PML risk; rated at 1:1000.
We have 35,000 on therapy now, and 3,000 from before 2006, with a total of 4 patients contracting PML. It sounds to me more like 1 : 10,000.
Elan is around $9 right now, and SO UNDERVALUED by Mr. Market that is scary. Tysabri sales are increasing and we officially hit blockbuster status -- sales of $1B (granted -- projecting forward revenues).
Before the PML scare in July just on Tysabri Elan was valued around $20. (don't get me started on the Alzheimer's drug AAB-001 and its potential -- a massive Phase III trial nearly a year already underway from it's first dosed patient and a statistically significant showing in a subgroup of gene carriers).
It will probably be one more quarter before the market shows Elan any love -- and coincidentally the next quarter which should show a large increase in quarter-over-quarter sales of Tysabri.
So I would not be surprised if Elan bounced between $8 and $11 over the next three months -- but by February of 2009 I fully expect to see Elan at about $14 - 17; a rather sweet return of 50% or so. If an interim look at AAB-001 comes in positive, then the rocketship ignites.
Regards,
Trond
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
Wednesday, June 25, 2008
Websites
The time has come for me to explain why I placed some additional websites off to the side.
In no particular order...
The BMW Method:
No, this is NOT the car. Back when I read the Motley Fool and subscribed to its message boards (oh -- back in the good ol' days before they became a newsletter driven rag... *grin*) the BMW Method board was my favorite hangout.
(The New Paradigms board was good too -- that was where I first heard mention of Dendreon)
Here's another link that explains the methodology (http://bmwmethod.com/about.php) but in a nutshell, BMW observed how the CAGR (Compound Annual Growth Rate) of large, stable, well-managed companies tends to stay at a historical average over long periods of time. The price in the short term fluctuates wildly -- both to the high side and to the low. Using his graphs, it is visually VERY clear to see when a stock is at a compelling buy price, and likewise, when it may be time to sell.
Note - this is NOT charting or technical analysis -- but simply taking the idea of buying low and selling high into a framework of how a company is performing right now.
As an example, the Tylenol scare from Johnson & Johnson would have seen the stock price far below the long term CAGR curve... and after a little due diligence to see that the company's response was a logical and good move, and that the rest of the company's product sales were unaffected, a buy would have been in order. One wonders how some of the present day banking stocks appear on the graphs right now... but I personally would hold off for a couple more months on these financial-type stocks as I think we have some more pain and possibly consolidation to endure first.
Investor Village:
Yes, this is a stock message board. It comes with the obligatory warning that you encounter all sort of rude and idiotic posters, along with obviously paid shills to either pump or pan the stocks. But for all that, you can meet some truly amazing thinkers, scientists, and satirists.
Rule of thumb: when you read the posts on a stock board, do not post yourself for a while; absorb the interactions of the prolific posters and their styles. You don't have to copy them -- but at least understand who are the well known people. If you disagree with someone popular just to have fun, you will probably start a flame war and have people put you on ignore. Yes, it's high school all over again, and things frequently degenerate into stupid arguments.
On the plus side, you will learn some amazing things. Two of the boards I frequent are the Elan and Dendreon boards. I, who if the truth be known, abhored the life sciences in school, have learned much about Multiple Sclerosis, Alzheimer's Disease, and prostate cancer -- and can speak fairly fluently about those ills and the method of action (MOA) of various drugs to treat them. I know how FDA clinical trials are designed, and what kinds of statistical bars are set for them. And, I truly *enjoy* talking about those kinds of things now.
Of course you still have to do your own due diligence, but you can also learn things about the companies you follow that are not really a part of any news item you might read until the stock price has already reacted. For example, the Elan board dissected everything known about the Phase II Alzheimer's trial results (that were released in mid June) and in the majority, hit nearly every major aspect of the summary results squarely on the head -- which in turn meant that those who understood it would most likely be good news were already buying more shares before the release.
(It's no secret that the board consensus is that the full results to be released at the end of July are going to be stellar and bring the stock to even new heights)
As further examples, from the Elan board I have learned that the company has nearly $3 BILLION in losses over the last few years that they can use to write down future profits, meaning enormous tax savings.
And that Ireland treats royalty income ... (*ahem*) ... royally when it comes to taxes -- and they constructed their Tysabri contract with Biogen so that non-US sales are all treated as royalties.
And that they have the ability to simply say, "Now" to Eli Lilly and from that point on, they get to share 50% in costs and revenues for a different, gamma secretase-based Alzheimer's treatment that looks to be very promising also.
On the IV message boards, there are a number of nice features. You can sort by the "most recommended" posts so that you see the truly GOOD posts first and do not have to wade through fluff. You can ignore idiotic posters so that you don't even see their posts. It's easy to add boards and navigate around the site.
I am going to skip a number of people who deserve a mention, but if you look at the Elan board, look for posts from Liposghost, Jivetalkin, Doodah, Pinvestment, and OKZ. On the Dendreon board, Ocyan is the king of the science, and MingtheMerciless is worth reading for his sense of humor.
Marketocracy:
This one is easy and short -- you can create your own virtual mutual fund. To be ranked, you have to follow some simple rules that professional money managers have to follow too -- and here's the kicker: the 100 best portfolio managers actually get paid by the site, which has its own mutual funds based off those portfolios. Fun!
Frugal Upstate:
I've plugged this before, but this blog is written by one of my best friends, who happens to have a wonderful site about living frugally. The point isn't to *not* spend money, but to choose what you are spending your money on, and to enable the lifestyle where you can afford the things you truly want.
The Sanity Check and Deep Capture:
I actually think Deep Capture should be required reading before investing money in individual stocks. I don't want to sound like a conspiracy theorist, but it is totally obvious to me that hedge funds are an enormous threat to small companies, and especially biotechs. The ability to "sell short" shares of a company -- regardless of whether it is "naked shorting" or legal -- caps the stock price of companies that you and I invest in. The SEC and some of the media are unwilling to look at some of the facts and do their job.
Here are a couple examples:
The company Taser has about 60 million registered shares. At a recent annual meeting -- 80 million votes were cast.
Another company, (and the name escapes me at the moment) had one investor buy up the number of registered shares. He watched in amazement as thousands of shares continued trading on the open market over the next few weeks.
... And yet, total silence on the part of the media, Deeply Captured...
The Sanity Check is a blog by the anonymous tipper (called Bobo) who alerted Overstock CEO Patrick Byrne to the naked shorting campaign against his company, and who figures prominently in the Deep Capture story.
Please -- read Deep Capture for yourself and let me know what you think!
Regards,
Trond
In no particular order...
The BMW Method:
No, this is NOT the car. Back when I read the Motley Fool and subscribed to its message boards (oh -- back in the good ol' days before they became a newsletter driven rag... *grin*) the BMW Method board was my favorite hangout.
(The New Paradigms board was good too -- that was where I first heard mention of Dendreon)
Here's another link that explains the methodology (http://bmwmethod.com/about.php) but in a nutshell, BMW observed how the CAGR (Compound Annual Growth Rate) of large, stable, well-managed companies tends to stay at a historical average over long periods of time. The price in the short term fluctuates wildly -- both to the high side and to the low. Using his graphs, it is visually VERY clear to see when a stock is at a compelling buy price, and likewise, when it may be time to sell.
Note - this is NOT charting or technical analysis -- but simply taking the idea of buying low and selling high into a framework of how a company is performing right now.
As an example, the Tylenol scare from Johnson & Johnson would have seen the stock price far below the long term CAGR curve... and after a little due diligence to see that the company's response was a logical and good move, and that the rest of the company's product sales were unaffected, a buy would have been in order. One wonders how some of the present day banking stocks appear on the graphs right now... but I personally would hold off for a couple more months on these financial-type stocks as I think we have some more pain and possibly consolidation to endure first.
Investor Village:
Yes, this is a stock message board. It comes with the obligatory warning that you encounter all sort of rude and idiotic posters, along with obviously paid shills to either pump or pan the stocks. But for all that, you can meet some truly amazing thinkers, scientists, and satirists.
Rule of thumb: when you read the posts on a stock board, do not post yourself for a while; absorb the interactions of the prolific posters and their styles. You don't have to copy them -- but at least understand who are the well known people. If you disagree with someone popular just to have fun, you will probably start a flame war and have people put you on ignore. Yes, it's high school all over again, and things frequently degenerate into stupid arguments.
On the plus side, you will learn some amazing things. Two of the boards I frequent are the Elan and Dendreon boards. I, who if the truth be known, abhored the life sciences in school, have learned much about Multiple Sclerosis, Alzheimer's Disease, and prostate cancer -- and can speak fairly fluently about those ills and the method of action (MOA) of various drugs to treat them. I know how FDA clinical trials are designed, and what kinds of statistical bars are set for them. And, I truly *enjoy* talking about those kinds of things now.
Of course you still have to do your own due diligence, but you can also learn things about the companies you follow that are not really a part of any news item you might read until the stock price has already reacted. For example, the Elan board dissected everything known about the Phase II Alzheimer's trial results (that were released in mid June) and in the majority, hit nearly every major aspect of the summary results squarely on the head -- which in turn meant that those who understood it would most likely be good news were already buying more shares before the release.
(It's no secret that the board consensus is that the full results to be released at the end of July are going to be stellar and bring the stock to even new heights)
As further examples, from the Elan board I have learned that the company has nearly $3 BILLION in losses over the last few years that they can use to write down future profits, meaning enormous tax savings.
And that Ireland treats royalty income ... (*ahem*) ... royally when it comes to taxes -- and they constructed their Tysabri contract with Biogen so that non-US sales are all treated as royalties.
And that they have the ability to simply say, "Now" to Eli Lilly and from that point on, they get to share 50% in costs and revenues for a different, gamma secretase-based Alzheimer's treatment that looks to be very promising also.
On the IV message boards, there are a number of nice features. You can sort by the "most recommended" posts so that you see the truly GOOD posts first and do not have to wade through fluff. You can ignore idiotic posters so that you don't even see their posts. It's easy to add boards and navigate around the site.
I am going to skip a number of people who deserve a mention, but if you look at the Elan board, look for posts from Liposghost, Jivetalkin, Doodah, Pinvestment, and OKZ. On the Dendreon board, Ocyan is the king of the science, and MingtheMerciless is worth reading for his sense of humor.
Marketocracy:
This one is easy and short -- you can create your own virtual mutual fund. To be ranked, you have to follow some simple rules that professional money managers have to follow too -- and here's the kicker: the 100 best portfolio managers actually get paid by the site, which has its own mutual funds based off those portfolios. Fun!
Frugal Upstate:
I've plugged this before, but this blog is written by one of my best friends, who happens to have a wonderful site about living frugally. The point isn't to *not* spend money, but to choose what you are spending your money on, and to enable the lifestyle where you can afford the things you truly want.
The Sanity Check and Deep Capture:
I actually think Deep Capture should be required reading before investing money in individual stocks. I don't want to sound like a conspiracy theorist, but it is totally obvious to me that hedge funds are an enormous threat to small companies, and especially biotechs. The ability to "sell short" shares of a company -- regardless of whether it is "naked shorting" or legal -- caps the stock price of companies that you and I invest in. The SEC and some of the media are unwilling to look at some of the facts and do their job.
Here are a couple examples:
The company Taser has about 60 million registered shares. At a recent annual meeting -- 80 million votes were cast.
Another company, (and the name escapes me at the moment) had one investor buy up the number of registered shares. He watched in amazement as thousands of shares continued trading on the open market over the next few weeks.
... And yet, total silence on the part of the media, Deeply Captured...
The Sanity Check is a blog by the anonymous tipper (called Bobo) who alerted Overstock CEO Patrick Byrne to the naked shorting campaign against his company, and who figures prominently in the Deep Capture story.
Please -- read Deep Capture for yourself and let me know what you think!
Regards,
Trond
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