What is fair value of ITMN if the drug is approved by FDA ? The potential sale of the drug is $1 B.
I think ITMN is now in same position as DNDN a few years ago. If FDA delays approval, I guess ITMN will come down to $10 ?
The FDA AC voting result are 9-3 in favour of approval. The FDA usually follows AC's recommendations but is not required to do so. The May 2007 non-approval on DNDN's Provenge was unprecedented for a revolutionary biologics to treat a terminal disease that victimizes millions of men around the globe. Investigations by Deep Capture have proven beyond the reasonable doubt that it was a corrupted decision by the FDA bought by the network of short sellers and big pharmas. That corrupted ruling brought unspeakable misery to millions of men and their families and financially destroyed my dreams. I am no longer bitter. Life goes on. But legal battles may emerge after this May's FDA decision. Will history repeat itself for ITMN? That remains to be seen and I sincerely hope not, for the sake of the patients and stock longs, although I have no position.
This is a hugely successful bio story of the year. Seeing the spetacular blowups of XNPT and MDVN, I was reluctant to get involved and missed a huge run. A strangle play would have been the most appropriate given the conflicting two trial results. Now that two of the three FDA-related plays are gone (Review doc, AC), the only potential play that is left is the final decision. I expect trading to be volatile up to the PDUFD. Upon approval, it will become a normal drug company, the pps being determined by sales.
Let me take your 1B sale figure and run a rough valuation. Total shares outstanding are 46M. In fast growing bio, the PS ratio (price to sales) can range between 3 to 20. Assuming a PS ratio of 5 (conservatively), ITMN potential pps is around 100 at peak sale assuming the FDA follows the AC recommendation.
There will be a few factors to look for a possible entry: 1) The FDA final decision --- the most pps influencing; 2) new shares offer to raise capital; 3) timing of product launch; 4) sales after launch; 5) partnership possibility; 6) European acceptance of application. These are the fundamentals. As for technicals, how shorts go for their money and life (a few hedge funds are surely going BK by this) decides short-term volatility. You and I are not privy to this info. I will take this stock on as a big project the next little while and will share with you my DD via email.
Assuming approval, no manufacturing hiccups and given the low number of shares outstanding, ITMN potentials may be as good as DNDN. I will also need to look for the pipeline.
Now, if the FDA decides to delay approval, you can be assured that it will go back under 15.
The PDUFA date is May 4. I expect volatile trading up to this date, followed by a huge sell the news fall upon approval (tanking if approval is delayed). I plan to build a small puts position for the final FDA decision and then go long. I am not technically inclined at all and don't have a handle on the TA side of trading (TA doesn't apply before earnings anyway). The only short-term potential play I plan to make is a small puts position, as soon as tomorrow at open. Just check and May options are not out yet. If I do play, I will trade April options with a small stake until May options becoming available following this month's expiration. They may open May options today or tomorrow, though, keep an eye on it if you are interested.
My two casinos are treating me very well the last few days. I closed my deep-in-the-money March calls positions yesterday but hesitated a bit to open April positions on the pullback in the afternoon. It is likely I will have to chase. I still have in-the-money calls positions to close. Plan to roll some into April.
