精华 苦辣酸甜难书尽，成败得失笑谈中

[lazycatcat]

Sorry, got it wrong. I think I tried to kick it when it was $8. Current valuation is $1.00 B

 

[lazycatcat]

AMRN got rejected - as expected. Between now and July, what do you think of this issue ? If it gets approved, what do you think is the worth ?

Rather strange that VVUS offering is successful. If FDA rejects, what may happen ? Or if FDA requires more studies etc ...

There has to be some reasons behind the discrepancy between VVUS and ARNA. Market essentially is writing off ARNA at this point ...

 

[lazycatcat]

I have no position in ARMN but it looks enticing. The likihood of FDA approval seems to be high and the market can maintain the expectation till July ...

 

[lazycatcat]

Itchy on AMRN Sept calls....The rejection was non-event as expected by the option pricing.....

 

[lazycatcat]

Shareholders will take a good haircut; March calls be wiped out; March put writers be assigned shares; March calls writers and put buyers score big; shortsellers make a bundle. Given the options open interest, volume will spike to the roof.

I will have to start the game anew. One regret: I bet against my own DD and expectation and failed to execute a strangle. One cold conformt: my exposure is not big. I am expecting a secondary and will start buying shares after that. With Stimuvax to continue, pipeline (PX-866 and ONT 10) will take centre stage. Between now and final START data readout, PX-866 and ONT 10 will drive pps movements.

You got up pretty early as the posting was 6 in the morning.

As Gordon Gekko said, you lose a few and you keep on fighting. ONTY becomes a story stock then ...

 

[lazycatcat]

M&A Arbitrage

A side note if you are interested in M&A arbitrage. If done properly, this is relatively lower risk than the general market and turn-around time is rather quick (in a few months). The general step is as follows:

1. A deal is announced.
2. Study the deal to evaluate likelihood of a success.
3. If rate of success is good, see if there is a spread between market and closing price. Also, evaluate likelihood of competing higher offers.
4. If 3 is positive, buy; otherwise, just keep track.

Recent success includes trh etc ... Historically, this technique is used by many successful investors....

Just some thoughts to share...

 

[lazycatcat]

Got distracted on other directions...Nice to see you are doing well with bios. I don't think there are significant dilution from AMRN. I think its drug is of lower huddle yet big market.

However, a 50% rise in bio is nothing to celebrate ...

 

[lazycatcat]

I got wiped out in ARNA in March options. I thought its recent price action should have occurred after VVUS recommendation.

I think FDA decision on VVUS is April 10th and there should be an impact on ARNA. ARNA is definitely controlled by some powerful speculators and there is nothing ordinary people can do with it...

AMRN valuation is probably hard to gage. The reference is the other drug that has over $1 B sale. AMRN product is claimed to have superior effects. I think the decision is around June 27th and therefore you have to use July option. I am not 100% sure about date but it is before July option expiration I think...

 

[lazycatcat]

Current ARNA action should have occurred after VVUS recommendation. Nothing was changed then and now.

Due to lack of material support (like earning etc), ARNA is easily subject to manipulation....

 

[lazycatcat]

Manipulation? That is life in pre-earnings biotech world! Arena has always been notoriously manipulated, unfortunately for longs, negatively. Its enemies are large in number and mighty in pockets. Pre-March-2009 DNDN was one I went through , checked the chart and you will see nothing better! "Battle-ground" stocks are not so-labelled for nothing!

Jazz was sub-10 for an extended period of time; Aria hovered between 2 and 3 for at least 5 years; THLD was around 1.2 just a couple of months ago and in fact, was there for years. They all took off like there is no tomorrow and never look back. All it took was one catalyst.

There is no "should" on Wall Street. You get what you see! I have posted about why Arena was kept under 1.8 post Vivus AdComm for many days. That is exactly where the value angle you often talked about lies!

Nothing changed with Arena? Sentiment has changed! Is that enough? A publicly-announced game changer is just around the cornor. Whether or not it comes to pass, that is the question, and exactly what bulls and bears are betting on. Buy/hold/sell/sideline decisions come down with a simple consideration --- conviction.

Arena is not a stock for the risk-averse minded and the faint of heart. Comes May 11, 3.08 is no longer! On June 28 or thereabout, it is either in double digits or sub-2.

You are definitely right and very experienced in this perspective. By the way, just heed April 10th day for VVUS as well.

My proposition for speculation/investment is that people will get attracted to "money" being left on the table. Before VVUS recommendation, it was standing at $1 B and ARNA at $300 M. So, there is money left on ARNA table if recommendation is successful.

Actually, ARNA went down and more money was still on the table.

I obviously neglected the fact the money in this case is in the eye of the beholder. It is not like actual earnings....As you said, it is controlled by sentiment.....

 

[lazycatcat]

Thanks for the correction. I just remembered it was before April option expiration.

I don't quite get your idea on ARNA. You meant selling put at strike price of $12.5, while ARNA stock price was at around $2.00.

What do you think if VVUS was rejected for more trials on heart impact ? What would be the share price ?

VVUS April put at $8.00 is around $0.10....while Jun put at $8.00 could be sold for $0.30....

 

[lazycatcat]

I see your point on the $12 put. If such moment strikes again, please share the ideas.

My experience with IB is pretty straight forward. What is the problem ? I don't have margin accounts...

I am pouring through ARNA 10K. If ARNA can financially go bankcrupt on refusal, that will provide good foundation for a position...

I presume if it gets CLR, it will be flying to Chapter 11...I want to find out how it will be squeezed financially...to ensure it is choked...

 

[lazycatcat]

ARNA has around $100 M in cash as of today - a rough estimate. So, it won't be squeezed by liquidity.

It has been offering stocks and warrants like crazy at $1.7 level in the past few months. Therefore, all the buying at $3.00 strike is probably just a cover of short selling in parallel at $3.00.

The poor common shareholders are essentially all hanging on FDA decision. All the low-risk juices have been sucked dry by two hedge funds ... Deer something and Azure something ...

So, it is blood and sweat bet on FDA decision... Fully diluted, the company may have around 200 to 250 shares. With $1.5 B market cap, the upper limit of share price is probably $7 per share ...

 

[lazycatcat]

The latest filing is 10-K. On page 79, the diluted share is ~140M.

On page 81, the total shares is 146 M.

On page 87, the shares excluded from dilution is 42 M.

So, all shares at this point is 182 to 188 M. This is as of Dec. 31, 2011.

Then Note 17 on subsequent events:

1. Deerfield bought 9.953 M common and 9.953 M preferred (assuming full conversion) at ~$1.7 per share.

2. March 2012, Azimuth deal of 14.41 M shares.

So, if you add these together, the total outstanding is ~34 M.

Adding all these together, it is 216 to 222 M shares. There are some adjustments downward and potentially upward (due to stock options).

If valued at $20 per share, the total valuation is $4 B. VVUS is at around $2B at today's price ....

 

[lazycatcat]

Here is a hypothetical idea on VVUS trade:

1. Buy VVUS at $21.72 (closing price).
2. Buy VVUS May $22 put for $4.50.
3. Sell VVUS Sept $27 for $4.00.

The risk is between May and Sept ... The max gain is probably less than $500 and max loss is probably smaller than 500...