Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
>>The short put cost you .55
No, you got .55 for writing the put. If the stock goes to zero, it will be put to you for a dollar, which offsets the dollar you made by shorting the stock. So you end up with 0.15 which was the net credit on your option position.
Key to understanding options is this simple equation:
long stock = long call + short put
(both the call and the put are at the same strike price and expiration).
Just like in algebra, you can move things to the other side. For example, moving the call to the other side:
long stock - long call = short put
this can be written as:
buying stock and selling a (covered) call is equivalent to writing a put.
Peter
I believe you are correct for securities on the "threshold" (fail to deliver) Reg SHO list and I should have been more precise in my previous response. But I think option market makers still don't have to locate a security before shorting it.
I'd guess that for options on the threshold list that put-call parity would break down - puts would be more expensive compared with calls, particularly for long-dated options.
I note there are currently only 13 Nasdaq securities on the threshold list (plus 12 BB and 16 "other OTC"). Novelos and Resverlogix were the only biotechs I noted.
Peter
eliminate shorting completely and let the economic side take place in where it belongs in a derivatives market place.
Well that's essentially what we have now in any stock that has a traded option, because option market makers are exempt from the naked shorting rules.
The trouble with your suggestion (assuming a prohibition on anyone including the MM naked shorting) is that it breaks the link between the derivative and the underlying because you can't arbitrage between them any time the imputed "derivative price" is lower than the stock price.
In the current version, if you short via an option, the market maker delta hedges by shorting the underlying. Hence the linkage is maintained. In your version, you wouldn't even get put-call parity, so your whole derivatives market would be out of whack.
But other than that, I like the concept. :)
Peter
I'm puzzled by the particular choice of LMWH here - tinzaparin. Any thoughts on this, Dew or anyone?
Peter
When I originally invested in Ariad last year, I thought it made sense for them to try to retain 100% of 534. I've completely changed my mind on that. True it is well within their financial and other capabilities to take it through to approval in patients who have failed other TKIs. But really to get the maximum value from the drug they need to do some sort of front line trial in high risk patients. That's a much bigger, longer and more expensive trial. The drug also needs to be tried in other indications, and again that is not something they can do unpartnered.
Peter
What Ariad has been saying (which makes complete sense to me) is that the push for the restructuring has come from themselves. I think they just didn't appreciate just how much this program was going to cost and so they signed a dumb ("eyes bigger than stomach") cost-sharing deal. They have a substantial line of credit under the deal, but that only kicks in once they have their first approval for the drug.
They do have some leverage here, as the program basically can't go forward without their consent. So that's maybe why the 2010 development plan hasn't been signed yet. So maybe both sides are playing chicken here.
The company I think had assumed that Merck would go forward in breast, which would have provided a substantial milestone. So to that extent the decision was a driver simply because they didn't get the cash. From their CC, it sounded like endometrial was the next likely pivotal, but it sounds like Merck (not unreasonably) is waiting for the Phase II results.
Peter
I really have no idea what is driving Ariad right now, other than it was grossly undervalued for some time (but that doesn't explain the timing). My best guess is that they are close to a big deal to partner 534 and that has somehow leaked.
I follow the stock very closely as it's by far my biggest holding (even before the recent run-up), but all credit goes to rkrw for the initial stock pick and his 534 analysis and research that got me into the stock in the first place.
Peter
Well PF1066 is getting "strong regressions" in the clinic, which trumps any preclinical claims Aria might have.
Seems like the Aria drug has been kind of slow to an IND here. They've been talking about it for ages now.
But if it is indeed better than the PFE drug, we would be talking a very significant drug for a company this size. Again the type of magic drug that could in my view demonstrate approvability in a small Phase I trial.
Peter
>>What kind of partnership are we looking at for 534 here?
Very substantial in my view. Upfront cash well north of $100m - I wouldn't be surprised by $150m or more.
It's a little early to see this as a Gleevec replacement. That's a story with lots of moving parts, not least of which is Gleevec going generic. So BMY/NVS will be trying to push Sprycel/Tasigna to front line, and the insurers will be trying to keep Gleevec as the initial therapy.
There's a good theoretical argument that 534 should be front line - it seems much less likely to engender resistance, and to date it actually seems more tolerable than the other drugs. Front line maybe it can even be given at a slightly lower dose to improve tolerability further. But there's a long way between a theoretical argument for front line and proof. A head-to-head trial against one of the other drugs in high-risk naive patients is the development path - that would need a partner.
Peter
Thanks - hadn't known the AACR abstracts were out yet.
Here are some more:
http://www.abstractsonline.com/Plan/ViewAbstract.aspx?sKey=70a76d65-6c78-4df3-91cc-af1e39942ea9&cKey=46d7d71e-b05e-4287-8e02-53a7f55339c1&mKey={0591FA3B-AFEF-49D2-8E65-55F41EE8117E}
http://www.abstractsonline.com/Plan/ViewAbstract.aspx?sKey=2aadaaf3-f840-4dfc-a85d-9de21a264316&cKey=e927b42d-81af-46a0-b5a6-77be72afd9f8&mKey={0591FA3B-AFEF-49D2-8E65-55F41EE8117E}
http://www.abstractsonline.com/Plan/ViewAbstract.aspx?sKey=dd723e01-2903-42be-9543-55981a386b43&cKey=428906ad-f81c-4efb-b746-b2a2eb38eec2&mKey={0591FA3B-AFEF-49D2-8E65-55F41EE8117E}
http://www.abstractsonline.com/Plan/ViewAbstract.aspx?sKey=7ed1ca57-04c3-47dc-ba92-4832a79cea94&cKey=5344db45-c9f6-42a0-a2e8-ded635b77f69&mKey={0591FA3B-AFEF-49D2-8E65-55F41EE8117E}
http://www.abstractsonline.com/Plan/ViewAbstract.aspx?sKey=8c110617-950a-4f6f-bc09-6b39c3ea8f2f&cKey=32d7a109-f4e7-4a11-a388-54a2fb8e553a&mKey={0591FA3B-AFEF-49D2-8E65-55F41EE8117E}
I previously posted a link on SI to a discussion of the PFE drug:
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=26385394
Aria CC:
No new news on partnership renegotiations, although the claim is they are progressing well. A few nuggets - Harvey says he has absolutely no intention of raising money, which to my mind must imply a 534 partnership in the next couple of months. Second, he said of patients that have responded initially to 534, none have progressed. Still early, but that hints at greater durability than existing agents. Still talking up their ALK inhibitor (2 abstracts at AACR) although no mention of when it will actually hit the clinic.
Peter
>>Tang Capital were aggressively accumulating VNDA sub-$1
Of course they were trying to shut it down for the cash, not to get approval, and they got (very) lucky.
Peter
Results 1 - 10 of about 22,200 for pharmacodiagnostic
Results 1 - 10 of about 22,300 for pharmacodiagnostics
Results 1 - 10 of about 43,200 for Theranostic
Results 1 - 10 of about 132,000 for Theranostics
Google has spoken. :)
Peter
<BDEL>
I've followed them. Key question here is if they can get the FDA to ignore some of the data from one of their India-based trials. If you throw out that data, then their trial succeeded, if not, it failed to show non-inferiority.
The company apparently company claims they know the reason for the bad Indian data - they say some blood samples were transported by land, unrefrigerated.
If the FDA believes them and is accommodating, then the stock is a buy. I don't really have enough information to make an informed decision.
(No current position, but I'm tempted).
Peter
The executive has the option.
Well putting my old securities lawyer hat on, I'd say if the executive has any discretion at all, then the plans simply do not conform.
Note this does not mean the sales themselves are illegal - just the selling executives no longer have an affirmative 10b5-1(c) defense against an insider trading accusation.
Peter
I can't argue with your fundamental points about lack of further adverse events and MNTA's credibility compared with Jing Pan's here.
But I could still see the FDA reviewers looking hard at the Jing Pan paper to see whether it implies there might be some hole in MNTA's claims. The Jing Pan paper is to some extent an attack on MNTA's methodology (to the extent they are claiming there might be other contaminants that MNTA has not found), and so it is not unreasonable for the FDA to at least consider it.
Incidentally there seems to be a new publication mentioned in the rebuttal that is supportive of MNTA's original paper:
Yes I think MNTA pretty much demolished that article as best as I can tell. The details though are beyond my technical competence to judge, and I think it might delay things at the FDA for who knows how long. (Of course the contamination issue applies to existing products too, not just MNTA, so it seems a little unfair that MNTA should get dinged here).
I guess I just got tired of waiting for Godot here. I've been in the stock on-and-off since MNTA first went public (rkrw and I went to their very first annual meeting). I've made a little money trading their stock, but lost some buying calls over the years. It's been like climbing one of those hills where the summit always seems to be just a little way ahead, but when you get to the top of the next rise you see the same thing again.
I think the most probable outcome here is an approval for MNTA and a no-decision for Teva, so to that extent I'm still bullish on the stock. But I think the overhang from a Teva no-decision and the possibility of an authorized generic will act to keep MNTA's stock well away from the full duopoly valuation. Still be comfortable double from here I would guess on that scenario (approval plus no-decision) though, although of course other scenarios (like Teva getting approval too) are obviously much less bullish.
Figure I'll just keep an eye on it and enter again if it weakens further. If I miss the approval, well that's life.
Peter
>>I gather that Momenta's rebuttal stands entirely on NMR methodology
As I recently posted on SI, that is not the case - sorry if my first post on this subject on SI gave that impression. That earlier post just contained a few snippets from the rebuttal.
Here's my SI post:
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=26381009
Who had the discretion in the soft plans you saw? The executive or an "independent" third party?
Peter
I think we must then have a disagreement on the meaning of the made-up word 'theranostics" - my understanding of the common usage was that it is about helping the decision of what treatment to use based on some refined diagnosis (typically some biomarker) - hence the combination of "therapy" and "diagnostics."
Peter
>>Theranostics
My understanding of "theranostics" is that it is meant to describe companion diagnostics - the basis of personalized medicine. In other words figuring out the right therapy based on some biomarker of the disease.
I assume you are not opposed to use of say KRAS testing before using anti-EGFR drugs? Or less well known, an example from conventional chemo - testing for ERCC1 to determine if platinum-based therapy is appropriate for NCSLC or colon cancer? This latter test was pioneered by Response Genetics (RGDX) - a microcap proponent of such testing.
Peter
I don't see how a "soft" plan could be legal. Even if the insider is leaving the actual decision of how many shares to sell to a third party, the insider cannot influence that party in any way. Here's a quote from the SEC guidance from last year:
for a Rule 10b5-1(c)(1)(i)(B)(3) defense to be available, the person is not permitted to exercise any subsequent influence over how, when, or whether a transaction occurs. The third party who has been granted discretion must not be aware of material nonpublic information when exercising that discretion.
The other interesting issue is the legality of canceling a 10b5 plan while in the possession of inside information. This currently seems to be a gray area. Here's an academic paper on this issue:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=330520
Personally I believe the full terms of 10b5 plans should be publicly disclosed.
Peter
Well one obvious timing awkwardness in terms of restructuring their rida deal is the upcoming interim look at the data this quarter. That data will potentially alter the timing of any milestones and the cash needs going forward.
Presumably a restructuring would involve rewriting the agreement the way it should have been written in the first place - a smaller share of potential profits for Ariad in exchange for a smaller (or capped) share of the development expenses. The question arises whether Merck is somehow playing hardball in terms of delaying the restructuring - that's why Harvey would be better off keeping his mouth shut in terms of timing of future events. But they have about a year's cash, so it's not like they couldn't wait several months if need be.
There should be no shortage of potential partners for 534, although obviously two of the potential players already have their own drugs, which complicates things. If they partner 534 now, that takes some of the urgency out of restructuring the Merck deal.
I have no idea why the stock has been strong of late - it's not as if there has been any actual news of significance. It's either the rest of the world finally waking up to the fact the stock was dramatically underpriced compared with its peers, or there's been a leak of some partnership news.
Peter
Voting Patient Representatives
Patient Representatives who serve on advisory committees which review therapies, products, or issues other than those related to medical devices are usually voting members. Voting Patient Representatives must be appointed as special government employees (SGEs). This appointment requires Patient Representatives to disclose personal financial information to the FDA in order to determine whether their financial interests pose a possible conflict of interest on an advisory committee. They have the same responsibilities as other voting members. They are expected to provide the patient perspective, ask questions, and offer comments to assist the committee in making recommendations.
Non-Voting Patient Representatives
Patient Representatives who serve on advisory committees which review therapies, products, or issues related to medical devices (other than oncology) are, usually, non-voting members. Non-voting members have the same rights as other committee members except that they may only vote on procedural matters concerning the conduct of the meeting. They are expected to provide the patient perspective, ask questions, and offer comments to assist the committee in making recommendations.
Probably a reasonable comparison to Exalgo is Opana ER (Endo/Penwest). That's a 12-hour extended-release oxymorphone (which I believe is about 3 times more potent than hydrocodone). Interestingly Opana ER's initial 6 month sales track matched almost exactly that of pallodone, which was a 12-hour extended-release hydrocodone sold in the US before it was withdrawn (taking it with alcohol caused "dumping" of the active ingredient, which could kill the user).
Opana (currently selling on the order of $250m/yr 4 years after launch) is scheduled to go generic in 2013 (or before if the patent is successfully challenged), which likely will dampen Exalgo sales.
Peter
The big substantive error is here:
Thanks ghmm.
The graphs are indeed consistent - it's just me that wasn't so early in the morning. :)
Peter
Yes, seems very gentle docs.
Striking was the fact that there was a post-hoc survival benefit, with the FDA's only complaint about the adjudication of whether death was ipf-related or not.
One thing that puzzles me - my recollection of the FVC graphs in the failed study (006) that ITMN has presented in the past differs from those they are presenting now. The old ones (as I recall them) show the drug doing better and then placebo suddenly improving near the end. The new ones show the placebo better pretty much throughout. Anyone else recall the graph from prior presentations (or have a copy of an old presentation)?
Peter