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Thanks Blackcat - good points. What bothers me most though is that even if the incidence of PML with T is the same as with Rituxan or Remicade for that matter, it will be more public with the TOUCH program. The other drugs seem to have gotten a free ride to some extent.
Jon
They are not planning on taking Rituxan into marketing for MS from what I have read. The plan instead is to put son of Rituxan into PH III instead some time next year, add 2+ years for trials and the FDA process and you are in 2011 or so. Other than PML, Tysabri is probably as well-tolerated as most drugs. Rituxan does have some nasty side effects including the PML. So it all comes down to the real PML rate of Tysabri vs. the better dosing/pricing of son of Rituxan.
Jon
Rumor not true at least yet. I assume the rumor will move on to TEVA except they report pre-market tomorrow. When do they usually release the PR Dew?
Jon
They will record the rest of unamortized fees and termination/separation costs into income.
Jon
I am generally a spectator as I think this drug has no business getting approved on this clinical program and with this data although the safety makes me waver. I have had a lot of fun watching the debate.
I was perfectly hedged for the committee vote but through some errors on my brokerage's part and on my handling of their error, I was briefly long 1100 shares from $15 to $25 which covered the costs of their unwinding my hedged positions (in error) and gave me a windfall profit of an extra $5K. I did scalp a point on the recent bounce but am out for good now unless I can find a low risk/arb play.
Jon
PS My main game lately is to try to play high option IV situations with spreads and/or sold straddles or other creative means but only after doing the fundamental work.
DNDN:
Short interest was massive at April reporting date. 33.9 MM shares from 26.4 MM shares. I do think it has been cleaned up a bit as put-call parity was holding last I looked two days ago.
http://www.shortsqueeze.com/index.php?symbol=dndn
Jon
This happens in a number of stocks from time to time. Also, some of the late reports for a day are simply VWAP reports which can be way above or below the close. For example, when DNDN has a straight up day say from $15 to $17, the VWAP is likely $16 or so. The close is $17, someone may do buying or selling in the $16s and $17s after hours, but then a VWAP report of $16 comes in and makes everyone think someone dumped. BTW, two ways to make money - play the game or buy from those selling below-market. I have done and it is kind of fun. I have generally made money taking cheap shares (i.e., large discount to close in either AH or pre-market).
Jon
On PML,
It is unclear what the ultimate outcome of PML would be in people with non-compromised immune systems. Some thought leaders believe you can remove T if you catch it early enough and mitigate somewhat the outcome. ELN and BIIB are working on several different avenues as mentioned earlier to mitigate impact.
Jon
The second AD drug that Elan might get into P3 this year is Lilly’s Gamma secretase. Elan has the rights to opt in 50/50 on this drug for a seven year window (as mentioned in today’s cc) and you don’t see that mentioned much either.
To me that is key - free option (of course earned with IP) with no resources spent until they know. Very important for a leveraged model.
Jon
Dew,
Why not do the simple question, which relates directly to T and ask about its revenues in 2008 or 2009?
<$250
250-499
500-749
750-999
>999
Jon
200 calls at 40 cents is still $8K - nice trade.
Jon
MEDI -
Very rich price. With all the smoke, it was obvious a deal was going to get done. Most of the stuff I read suggested mid-40s and so I stayed away given potential risks and the large discount a stock swap could have had (notice they paid cash though).
Jon
What do you bet AGIX knew the news on Friday and held up the PR to screw the shorts one last time as options expired over the weekend?
Jon
On B/S for biotech options - I do not disagree with your assessment as B/S clearly misses fat tails and extreme events. On CEGE, it should be relatively close however given the fact that the option being priced is only 2/3 of a year longer than the longest public security and we are using the inputs derived from that security to price the new one. Hence, you are effectively extrapolating from the one to the other over a relatively short time period - not too huge a leap of faith.
On DNDN, I have not followed it closely enough to comment.
I do find it interesting the synthetic short is fairly close to stock price - buying the put and selling the call - which is strange for a supposedly shorted out stock. Go look at NRMX recently - it cost you $1 to replicate a short using options.
Jon
And MYGN has barely moved - of course there is a difference in importance given the different sizes, but still?
Jon
Thanks Dew. The problem with it is that the numbers are very sensitive when high vols are involved. And in bio-land, that is always. Look at MNTA, AGIX, CEGE, and DNDN actual and implied vols recently and you could reasonably use a 100% vol number. This is why so many believe expensing options is not a good idea - a lot of art vs. science in it and accounting rules don't work well in this regard. Also why so much money was given away to corporate execs - seemed harmless enough giving a few million options at current strike. But when annual issuances were involved with 10 year lives, the amounts of money became mind boggling.
I slipped up yet again in my analysis earlier though and did not use the public data fully. Today, CEGE has Jan 09 options outstanding which at the midpoint have a vol of 72%. Plugging this number into the calculator yields $2 per warrant or $4.4 million. This reduces proceeds for pure stock to $55.6 million or $5.15, still reasonable vs. a $5.33 close and a massive runup - but a bit lower than I had calculated earlier. I do not know the vols on that day - probably higher though but some of that could be reigned in because of going out another 9 months. A vol 10 points higher (82%) would have yielded $2.35 per warrant or about $770K more.
Jon
Cell Genesys (late response)
Actual proceeds are really the 60 MM less about 10 MM for the warrant value (5 year warrants probably worth 4-5 per warrant but I do not see details on strike price and I don't have my B-S application on this computer) divided by 10.8.
No. The warrants haven't been exercised yet, so they didn't bring in any extra cash.
AND
On April 11, 2007, Cell Genesys, Inc. (the "Company") entered into a Placement Agency Agreement with Credit Suisse Securities (USA) LLC, Needham & Company, LLC, Canaccord Adams Inc. and Cantor Fitzgerald & Co. relating to the issuance and sale by the Company of 10.8 million shares of the Company's common stock ("Common Stock"), and warrants to purchase 2.2 million shares of the Company's Common Stock at an exercise price of $7.18 per share ("Warrants" and, together with the Common Stock the "Securities") to the signatories to the Subscription Agreements (as defined below) at a price of $5.55 per Security which the Company estimates will result in net proceeds of approximately $55.2 million, after deducting the placement agents' fees and estimated offering expenses. The five-year Warrants will not be exercisable prior to six months after issuance.
Wrong in terms of calculations by both of us.
I did not factor in proceeds from the warrant exercise only today's value if an investor wanted to value the warrant today.
The investors bought 2 things: 1. Stock 2. Warrants for more stock to maybe be exercised at a later date. Notice they paid 5.55 per Security - includes Stock and part of a warrant.
Most of us retail investors look at these options and assign little value to them but if you run an option pricing model you will find that options struck 35% out of the money for a five year term likely have a value of between 10-25% of the stock price per warrant. The 10% assumes vol of 25% and the 20-25% assumes vol of 50%. In this case, using 50% vol (seems low vs. today but this is over 5 year life) and 5.33 stock price (day of deal) and 7.18 exercise price, one gets $1.23 per warrant, much less than I guessed without the data on strike price. This works out to just under $3 MM (vs. my $10 MM) and gives 60 - 3 / 10.8 = $5.27 which is close to the stock price the day of the deal - not too bad.
Jon
There were clearly a handful of "up to 6 month" (vs. 10 month process) approvals for regular path drugs looking at the graph on the right - but most drugs clearly go through multiple cycles and take much longer.
Jon
does anyone know if they usually wait to the PDUFA date to announce approval/approvable decisions?
Most come down to the absolute wire and even occur during weekends after a Friday deadline (i.e., company gets notification late on Friday and discloses on Monday). I have seen some approvals a week or so early but not many. Probably some approvables too but I don't actively track this.
I doubt FDA is going to approve provenge 3 weeks early.
Jon
Thanks to all who wrote on the request for medical help.
Jon
Of course these data look like the trial equivalent of Fort Knox compared to the accelerated approval OOD gave to Sutent for the same indication. Two non-randomized Phase II trials? Oh, to be second in line at the FDA with a similar class of drug. And everyone wonders why me-too drugs are so popular...
It didn't help ENCY!
Jon
DNDN: (My guess is that the FDA is now experiencing some of the fiercest in-fighting between divisions, CDER vs. CBER, that it has ever experienced. The fact that Scher has taken this whole mess public is testimony to that. The whole process is rather fascinating, if you're into this sort of stuff--lol)
I agree, at least for those of us without positions.
Jon
MEDICAL HELP PLEASE:
A very good friend is 17 weeks pregnant with her second child. She has been having heart palpitations and it has her concerned. Her ob/gyn has said it is no major problem and is probably caffeine related. She saw a cardio guy recently anyway who indicates she has some regurgitation around the left valve (nothing to worry about, very common, not bad). She might have a pituitary issue. So either the pituitary issue (too high a metabolic rate if it exists - her mother had it) or pregnancy is causing the issue.
Anyone know anything about this area/have any thoughts?
Jon
PS No issues with the first pregnancy and she is 40 years old.
You really think Satra has higher chance of approval post Provenge AC results? That means >65% chance of approval, I am assuming.
Jon
PS I agree the Spectrum/GPCB press release battles and Spectrum acting as full partner issues are comical. Spectrum should go ask the DOVP executives how to act - oh that's right, they are probably all long gone!
Take some Lunesta! Just kidding - disclosure: long SEPR from much, much lower prices but held from much higher prices. Ugghhh!
I just noticed the VRTX stuff over on Investorvillage. It seems I am getting dissed without ever having said a word! It seems I am just some SI guy who mis-reads data and focuses on the detailed minor poirnts. Thanks Dew - LOL.
Jon
This is the price that will screw all option buyers most. Anything that is plus/minus 5% in price with the next news out in November (seemed unexpectedly long by some commentators) should do a number on the vols.
Jon
PS I had posted one of the Euro prices over on SI about the same time as you, but I have an excuse. It was 3:30 in my afternoon.
As Dr. Mule pointed out, we have no idea how any of these works. If we wait until we do, we won't approve one of these drugs any time in the next decade or so. If 9902b shoots p<0.05, would you withhold approval because the MOA isn't precisely known? If the answer is no, then the MOA argument is moot.
It would seem to me that the whole MOA issue would mean more if this was a drug that was going to be given forever to a large population where forever represents decades (i.e., statins, etc) and where not knowing the MOA might potentially lead to unexpected SEs due to time and number of patients.
Here we are talking a very small number of years for folks who are dying.
Jon
PS Yeah, it could also mean more if one is questioning the efficacy effect as folks are. But given the safety data and the illness and the current ongoing study, does it?
I still think FDA might go with CU due and waiting given that is the POLITICALLY easiest answer to appease the different constituents.
How has the SPPI/GPCB spread traded recently? Anyone know?
Jon
But here is my question: How do they know what agent caused what side-effect beyond a reasonable doubt?
I was just pondering the same thing - second time today that
has happened. Look at my last post where I detailed some of the AEs in Arm D - one was a gastroesophageal redux issue (unlikely to be any of three drugs although I guess it could fir into GI issues seen already) and one was anemia (most common or among most common SOC issues).
Looking at the main VX-950 combo issue, it seems to exacerbate the rash issues of SOC - doesn't seem to be a VX issue (at least not in early trials, and given the number of times it has popped up in combo and its prevalence in SOC, it seems to be an exacerbation issue). I wonder if it will magnify other AEs of other cocktail drugs. We will get some more info on side effect causality when the non-riba arm is done in one of the later Prove trials.
Jon
Agree with you on this about ITT and dropouts.
It is also unclear how the three AE drops in Arm D impact numbers. Also the 4 that moved on to Arm B moved on because they were not early responders or relapsed between weeks 4 and 10. They are responders so far though from what I can tell and are receiving SOC for a little while longer. So what does this 6 of 17 on an ITT basis really mean, esp. with one quitting because of refusing to consent, one quitting due to AE which is unlikely from VX-950 and one quitting due to anemia - (typical SOC issue). So you have these three quitters plus one other quitter and four SVRs (but not RVRs) counting as failures in an ITT for Arm D.
Jon
VRTX Agreed on most all. Palindromy did miss the dropouts though. There is an SVR rate on an ITT basis of 70% for all of Prove 1. This is the cleanest assumption to make for now.
Jon
Now, assuming(and I think it is a bad assumption) that 6/9 reflects true SVR20 proportion, the real SVR20 that would playout with larger study numbers could be assumed to be 0.666*0.799 = 0.532 ie 53.2%
You are still missing the drop-out effect however.
Most if not all drop-outs came much later. The better measure is the 70% SVR ITT measure at 12 weeks for the whole trial. Using 2/3 you 47%. Using 15% (feels more right to me), you get 60%. But I still think 12 + 24 SOC (12 being concurrently and 12 after stopping) will win out ultimately.
Jon
[EDIT] Similar conclusion here as to gofishmarko who posted while I was devising my post. I did not factor in responders becoming non-responders during SOC arm - probably offsets fact I used RVR as proxy for SVR even though response on an LOC basis is better than RVR rates (not clear proof as all of the droppers COULD have relapsed and SVR on ITT is lower than RVR).
2. Increase SVR to say, 70% (we don't know yet; seems to be a reasonable number at this juncture)
I saw some analysis which indicates the likely rate is between 46%
(current SOC)and 66%. To do your own take 100% and subtract 11% (drop rate for all of Prove 1) and 21% for non-responders (non-RVR rate - this is but a proxy - may be a bit low given non-RVRs may become SVRs but data set overall shows more RVRs than SVRs, mainly because of dropouts though). This gives you an ITT SVR rate of ~70%. If you have relapses equivalent to Arm D, you are down to 46%. If the relapse rate is halved, you are in mid 50s.
Jon
Most of the analysis I have seen is using 17 as the denominator - not the 20 number expected to be randomized into Arm D. The 17 are those receiving 1 or more treatments.
The drop rate in Arm D was much higher than in Prove 1 by the way, 4/17 vs. 11% overall.
It also appears there may be some failures with SVRs judging from the response at 12 weeks measured on an ITT-basis vs. LOC-basis. The LOC basis is significantly higher and represents using the last measurement for droppers.
Jon
VRTX
I just posted some info on VRTX over at SI.
Jon
http://www.siliconinvestor.com/readmsg.aspx?msgid=23460256
>Now would seem the smart time [for NVS] to take out MNTA.<
According to #msg-18782667, MNTA first has to get its market cap up to $1B
LOL.
Jon
Now would seem the smart time to take out MNTA.
Jon
The easiest thing to do is to allow it be used but to throw it back on the company through CU program - "see, we listened to AC but also guaranteed trials would be finished given results to date."
The political answer is approvable with CU. It may be inconvenient to longs and to the bio sector as a whole, but I think I agree with Dew that that is what is coming. It is the perfect solution to a thorny political problem. If it does not get used in a CU, it is DNDN's fault for having poor finances.
Jon
Let's hope they pass the bill and force the veto.
Jon