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gdollarsign, thank you for pulling all this together. I've wondered the same thing and don't have a clue about the answer.
Is that a trick question? Sure I'd take the drug. Please understand that I'm not criticizing the results. But as a layperson, I'm aghast that it's considered such a medical advance to extend a patient's life by a few weeks or months. What horrors these patients and their families must suffer!
Can one of you science guys help me understand what these results mean to a sarcoma patient? In order to dumb it down to the point where I can understand it, if you were a doctor, you'd tell your patient that by giving him this new drug, he could expect to live how much longer than without it? Am I reading the results correctly, that the improved life expectancy is measured in WEEKS?
Bladerunner, I agree. I would have paid an extra 25% in SP to avoid the downside risk.
poorgradstudent,
If you don't mind me asking, are you still long to the same extent, or has this news caused you to reduce or hedge your position in the stock?
I heard he also passed gas after he fell, which we all know is very bullish.
I am encouraged by the amendment to the credit facility. When these amendments are made, the company normally represents to the bank that, in so many words, except as disclosed to the bank, it has no knowledge of any bad things about to happen that could affect its operations or prospects. Assuming that the company knows the study results, if they were negative and were therefore disclosed to the bank, there's a good chance the bank would have balked at the increased/extended facility. So I'm slightly encouraged by the news.
Whether it's a good bet depends on the probability of the two outcomes. I think you're assuming the probability is 50/50, but maybe it's not.
Would anyone care to comment on this question: to what extent is expected good news already discounted into the current PPS. Is it possible that when the news is released, even if it's as good as we longs expect - and especially if it's anything less than stellar - that the PPS might go down?
Ok you science guys, please tell us bubbleheads what the press release means in plain English. Did the company hit a homerun, a double, strike out, or what? Can't wait to hear some analysis from you fellows. Many thanks.
I've got more of this stock than I probably should have, but I didn't sell any today and will hold my breath over the weekend. Perhaps one of you science guys could monitor the presentations and let us bubble-heads know how good or bad the news is. Thanks in advance for any help here.
What did you guys think of the Seeking Alpha article?
Anyone happen to know whether the over-allotment was taken down? I can't seem to find any information about this, and the company has responded to my inquiry.
Thanks again. I really appreciate you bringing this technical info down to something I can understand. I don't have much schooling in science the way you and a lot of the posters here seem to have. (I've spent most of my time around horses.) So any plain-English summary helps a lot. I'm seriously long on ARIAD and think I understand the basics, but you fellows who take a moment to dumb it down are a big help to investors like me. Again, thanks.
Thanks for the post.
If the study ends this month, any thoughts about when results would be released to the market?
What significance, if any, would you attach to this? Thanks.
I've also added to my position. Using on the pps when the offering was announced, and assuming the over-allotment is fully subscribed, the weighted-average pps should be - in theory - $4.10. So we should get a nice bounce, about 9%, when the offering is closed. That's my theory anyway. Good luck to all us longs tomorrow and next week.
Good to know, thanks. I just wanted to clarify that there's zero significance to seeing that a bunch of insiders have signed a lockup agreement.
Signing a lockup does not mean the signatories bought any new shares. They are two different things.
If this were a best efforts underwriting, it would be a different story. But since this is, as far as I can tell, a firm-commitment underwriting, the BANKER HAS COMMITTED TO BUYING ALL OF THE NEW SHARES AT $3.70, so yes, he has a big role in deciding price and timing. And he hopes to make a bundle on the over-allotment.
If $3.70 isn't a floor, the underwriter stands to take a bath on this deal.
Let's not overlook the impact of the investment bankers on the timing and pricing decisions. As I understand it, this is a firm-commitment underwriting, so the investment bankers doing the underwriting have a strong say in timing and a very strong say about pricing. As I stated in a post soon after the offering was announced, I believe this was a collaborative decision based in part on the excitement in the market generated by the weekend's announcement about the science. The bankers saw this as an ideal time to go to the market.
I think you're 100% correct. Once the offering is complete, we should see the pps jump back to market value (and beyond), which I'm estimating at $4.10.
There is an unusual trading opportunity here, while we are waiting a few days for the offering to close. The market told us the shares were worth $4.10 prior to the offering being announced. The price has sunk to the offering price of $3.70 because the offer has temporarily fixed the "market" price at that level. But when the offering is completed (and assuming sale of all over-allotment shares), the weighted average market price will be $4.04, about 9% above the offering price. And of course the PPS could go much higher, given that the company will then be better positioned financially. Buying now at around $3.70 is a way to acquire these shares at a nice discount to the mathematical FMV, a situation which infrequently arises.
Let's try to remain calm. A few observations: The timing of this announcement was certainly made after careful consultations with the lead underwriter. The underwriter wants to bring the offering to market now, in a robust market for these shares, probably thinking that today's good news on the science gives him a favorable story to sell to the market or in a private placement. If the price climbs in the weeks after the offering, the underwriter stands to make a bundle on over-allotment shares. In the long run (yes, I know, in the long run we are all dead), ARIAD's return on these new funds will hopefully dwarf all of our present concerns and dismay, catapulting the company far beyond where it might have been without the proceeds of this offering. It's a matter of enduring current pain for long term gain, as anyone who has sold shares to a venture capitalist will attest. In the meantime, having doubled my position this morning, I am going off to lick my wounds and enjoy a stiff drink.
The price will be set on the eve of the offering.
My impression was that they were referring to the side effects of the drug in the headline. But the text indicated that the side effects were common in drugs of this kind and not unexpected.
You fellows convinced me. I doubled my position this morning. Good luck to all you longs. I suppose there may be some cancer patients who are also deeply gratified by this morning's news.
Whatever was in the presentation Saturday, it appears to have been a non-event. There's nothing on this board about it and nothing in the press that I've seen. Any insight from any of you guys before the market opens in the morning?
Can any of you science guys summarize the news from Europe for us science-challenged types? If it's good news, I'd like to buy more shares at the opening Monday. Many thanks.
I don't like it either. There should be speculative buying in anticipation of Saturday's news. Can we be THAT better informed vs. the market as a whole, or we longs kidding ourselves or just plain delutional? What's wrong with this picture?
To answer your question, the term "fully-diluted" assumes the conversion of warrants and options on an as-converted basis.
Thanks very much for your comments.
Thanks for putting me on to this. I just searched for Ariad+directors+resignation.
Wow, what a mess. Makes me wonder if I should reduce my position in view of this company baggage. Any thoughts on how this will affect the company, all other things being equal?
I have been a shareholder in ARIAD only since spring of this year, and I admittedly know nothing about the company's history. I've seen in several posts, by far more informed investors, dark references to ARIAD's past. Could you kindly educate me (and perhaps other investors who are new to ARIAD), what this is all about? Many thanks.
So it would seem that the volume of put contracts today was about 7x daily average. Here are a few possible explanations. (i) A shareholder with a large long position in the stock is hedging his downside by purchasing puts. He knows news is coming that will significantly move the sp, either up or down, but he doesn't know which. So he's trading part of the potential gains upon good news in return for reduced losses if the news is bad. Possible, but not likely, since the call volume did not spike today - and our hypothetical shareholder would likely have written a large number of covered calls to pay for the puts; (ii) someone affiliated with the company recently acquired restricted stock and is concerned that the sp might fall before he can sell it. He and the derivatives desk of his bank or investment banker enter into a cashless European collar, which his counterparty is now hedging by buying puts. (iii) someone knows that bad news is coming and bought puts today.
You are perhaps confusing inflation, on the one hand, and rising prices, on the other. Inflation is not the same as rising prices, anymore than rain is the same as wet sidewalks. Thus we can experience inflation without any change in velocity. Inflation is always and everywhere a monetary phenomena. Or so I was taught at the Chicago School by some pretty smart guys.
I concur. See the links to the St. Louis Fed at my post #2372 for what he means about the cash just sitting there and the velocity of money (actually, he probably means the multiplier, not the velocity).
Central bankers are engaged in a race to the bottom as they weaken their currencies in an effort to boost exports and stimulate their economies. In the U.S., where exports are a smaller portion of GDP than e.g. Japan or China, our central bank is busy as a beaver monetizing federal debt and pushing harder on the string (see http://research.stlouisfed.org/fred2/series/EXCRESNS, or http://research.stlouisfed.org/fred2/series/MULT). The effect will likely be significant inflation 18-24 months down the road (and like the years following World War II, the opportunity to pay off or re-fund federal debt with inflated dollars). Combined with a continuing weak economy and high unemployment, my guess is that we're headed into a decade of stagflation. It's just dreadful.
I'm short the S&P 500, long gold, and long just a few stocks, like ARIAD, with exciting stories.
I'm up about 17% in less than 2 months. So as my wife says, better long than short.