RLYP - Wade, I own RLYP and have an avg basis in the $20's. Luckily, I've sold some call on spikes and have brought my avg down, but still waaay underwater. I think the short thesis is simple, they don't expect a B/O and they are betting that it's a slow ramp in sales. With ~$290 million of cash, and a high cash burn rate, the thought is that RLYP will have to raise more money at some point if they don't get sold. That means an equity issuance that may be dilutive, especially if done at these levels. An equity issuance would allow short sellers an easy opportunity to cover.
I personally think that management should strongly consider a sale instead of a potential share issuance later this year. They may be holding off on a sale now until they see what happens to ZS-9 (will it get approved, will there be restrictions, etc.). It's a bit of a bet on their part hoping that any negative impact to ZS-9 will be a positive to their drug and make it more valuable in a sale. I think the cash position is giving them a longer window in the hope of getting a better price.
I'm disappointed with the price action as well, but plan to hold as I think downside is limited and will continue to sell one-month out calls on upswings as my current ones roll off until May (when the FDA's decision on ZS-9 is due).
