Obvious takedown on ARNA pps to lower BO premium - don't know how "they" manage to get this done, but we've all seen it before. ARNA was at $89 in Feb, although they had an official failure of one P2 drug trial for IBS - 3 doses and various levels of abdominal pain - but the largest subgroup, those on the highest dose with the worst pain, showed meaningful and stat sig improvement, and the stock did not crater after topline results came out in March. It did crater in Aug after Q2 results were released, from $62 to $45, although there was nothing really bad about results except net loss YoY went from -$1.61 to -$2.40 due to increased IR&D costs as trials expanded/started - they have a relatively large pipeline, including a PAH drug licensed to a SK biotech - no CVR for that program in the PFE deal. Terms of the deal are $235M payment from ARNA to PFE if ARNA walks away, including that they get a better offer, and $350M from PFE to ARNA if PFE walks away, like if one of their most important ongoing P3's announces failure before the deal closes.
ARNA was my single biggest position, owned it in 3 accounts since 2011 with some averaging down (AMRN close behind, #2 biggest position) - at least I won one of those huge bets - avg. profit for the 3 accounts is +130%, and only 1/3 of the # of shrs is in my taxable account, have enough write-offs to cover the taxes. Really thought AMRN was worth way more than ARNA in the long run, especially since I bought ARNA for Belviq, it's failed weight loss drug (pulled from market due to cancer problems, but never sold well anyway). This is a case of where not taking your losses and moving on paid off (the lost opportunity cost argument) - even survived a 1:20 RS and still came out on top. Hoping the "don't sell and make paper losses permanent" attitude pays off in AMRN as well - I'd be thrilled to get $15/shr and walk away from this POS stock - hell, I'd even take $13 - that's still a 100% gain between both accounts that have AMRN.
BTW, the market is not sure this ARNA BO is going through, and it definitely doesn't appear to think a bidding war is going to break out - ARNA only trading at $90 with a BO price of $100 on the table - will be interesting to see what happens the next week or so. But YIPPEE! One 10 yr held biotech millstone around my neck will be gone forever some time next year.
The Thought Police: To censor and protect. Craig Bruce
