Biotech Values

[DewDiligence]

>> are you still holding to your 25% chance of a bad outcome for the advisory committee meeting? As I recall, you came up with that figure before Guyer announced that they were going to withhold the two year data. <<

I had assumed that the EYET’s two-year data would be bad, so EYET’s decision to not reveal the data doesn’t appreciably change my view of the panel-outcome probabilities.

These are the probabilities as best as I can estimate them:

--25% chance that the Aug 27 panel votes for non-approval based on the data at hand. In this case, there’s a 95% chance the FDA backs the panel and issues a decision short of a full-fledged approval. Thus, there’s a 23.75% chance (0.95x0.35) of a non-approval or delayed approval from this parlay.

--75% chance that the panel votes to approve. In this event, there’s still a 30% chance that the FDA contravenes the panel’s vote and requests more data anyhow. Thus, there’s a 22.5% chance of a delay from this parlay.

--Adding the two parlays above, the aggregate chance of an unfavorable outcome for EYET is about 46%.

>> It's going to be hard to hold these puts across the committee meeting. When I bought them it was just play money for an all or nothing bet on the meeting outcome. <<

Assuming for the sake of discussion that my probabilities are accurate, note that about half of the 46% vig comes not at the panel meeting but later, when the FDA itself reviews the application. Hence, to take full advantage of the these outcomes using options, one would have to hold some options expiring in December or later.