I see SNY's side of the argument now -- thanks to blade & exwannabe for putting up with me -- and see the case for the murky thing it is. I see SNY as maybe technically right, but philosophically wrong. It reminds me a little of the IGEN days. But that situation was easier to understand: that Igen was ripped off by Roche was clear from the get go, it was just a matter of making it official.
To figure this from an investment/trading angle . . . I agree with blade that the District court decision could go any way the judge wants, since he knows it will be kicked up to appellate court no matter how he rules. It is theoretically possible, though unlikely, that the approval could be yanked or a restraining order granted. Even less likely if this is the same judge that has already heard round one and not granted the TRO. As such, this shapes up to be a somewhat binary event starting two days before August expiration. However, I would guess no ruling will be issued before the 19th (expiration day). Before that happens, there will be some kind of answer to to SNY's complaint from the FDA, possibly very soon, more likely in the week or two from now range.
Does all this sound reasonable?
So the way to trade this would be to buy weakness before the answer is filed, as many of us have already done. Then sell the spike from whatever optimism is generated by the answer. If we deem the answer to be weak, just get out. Figure that if the outcome of the hearing is in the FDA's favor, the move will be about twice (educated WAG) the spike caused by the answer. If the approval is yanked, the downside will be much larger, maybe to high single digits. If one is still holding some shares in front of the ruling, protective puts might be a good idea. If one has gotten out on the answer-related spike, buying a straddle/strangle might be the way to go. Alternatively, one could wait for the up or downside target -- whichever applies -- to be hit and sell time premium. Or buy or sell short. That the losing party will appeal has to be obvious to everyone, so I would consider the filing of one a non-event and not so tradable.
I doubt an M118 or other FOB partnership would show up in this little 3 week window, but a Markman ruling just might & could cause a little excitement. With a potentially binary event happening soon after, though, I would expect the excitement to be muted. Even if it shows up after the ruling, it seems hard to handicap it, and thus hard to trade it. Maybe best to get out of the stock until it shows up? Also, I think this legal action makes it very unlikely that Sanofi will launch an AG any time soon, if at all. So their July 29th CC has probably been rendered a non-event, too. Ditto for Momenta's CC: we already know the pricing, and that Sandoz has hit the ground running.
Did I miss any angles? I'll be interested in hearing comments & in others' strategies for playing this.
In the meantime, a few questions.
Is this the same judge who heard the opening salvos?
When do you expect an answer to be filed by the FDA, and will you be able to post it in a timely fashion for us trading peons?
When do you think the hearing is likely to end and a ruling made?
You gonna go to the trial? Should be interesting. Maybe precedent setting, certainly an important case for the industry.
TIA & Regards, RockRat
