Biotech Values

[iwfal]

Only incentive stock options or ISO's create AMTI when exercised. ... On the other hand, there are significant limitations on issuance of ISOs and it would be mildly surprising for these to be ISOs.

You're right - I did assume that these were ISOs. But didn't realize that they were the exception for execs rather than the rule. And agree that the precise dynamics are different for unqualified stock options - but suspect that the same overall dynamic is in play (that if you exercise you have to pay taxes (normal taxes in the case of unqual'd options) - and you'd be better off just letting the options ride and investing that cash in more stock.)

It is worth noting that the AMT paid in one year is not necessarily a real cost because it is available in following years as a credit to the extent regular tax liability exceeds AMT liability.

Yep - know that. But I assume that once an AMTer, always an AMTer - although undoubtedly you have better data on that than I.

One inference that can be drawn is that the option holder believes there will be future appreciation and is trying to effectively convert that appreciation in capital gains, as opposed to ordinary income.

Yep - but you have to pay (taxes) for that priveledge and I believe that for the same expenditure of cash you get a better return if the cash is spent on new stock and the options are left as options until the planned final sell date.

But before drawing that inference here, we would need to confirm that the options don't expire at some point in the near future given Brugger's resignation.

Yep - clearly non-linear events (like options expiration) would change the dynamic. Something I didn't check. Not even sure how to check it.

Thanks for the feedback.