Replies to post #83199 on Biotech Values

[wallstarb]

If its any consolation we have been shorting ARRY last few days but today especially.

14:53] <@WallStArb> ARRY technically broke down - this one May get ugly next few weeks[14:58] <XB> doesn't ARRY have news in the near horizon?
14:59] <@WallStArb> Is that what they are calling bad data now?
<@WallStArb> [15:01] <@WallStArb> ARRY dilluted market cap is like $500m if you include debt - imo its a loser and over valued
[15:01] <@WallStArb> They got over $120m debt/liaiblities - little cash

I think it will be $.50 - $.80 area - but that is/was some of the live chatlog from the financialchat.com site. Goodluck with it - but imo it's toast --> should eventually go to $0 unless they can salvage something - but lookign at their balance sheet it is expensive even at $.50

[rkrw]

I wasn't expecting the data to be good. But at least they proved unambiguously it's not good.

[turtlepower]

arry - Wonder what the CC is for. There isn't too much to discuss in terms of what would happen to the RA program. Trading around 3 after hours.

[mcbio]

Re: ARRY-162 Phase 2 RA results

ARRY data is a lot worse then so-so and ARRY has no cash.

Actually ARRY has -$1.26 a share net cash - so it will likely trade down under $1 - It seems the south americans make damned good placebos - maybe ARRY can sell those instead.

First, I'm clearly disappointed in the results and I won't try and sugarcoat my feelings. I knew it was a crapshoot but was hoping for a positive outcome. However, I'm more disappointed because of the potential upside that won't be realized and not because I believe the share price is about to crater. You're predicting the share price to trade down under $1/share which I find absolutely and unequivocally absurd. If the after hours activity is indicative of the pricing tomorrow (down about 23% to $2.93), then the share drop is much closer to what I predicted (roughly $2.75/share) than your prediction. I actually hope it does trade down to $1 as I would love to dollar cost average at that ridiculous price.

I also find your statement that "ARRY has no cash" equally absurd. As has been noted before, ARRY has about $100 million in cash, which is sufficient to last the company for at least a year assuming zero upfront milestone payments from partnering any of their compounds. Also, you focus on the negative net cash but fail to understand the nature and timing of the liabilities. Again, as has been noted before, the bulk of liabilities that you see on ARRY's balance sheet (about $126 million) are not due until 2014, or 5 years from now, and are payable in either cash or stock. So, there is no dire immediate cash crunch that you continue to allude to.

Now, back to the actual trial results. I will say the one thing that puzzles me is that there was no reference to the ACR50 or ACR70 scores. Did they simply not test for these scores, as they indicated they would do in a prior call, or are these results still to come once the data is further analyzed? I hope this important point gets fleshed out in the conference call tomorrow. Although I'm not counting on these scores to be positive, there is a chance that ARRY-162 could further differentiate itself from placebo and potentially approach stat sig given that ACR50 and ACR70 scores are much harder to achieve than the ACR20 score.

However, the other point is that the ACR scores do not follow a clear dose-response pattern. There is a better response across the board in the 10mg bid cohort versus the 20mg bid cohort, which just adds to the confusion and disappointment of the results. Also, as mentioned before, RIGL's R788 had an ACR20 score of 65% in its similar Phase 2 trial, which is a bit better than the ARRY-162 results.

Speaking of RIGL, I was eagerly awaiting these results not just because I'm long ARRY but because I'm still considering getting back into RIGL for a third time. These results are good for RIGL because that means one less competitor in the oral RA space. And I believe that you're just as wrong in your assessment of RIGL as you are of ARRY. I will withhold final judgment until RIGL has its end of Phase 2b meeting with the FDA at the end of October. But, barring any significant clinical restrictions imposed by the FDA on future R788 trials, I will likely be back in RIGL given this news today from ARRY.

As far as ARRY's valuation now, I will continue to hold given the rest of the pipeline (if it drops below $2, and certainly to $1, I may add). Although I'm quite certain that ARRY-162 is dead in an RA indication, there is still the cancer angle. They also still expect a significant partnership for their diabetes compound, and perhaps one or more others, by the end of the year. And then there is the rest of the pipeline, which is quite deep.

Finally, congrats to Tony for selling out ahead of these results.