Replies to post #107752 on Biotech Values

[DewDiligence]

Today is Steven Brugger’s last day at MNTA, but he will still serve as a “consultant”:

http://sec.gov/Archives/edgar/data/1235010/000110465910056494/a10-20739_18ka.htm

I had an inkling that Brugger might have a continuing involvement with MNTA in some capacity when he chose to exercise 56K MNTA options without selling the new shares (#msg-56169633).

Today’s SEC filing does not say which private biotech company Brugger is joining as the CEO. If anyone knows, please post.

[iwfal]

Exercise and hold is an odd thing to do under most circumstances. For instance, under these circumstances (exercising options with a strike price of less than 1 and exercise price of 15) he'll have to pay somewhere in the neighborhood of $200K of AMT. If he had, instead, invested it in MNTA shares and left the options untouched he'd actually make more money assuming the stock goes up.

I fully agree that there is some psychology going on that makes these strategies attractive - but not sure exactly what it is.

(And note that I am aware that there are special circumstances where this strategy (exercise and hold) is economically attractive. E.g. for whatever reason the option holder expects to have the cash to pay AMT but doesn't have it at this instant. Or the option holder has low enough income to avoid AMT or expects to be below AMT amounts in a few years (and so can recover some of the money paid in AMT). BUT in most circumstances it doesn't make a lot of obvious sense.)