Replies to post #108310 on Biotech Values

[ghmm]

I really appreciate Craig Wheeler's discipline in not going on a huge spending spree. It appears CW is incrementally increasing investment in #3 (which I am glad to see) but at some point cash will really build up (though I am sure Biotech CEO's would agree you can never have too much cash) and I was curious what next steps would be assuming none of the 6 items that you outlined (and nothing negative either like a second generic Enoxaparin):
2'-Develop M118 in a deal where we pay more of the share
3'-Accelerate work/spending in FoB
4'-Take 402 into clinical development
something else?

CW seems still bullish on M118 but sounds frustrated at partnering opportunities and while I would normally expect 3' and/or 4' to be more likely I am wondering if at some point (cash level and/or financial stability) he would take much more share of the cost of developing M118. Any thoughts?

[medchal]

"... simply being long the stock is apparently not exciting enough for some of the readers on this board."  Oh, come now, Dew:  That's disappointing, particularly because it's disingenuous.

I'm sure you know the options game as well as anyone, even though you more or less disdain it, and you know that a lot of options plays--selling married calls, for example--are certainly not meant to be a recipe for "excitement".  Quite the contrary, it's a risk-reduction technique, as well as--at times--a way of generating remarkable gains without taking on excitement (risk).  The only reason I mention it here from time to time is that a lot of people are unaware of the possibilities and only think of options in terms of buying calls (which will usually generate enough excitement--and losses--to satisfy anyone but a determined masochist).

Stocks held by the enthusiastic are the best plays along this line, and MNTA fits into that category right now, and has ever since approval.  It's been fully three months since that approval, and it has been relatively easy to sell calls on shares two or three times, at handsome premiums, to those afraid of missing out on an "abrupt rise" and/or wanting to take advantage of such an event.  In my case, I've collected just over $2.65 a share in premiums on expired (and about to expire) calls.

Personally, I have to wonder at anyone willing to pay anything for the right to buy a $16.35 share at $18.20 for only the next two weeks.  To me, that's just another instance of failure of the "efficient-market hypothesis", and one which should be taken advantage of.

As far as buying calls making any sense here--obviously I think it doesn't, since I'm selling them.  However, those seeking "excitement" (through the measured loss of money?) may see it otherwise, I suppose.

[Rocky3]

I’m not sure I agree that a slow and steady rise is more likely than an abrupt rise; several kinds of events could result in the latter:

1. FDA approval of generic Copaxone.

2. A partnership deal for M118.

3. A partnership deal for an FoB program.

4. A partnership deal for M402.

5. Formal FDA rejection of Teva’s Lovenox ANDA (unlikely, but possible).

6. A buyout offer at a large premium.

Because the timing of the above events is difficult to predict, I think the best approach to MNTA is to dispense with buying or selling options and to simply own the stock. However, simply being long the stock is apparently not exciting enough for some of the readers on this board.

I don't think any of things mentioned are that likely, and surely none of them are likely to move the price as much as approval of mEn did - and we saw how long that lasted.

As already pointed out, the volatilities are high and have been for years. I have not found any other stock that has maintained such high volatilities for such a long time - at least 4 1/2 years. And the stock price has not really moved that much (at least in my opinion, since it was over 20 in early 2006). It has been far more profitable taking advantage of that volatility by selling covered calls or puts (as pointed out, probably an inefficient market opportunity), than owning the stock. Will it be in the future? None of us really knows, just like we don't really know when (if ever) tEn will be approved.

After primarily playing the volatility by selling puts for years, I am now very long the stock too. But still selling puts and a few covered calls too. Luckily, the prior profits have funded a lot of the current long position. Having not collared the long position, so I am very exposed to tEn approval possibility. If we get to mid 20s (either slowly or fast), will look to collar. Biggest single current option position is in ratio spread calls of 20 and 25 due in March. So I am also slightly exposed to buyout over 30 (which is a possibilty before March).

JMO.

[DewDiligence]

More on the foolishness of call writing: The scenario mentioned in #msg-56669891 is yet another possible event that could cause MNTA call writers to regret their assumption that nothing of great consequence will be happening to MNTA’s share price during the next ______________ [fill in the blank] months.

On its own, the scenario in #msg-56669891 is not especially likely, of course; however, when this scenario is considered in conjunction with the items listed in #msg-56387187, the probability that some unlikely event will occur becomes quite likely.

As previously noted, I think MNTA call writers are being penny-wise and pound-foolish and are deluding themselves by believing that they are not making highly consequential gambles about event timing. They will IMO need to be lucky to not regret what they are doing.

[Rocky3]

I’m not sure I agree that a slow and steady rise is more likely than an abrupt rise; several kinds of events could result in the latter:

1. FDA approval of generic Copaxone.

2. A partnership deal for M118.

3. A partnership deal for an FoB program.

4. A partnership deal for M402.

5. Formal FDA rejection of Teva’s Lovenox ANDA (unlikely, but possible).

6. A buyout offer at a large premium.

Because the timing of the above events is difficult to predict, I think the best approach to MNTA is to dispense with buying or selling options and to simply own the stock. However, simply being long the stock is apparently not exciting enough for some of the readers on this board. Regards, Dew

We finally get one (and another one becomes much less likely, specically the buyout). And once again those who sold volatility did not lose much if anything. Those who own the stock are ahead, and I think that they should continue to prosper, but those that collect premiums will probably continue to do better until (and if) mCop is approved (IMO). The other possibilities are such low probabilities that they are simply insignificant.

I would have thought that this deal would have produced a much bigger move, but I thought the same after the PI was entered. The options market has proved to much more inefficient than the underlying market. I, for one, will continue to play it. Those that continue to believe that it is not appropriate should continue to avoid it, but they should acknowledge that they have been wrong both about timing and results so far - of course things can change quickly, which those of us that are long hope for too.