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September 2010



Two new put candidates

September 29, 2010 – Comments (18) | RELATED TICKERS: CORT , ONCYF

Corcept (CORT) - I'll try and be concise here. Corcept is expecting topline results from the phase III trial of wonder drug Corlux in Cushing's syndrome in December. Corlux is a wonder drug because it has single-handedly kept Corcept's share price afloat for years despite a complete and utter lack of success in late stage trials. Corlux has failed three phase III trials for psychotic depression which has not stopped the company from attempting to enroll a fourth phase III trial (still enrolling 2.5 years later). Corlux was then advanced for mitigation of antipsychotic-induced weight gain but proof-of-concept data was unimpressive. So Cushing's is the latest in a series of indications for the company's solitary compound in advanced development. Corcept has been diluting heavily this year indicating to me a lack of confidence in their phase III results. The share price is up nearly 50% over the last month despite an absence of positive catalysts, which is suggestive of a Bottle Imp pattern developing. According to Yahoo Finance, there are no puts currently available with an expiration in 2011 but I will be watching for these closely as I believe the likelihood of positive results in Decmber is less than 30%. Negative results should drop the market cap close to cash, from above a share price of 4 to well below 1.  [more]



Arena joins the GBMB

September 23, 2010 – Comments (2) | RELATED TICKERS: ARNA , ANTH , MSTX

There's nothing scientific about calling a bottom on Arena at 1.6. This is just pure instinct about human nature. Recent events have made it clear that the behavior of Vivus, Arena, and Orexigen is going to remain volatile and counterintuitive until the last of the current crop of obesity drug candidates is rejected by the FDA. My only real money score so far has been on Vivus where I made several thousand on impressive phase III efficacy results. Fortunately I didn't bet real money on my prediction that Qnexa would receive a positive panel vote. I missed a beautiful opportunity last week on Arena puts when I hesitated to buy them at my preset threshold. Now I'm back in the game long on Arena. For the sake of argument I'll write up Arena in my conventional GBMB format.  [more]



The Holy Grail

September 21, 2010 – Comments (9) | RELATED TICKERS: OREX , SVNTQ , SSKN

I’ve never been a patient person. I don’t care much for an investing strategy of gaining an average of 8% a year to build a comfortable retirement account. That would make sense, and sense is for everyone else. What I’m trying to figure out is if I can be smarter than the vast majority of traders: smart enough to increase my stake by 50%, 100%, or more a year and accumulate enough wealth to change my life in unpredictable ways. That’s one reason why I’ve chosen the most volatile of sectors as my domain. On any given day, one or two of the biggest gainers and biggest losers are likely to be small cap biotechs and pharmas. Unfortunately, the majority of these stocks will end up as losers so when you’re betting long the odds are stacked against you. There won’t be any more biotech bubbles for the foreseeable future – the year 2000 took care of that.  [more]



Questcor PDUFA

September 08, 2010 – Comments (3) | RELATED TICKERS: QCOR.DL

I'll just add a quick blurb here in advance of the Questcor Pharmaceuticals PDUFA for Acthar Gel for infantile spasms. This catalytic event isn't getting a fraction of the attention devoted to Arena and Lorqess but might end up being substantially more profitable for a savvy investor.  [more]



GBMB Update

September 07, 2010 – Comments (4) | RELATED TICKERS: ITMN.DL , OPTR.DL , RGEN

I won’t review my positions here, except for two notes:  [more]



Arena Puts

September 07, 2010 – Comments (5) | RELATED TICKERS: ARNA

This is my latest effort to create a bidirectional trading strategy so as not to rely excessively on upward price movement in a sideways market. Shorting biotech is simply too dangerous for me – I can tolerate 50% or even 100% losses in a long investment but not 200% or 300% losses from a short gone bad. Psychologically I prefer to buy puts ahead of binary events – I know exactly how much money I’m placing at risk and almost exactly what I stand to gain. Win or lose, it’s over and I can move on.  [more]

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