The GBMB portfolio has done well over the last six weeks along with the broad market, and as my balance has shifted well into the black my self-confidence has been growing. This in turn has led to some more acquisitions in old favorites.
Current holdings (as of 10/17/10):
BDSI 5000 shares bought at 3.95, current price 3.44
DSCO 50000 shares bought at DCA of 0.375, current price 0.24
MYGN 2000 shares bought at 18, current price 19.34
MYRX 3000 shares bought at 3.8, current price 3.86
EXEL 3000 shares bought at 3.69, current price 4.6
BIOD 3000 shares bought at 3.94, current price 4.21
RTIX 3000 shares bought at 2.95, current price 2.74
IDRA 6000 shares bought at DCA of 3.15, current price 2.89
ARNA 5000 shares bought at 1.6, current price 1.7
ANDS 3965 shares bought at 1.65, current price 1.75
ITMN 2000 shares sold at 11.58 (bought at 10.4)
FOLD 1218 shares sold at 3.32 (bought at 2.9)
OPTR 2000 shares sold at 9.7 (bought at 7.95)
Total value of current GBMB holdings = $146889
Unrealized losses = $4193
Realized gains = $28032
Net balance = $23839
That net balance of $23839 is a significant improvement over the $1206 I was showing two months ago. It's amazing what a broad market rally can do. The question is how much of those gains I can hold the next time the S&P sags under the weight of our crappy world economy. And now some updates:
MYGN - it's funny how quickly things can change. In July and August the line to bash Myriad went around the block. The company was losing its patents, the new health care system wouldn't support expensive molecular diagnostics, yadda yadda. Now after two months and a 35% gain from the lows, the analysts and bloggers are creeping back in. RBC Capital Markets declared them a possible takeover target, Forbes and Zacks want a piece of the action, and the company can do no wrong. But you can throw a blanket over the talking heads. The only thing that matters is the next quarterly revenue numbers to be released November 2. PR day has been a bad day for Myriad all year but that may change now that the company has begun offering its own guidance. I'm predicting the company will meet revenue expectations for the first time this year which will likely return them to the low 20's. For now, I'm holding my 2000 shares.
BDSI - I'm not expecting Onsolis revenues to increase significantly but I'm still holding out hope for this to become a profitable investment. If Onsolis revenues remain in the toilet, Biodelivery's value in the near term will depend on the street's perception of the value of their BEMA pipeline. I'm hoping positive momentum will carry them back to the 5 range at which point I'll likely take profits ahead of the next outgoing tide.
DSCO - recent encouraging results from a phase IIa trial of aerosolized KL4 surfactant in cystic fibrosis resulted in only weak upward movement in the share price. This serves to reinforce my opinion that the only story that matters in the short term for Discovery is the expected Q1 2011 resubmission of the Surfaxin NDA. I continue to feel that Discovery probably has the best risk/benefit balance out there right now for scary volatile baby bio. Certainly, you could lose your entire investment even at these price levels but you could also end up with a 5-10 fold increase before the next PDUFA. I've previously declared myself out of the running for more Discovery shares but with my new confidence and another dip below 0.2 I might be up for yet another double down. This is as close as I get to a pump.
BIOD - Ouch! What's up with the love/hate on Biodel? When the shares hit 6 intraday in September I thought we might be headed to double digits prior to the Viaject PDUFA on October 30. Instead, the share price has careened back down towards 4. I was proud of myself for not hitting the sell button at 6 and parachuting out with a 6K profit but of course I'm not feeling so smart now. I'm about 80% sure the FDA will reject Viaject harshly so I have to get out of my long position well before the PDUFA. Unfortunately, missing the peak on Biodel hurts me on both my long bet and on the puts I was planning to buy prior to the PDUFA. I'm going to give this one another week to run back up and then sell my shares rather than risk getting stomped on an early FDA rejection.
MIPI - another ridiculous "breakout" Friday for Molecular Insight. I missed the chance to dump my CAPS green thumb and switch to red when the share price was over 1.5 for all of 10 minutes. The catalyst was a meeting presentation of phase I data for prostate cancer imaging agent Trofex, which I believe was similar to that announced in a company PR last year. It's hard to know for sure because the company didn't release their own PR this time so I have to rely on the shallow interpretations of the news services. Regardless, this is just a game with MIPI as they dance around bankruptcy. But the lows keep getting lower and the risk of a long bet keeps getting higher. Who's still got the stones to play with this one?
ARNA - not much to say here in advance of the October 22 PDUFA. I'm surprised we didn't get back to the 2 range at least but I guess that's why I'm not a stock millionaire. At least I'm not down in the stub and I'll be selling Monday or Tuesday with hopefully at least five hundred bucks in hand from the trade. Puts probably aren't worth the risk and trouble at this level.
ANDS - Anadys became a good buying opportunity with a market overreaction to a dilutive financing on Friday and I was lucky enough to pick it up near the daily lows at 1.65 prior to a small late day recovery. The magnitude of the latest smackdown seems to be punishment for the company's decision to proceed to a phase IIb trial without a partnership. If there was nothing to do but wait for the phase IIb trial to generate data then I'd be giving the stock a wide berth at this point. What the market seems to have forgotten is that the phase IIa trial is far from over, and 48 week efficacy data from the 200mg cohort may be available as soon as this month. Of course, the data could be lousy and send the stock into the toilet. But given the encouraging 12 week data from the same trial and the prior positive market response I'm happy with my bet at these levels.
IDRA - some stocks defy gravity but Idera embraces it. The stock continues to explore all-time lows without recent negative catalysts. The company should have over 40M in cash by the end of the quarter to support their 64M cap. The pipeline includes the IMO-2055 collaboration with Merck KGaA in phase II and two proprietary programs on the cusp of phase II development. Idera isn't showing signs of being the next Celgene but accoridng to my valuation system it's worth a lot more than 64M. I recently doubled down on my 3000 share investment but the stub continues to drop.
I chose to take profits on a couple of my GBMB investments simply because I wanted to reduce my long exposure in the face of an impending broad correction. For Intermune, this worked against me as the share price rose far past my sale price of 11.58 to almost 16 before retracing. That's $8000 in missed profits for anyone keeping score. The street seemed to like the sale of danoprevir to Roche, then maybe they decided they didn't like it quite so much. Personally, I think it puts a lot more pressure on the company to generate a positive phase III result for pirfenidone next time around. In the meantime, the EMEA will rule on pirfenidone in H1 2011 and I expect that will almost certainly be negative. So I may actually red thumb or put Intermune if it sneaks over 16, then try and buy them again if they shoot below 10 on European rejection. I also dumped Optimer but that one didn't sting as much because I timed the bottom so perfectly. I don't know when the street is going to wake up and realize this company is undervalued, but if the fidaxomicin NDA submission didn't do it I don't know what will. I'm hoping I timed my sale as well as I timed my buy and I'll have another chance to buy Optimer on a pullback.
There's lots of other interesting stories from the GBMB out there - Anthera, Amicus, and Exelixis to name a few. But I think I've written enough for one post so I'll have to save something for later in the week.