Use access key #2 to skip to page content.

GBMB update

Recs

14

October 18, 2010 – Comments (21) | RELATED TICKERS: MYGN , DSCO , BDSI

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
 

Recent sales:

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)

 

Status:

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. 

21 Comments – Post Your Own

#1) On October 18, 2010 at 2:40 PM, MegaEurope (< 20) wrote:

Surely you're not using 6:1 leverage with a 2000% return over two months?

Total value of current GBMB holdings = $146889 (6 digits)

Net balance = $23839 (5 digits)

$1206 I was showing two months ago (4 digits)

Report this comment
#2) On October 18, 2010 at 3:02 PM, Momentum21 (86.23) wrote:

thanks man...

re. ARNA - do you have even the slightest thought of holding through the decision here? On a "technical" level it would appear that those who wanted out are out...and who is expecting an approval at this point? 

Just playing devils advocate... 

Report this comment
#3) On October 18, 2010 at 3:28 PM, zzlangerhans (99.77) wrote:

#1) I'm not being careful with terminology. Net Balance = Realized Gains - Unrealized Losses = how much I'm up. I'm not getting any more scientific than that. I don't care about leverage, or benchmarks, or alpha. I'm just trying to make money. 

#2) I would say I had the slightest thought about it, and I'm not going to do it. I'm done with gambling. Admittedly it will be annoying if lorc gets a soft rejection and Arena shoots up to 5, but there will be other opportunities to make money. Losing money is something I'm trying not to do. If I stay in and Arena gets knocked below 1 as I expect, then it would be a hit I richly deserved.

Report this comment
#4) On October 18, 2010 at 3:57 PM, MegaEurope (< 20) wrote:

OK cool.  I wasn't being picky, I just didn't understand your numbers.  I would call that "profit", not "net balance".

Nice job so far.

Report this comment
#5) On October 21, 2010 at 2:58 AM, puccini3005 (29.60) wrote:

Hey ZZ, I just wanted to say thanks for putting this stuff out there.  I love the GBMB's.  It was while reading up on ARNA that I first found a reference to the GBMB list... I had to go back through your blogs to where you explained it.  I find myself with a similar strategy these days, although I hadn't messed with the biotechs... (having been spooked by an investment several years ago where I lost an entire position).  Anyway, I shook it off and took a small ARNA position, which I sold for a small profit last week.  So I'm feeling a bit emboldened and taking deeper looks at some of the companies making your list.

Thus I was wondering if you've given any more thought to SNSS.  It has shown some upticks the past few days.  I went ahead and jumped in, probably too early.  Intrestingly, I got charged an OTC comission on it, even though its not an OTC stock, guess I need to call my brokerage and find out why.

I also like IDRA, alot.  I'm watching them closely with my finger on the trigger.

Good luck, thanks again for sharing.

Report this comment
#6) On October 21, 2010 at 3:01 AM, TMFUltraLong (99.95) wrote:

Blue horse shoe is beginning to like Somaxon again.....

UltraLong

Report this comment
#7) On October 21, 2010 at 10:05 PM, zzlangerhans (99.77) wrote:

#5) No new thoughts on Sunesis - it's only been three weeks, things don't move that fast in biotech, and I have 200+ companies to follow. If they drop below 0.3 prior to ASH I'm in, otherwise I'm not. The GBMB doesn't chase. Glad you profited on Arena, I lost $450. Que sera sera. If you buy Idera now you'll have a lower cost basis than I do, therefore you owe me dinner when it runs.

#6) I don't know the shoe. Blue horseshoe investors is a dead link. Whoever likes Somaxon is fighting a tough battle against weak prescription numbers, I wish them luck.

Report this comment
#8) On October 21, 2010 at 10:57 PM, Momentum21 (86.23) wrote:

For ARNA investors tomorrow is bigger than game 5 of the playoffs for the Yankees...we know the likely outcome but the anticipation is building, no? 

I thought I would have gotten out of this one by now but it appears I am going along for the ride. Bottoms up zz...wish me luck and I will buy you and Porte dinner if all goes well! : )

 

Report this comment
#9) On October 22, 2010 at 9:53 AM, zzlangerhans (99.77) wrote:

No decision yet on Arena. If you want to see the last word before the FDA decision, check out yesterday's article in Forbes. It blows the whole "rat cancer" theory out of the water and clearly establishes that poor efficacy was the real reason for the rejection. Makes it a lot less likely the rejection will sound something like "Sure we'll approve you once we get this rat cancer problem figured out". Of course, it's hard to imagine how they will ask for a new efficacy trial when BLOOM and BLOSOM technically met the FDA's own criteria. I still wouldn't be holding Arena for anything after the close today.

Report this comment
#10) On October 22, 2010 at 12:43 PM, Momentum21 (86.23) wrote:

this is like the superbowl baby! I might go down but I am going to take some shorties with me... : )

Report this comment
#11) On October 22, 2010 at 4:59 PM, zzlangerhans (99.77) wrote:

Guess I'm a "shortie" now, having bought 30 contracts of the November 1.5 puts. We'll see who's buying dinner and who's on food stamps soon ...

Report this comment
#12) On October 22, 2010 at 5:36 PM, Momentum21 (86.23) wrote:

#11 - I was referencing the late morning push over $1.80. I think your bet is a good one since your risk is defined and the price is feasible under more than just the outright rejection outcome (which has the best odds).

I just happen to think the payout for anything other than a flat out rejection will be very good...and rejection is not a slam dunk IMO.

It blows the whole "rat cancer" theory out of the water and clearly establishes that poor efficacy was the real reason for the rejection. 

The only panel member interviewed in recent articles appeared to be most bearish. Others were concerned about the tumor/cancer issues and there was also talk about not having someone on the panel to speak to that...the efficacy issue goes hand and hand with related risk, no?

I think they will get another shot before outright rejection...but you can buy me dinner if you make it in the money. Sound like a plan shortie? : ) 

 

Report this comment
#13) On October 22, 2010 at 5:51 PM, Momentum21 (86.23) wrote:

Did you see Herper's piece today? He is definitely better hedged than me! 

And you could make the following argument for Arena’s stock: right now, it’s dropped from a high of $8 to about $1.60, even less a couple days ago. Now, I think the odds that the FDA will go against its advisory panel and approve lorcaserin are very low, but if that happens, the stock will soar. If you think there is even a small chance Arena will make it through this time, a bet on it might have made sense. The potential loss is contained at $1.60 per share, and there is a lot of upside. 

Report this comment
#14) On October 29, 2010 at 12:33 PM, Momentum21 (86.23) wrote:

Still hanging with ARNA. I thought we would get more of a VVUS type reaction from Arena shares on Monday. That was disappointing for bulls and bears!

Since you offered me very sounds advice on ALXA I picked up some ANDS today at $1.49.

I like the buying from QVT and if nothing else we got a bit of a head start on that mid-month offering at $1.80.

 

Report this comment
#15) On October 30, 2010 at 3:32 PM, zzlangerhans (99.77) wrote:

This could be volatile after 48 week data for ANA598 later this year. The pessimism about the progression to phase III without a partner is thick enough to cut with a knife. Even mildly positive data could send this rocketing, but be ready to sell quick based on previous spiky behavior.

Report this comment
#16) On October 30, 2010 at 4:30 PM, Momentum21 (86.23) wrote:

“We are pleased with the positive clinical profile seen to date for ANA598, as well as its preclinical properties that support investigation of combinations with other direct antivirals,”

Let's hope others are pleased... : ) 

Presentations Sunday and Tuesday on ANA598

 

Report this comment
#17) On October 31, 2010 at 1:53 AM, portefeuille (99.60) wrote:

#16 also see these posts.

Hepatitis C for Fools

Hepatitis C for Fools II: The Other Protease Inhibitors

biopharmaceuticals ANDS

Report this comment
#18) On October 31, 2010 at 1:57 AM, portefeuille (99.60) wrote:

but be ready to sell quick based on previous spiky behavior

and be careful with stop loss orders (i.e. don't use them ...).

AVNR trading on October 29, 2010.



enlarge

Report this comment
#19) On October 31, 2010 at 9:42 AM, D0min0 (63.66) wrote:

Do you have an opinion on CVM, CEL-SCI Corporation?

Report this comment
#20) On October 31, 2010 at 11:19 AM, zzlangerhans (99.77) wrote:

#16) I don't think this is going to be data we haven't seen before. If I remember correctly the next stop is 48 wk data and we've already seen 24 wks. But really for these hepatitis trials one has to map them out on paper and I haven't had a chance to do that this weekend.

#19) Sorry, Cel-Sci is a baddie. The 200M share float causes the company to have a market cap of 140M, a lot higher than the penny price of 0.69 would lead you to believe. All that cap is tied up in the potential of Multikine, a cytokine soup that the company believes can cure cancers through direct local injection. Opinions differ on the reliability of purportedly positive phase II data from 2005, but I side with the skeptics. I have a limit order in for a red thumb. 

Report this comment
#21) On November 02, 2010 at 12:53 PM, D0min0 (63.66) wrote:

Here's a good write-up on DSCO:

Discovery Laboratories, Inc. in Precarious Position

Report this comment

Featured Broker Partners


Advertisement