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Where one can pay $0.21 for $10 in potential upside



July 12, 2011 – Comments (0)

The interesting contingent value rights that were issued in conjunction with Sanofi’s (SNY) acquisition of Genzyme dropped by 15% yesterday on disappointing results from its Phase Three trial. It now appears as through the drug will be approved for sale in the U.S., enabling $2.00 of the milestone payments to be made fairly easily but that its ultimate sales will be fairly limited.

GCVRZ is currently trading at $2.21. I'm glad that I never purchased this stock when it was first issued, but it's starting to look fairly cheap. One is essentially paying $0.21 for a less likely, but still possible $12/share in milestone payments if future test results are more positive.

I'd be tempted to add GCVRZ in CAPS if it was available here, but I still don't believe that I am going to buy any in real life.  Is there any biotech experts out there who are familiar with the Phase 3 results who would be willing to shed a little more light on them?

Sanofi Tracking Stock Drops on Genzyme MS Drug


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