Player Avatar zzlangerhans (99.85) Submitted: 9/25/2010 1:17:07 AM : Underperform Start Price: $19.03 THRX Score: +7.92

The recent bull charge has carried several baby biotechs and small pharmas out of their trading range without positive catalysts, which primes them for disproportionate drops as soon as the momentum inevitably shifts. Theravance has been bouncing along prettily between 12 and 17 for the last three months and I've been tempted to place a red thumb several times. After all the work the company put into getting televancin approved for skin infections, sales and royalties have been negligible. The company hasn't resubmitted their NDA for televancin for pneumonia, but even if this is eventually approved the commercial prospects are murky. The same applies to the televancin applications in Europe. Most of the company's potential is wrapped up in long-acting B agonist Relovair, currently in phase III trials for COPD and asthma with Glaxo.

The cash position of 211M is counterbalanced by 173M in long-term debt, making the market cap of 1400M all enterprise value. That's a lot of cap for a failing antibiotic, a new bronchodilator in the crowded asthma space that still has to pass phase III, and some miscellaneous early phase chaff. Long before Relovair phase III data is released in 2011, I expect a major market correction that will drag Theravance down with the ship. If not, I'm always looking for new put candidates.

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Member Avatar markzzzzzz (24.40) Submitted: 3/11/2011 2:04:31 PM
Recs: 0

I don't believe you better be buying puts 22.30 now you would have lost big time on this assumption.
what would be your assumption now?

Member Avatar zzlangerhans (99.85) Submitted: 8/1/2011 1:01:48 PM
Recs: 0

My assumption now is that the pick was successful. Patience rewards.

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