The value in getting the P3 approval will be in the marketability of the asset for partnership or sale. Approval gets us $8, whiff of a deal will bring $12. I definitely hope it's more and I'm surprised that the media and the articles are ignoring the fact that a partnership is very much on the table, and that approval often opens the door to a takeout. I think this is particularly compelling in EXEL's case, because if our hypothesis that the upside is rangebound by the small MTC market - a potential acquirer at least mitigates the risk of outright rejection, but benefits from the potential upside of secondary approval in much larger markets.
The real value, as everyone should know is actually in the Cabo application to Prostate and Other Cancers. We already know that indications are VERY good for Prostate Cancer. This is a multi billion per year market in the U.S. ALONE. The truth is, even a delay here does not really stop this train, because I see use for Prostate Cancer, but in fact, odds favor approval tomorrow.
Point is this: you can win big here no matter what tomorrow brings. How?
You position yourself long the stock, if it gets approval, just hold as story unfolds. You are talking very good chance of it going to well over $12 in 2013.
Say it gets a delay: BUY on any drop and hold what you have, bringing your ACB down. I would not ordinarily average down, but this is certainly, in my view an extraordinary case, because I think it is worth more than $6 now, whatever happens tomorrow. The cash rich situation and future are still ALL in tact, because no matter what delays, they will certainly only be temporary, IF AT ALL, and I doubt any will be coming. But good to be prepared for all eventualities.
This is a fantastic stock for REAL INVESTORS. Some certainly may trade and play all this short term stuff, but BIG money is here for anybody willing to commit for. I would say a couple of years at most. I am talking multiples of current price, not a small percentage move. But it could all happen much sooner of course. Buyout possible, but will have to be at huge mark up to current price, as who would sell??? And any low ball bids, will be countered by competition. The reason? This Cabo is a franchise drug opportunity, where big Pharma can cash in for years at billions per year on multiple applications. It is EXACTLY what MANY of them need.
Do your own DD. But being fooled by short term antics here is very foolish and short sighted, as I see it. Play it as you like. But thanks for the extra shares this AM and a few options to boot!
The red herring in this company is not the drug, it is management, and even worse it is one guy and I am pretty sure everyone knows who I am talking about: MMM, Dr. Hair-do.
On the positive side, maybe has finally learned something, but then again, I think I said that before when he took over development and crashed the companies clinical programs.
As CEO I only think he screwed up one major thing so far: SPA. Remember that, anyone see that day in the chart? Was it 8/6/2012, NO that was debt offering right after NDA review date, or 9/26? (the days after Fran Heller's interview) NOPE, go all the way back to 11/1/2011!
I can't keep track, can anyone else keep up with this guy?
Good luck, but don't expect anything.........from Hubris Maximus
This would be the one most compelling reason for longs to stay put post MTC approval. Many on this board suggest a sell on the news play, but with an FDA approval in hand for even a small indication, Cabo is suddenly derisked so to speak. As you point out, the company becomes much less risky as an acquisition candidate. The price tag on this company will not be small. Thus for big pharma to make that kind of investment, this derisking must take place. MTC approval carries with it many interesting implications. All positive.