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Exelixis, Inc. Message Board

  • duckduffer duckduffer May 14, 2013 12:45 PM Flag

    Pressure on Shorts

    More of a comment on the influence from the broader markets on EXEL's PPS. The shorts have enjoyed some pretty ridiculous success over the past few years with all the anxiety and fear that has been rampant in the economic world. Almost too easy, just pick a stock, wait for the market to swoon, and then pile on. Based on Teppers comments this morning, it would appear things may be a little bit challenging for those who choose to bet against the markets for a while. Will that have any impact on the short trade in EXEL? Think about the dynamics that could be at play.
    1) Strong overall market putting pressure on short hedgies (leveraged positions getting killed)
    2) Clock ticking on Comet and GDC 0973 readouts
    3) Still a huge short position (35.5M) on a stock with 86% institutional holdings that could take months to exit without causing a squeeze
    4) Cabo's clinical mojo continues to accelerate, perhaps with a little positive OS news coming soon that further validates the positive effect of healing bones.
    Is this really a good time to be sitting on a substantial short position here? Even with a convertible hedge? 400 Billion dollars looking for a place to go according to Tepper. Could EXEL be one of those places in the next 12 months?
    GLTA

    Sentiment: Strong Buy

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    • "2) Clock ticking on Comet and GDC 0973 readouts.."

      A few developments on this front. Recall that GDC 0973 is to be used in combination with approved drug Zelboraf. Zelboraf is a BRAF inhibitor and 973 inhibits MEK. The Z/973 combination is being evaluated in a phase 3 trial with Z/973 vs Z monotherapy with a planned enrollment approx. 500. That trial has been recruiting for 5 months with about 50 of 200 centers open.

      GSK also has their own BRAF/MEK combination, Dabrafenib and Trametinib. Neither drug is approved, but each has completed a successful monotherapy trial and GSK has submitted separate NDA's on each. Additionally, there is an ongoing combination trial of D/T vs Z. It has been recruiting 11 months with 190 centers open. It has an OS primary endpoint and full enrolment will be 700.

      Initially both D and T had a PDUFA date in June 2013 for their monotherapy indications. Recently, FDA slid the Trametinib PDUFA date until Sep 2. Interestingly, in Europe, GSK has applied for both drugs for monotherapy use and also for combination use. The combo use is based on phase 2 data that I suspect FDA rejected as too skimpy.

      Zelbaraf still enjoys a monopoly lock on the melanoma market. It is likely Dabrafenib will be approved in June and then Dabrafenib in September. At that time the market dynamic changes. The data may not meet FDA muster, but each melanoma specialist worldwide is living under a rock if not aware that BRAF/MEK combinations are superior to BRAF monotherapy based on convincing phase 2 data. In September, GSK will have two approved monotherapy drugs that can be used off label in combination and will provide a concensus superior result to Z. It will be interesting to see how the products are priced, how GSK dances around restrictions on off label marketing, how the NCCN reacts and how the private and govmt reimbursement agencies handle the situation. Meanwhile, Roche will be racing to finish its Z/973 trial so that it can compete.

    • I hope these short skums gets their guts ripped off. They have played us for too long. Time will run out on them one day.Meanwhile they are countiniously manipulating and stealing our Investments.

      Sentiment: Buy

    • Needless to say as soon as the board starts to chatter about a short squeeze, or a reasonable facsimile, the MM's have to let us know who is in charge. And there are still some people who believe the MM's don't read these posts. But once the OS news is out they won't be able to stand in the way of an oncoming train, it's not too late.........ALL ABOARD!!!

      Sentiment: Strong Buy

    • Nicely stated.
      Can you elaborate on the issue you raised regarding the institutional ownership and the effect that may have on the 'short' timeline?...not sure how that plays out.
      Thanks.

      • 1 Reply to oncodoc02138
      • The question of when do the different types of short position holders feel the urgent need to cover their position is the million dollar question. No one, not a convertible arbitrager, not a long fund holding a short hedge, not a short hedge fund with a bearish outlook, wants to be forced to cover at a higher PPS. It's obviously a losing proposition for all, regardless of why they are there. The high institutional ownership creates a much smaller pool of available shares with which to cover at a lower PPS. Consider also that when the PPS rises to a level that enables convertibles to convert to common ($6.90 or 130% of the conversion price), the holders of those shares will still be institutions/hedge funds who are likely not going to want to sell before this plays out further (consider the underlying catalysts must be good if the PPS has risen to this level). So where do all the available shares come from? While this situation is not a simple math equation and there are numerous variables, there is pressure mounting on how and when the different types of shorts will exit. If the assumption is most will not exit until Comet or GDC 0973 data reads out, that could be a costly assumption.

        Sentiment: Strong Buy

 
EXEL
3.78+0.19(+5.29%)Jul 23 4:00 PMEDT

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