Miracles never cease and Spencer Osborne amazed many of us all this morning. Instead of a heaping helping of mindless second guessing (read bashing) from a so-called long and self appointed expert on Arena. Out of nowhere Spence delivered a tightly-written gem of an article that frankly is some of the most important news on Arena from a third party in some time.
Spencer simply dropped a billion dollars plus pile of money that many Arena longs and analysts did not know about or had forgotten. The NOL (net operating losses) article is huge because as he mentioned its not only about offsetting future profits via tax credits, its also about the unseen value for shareholders in a buyout. He goes on to explain how it must be utilized correctly if Arena or buyer wants to maximize its value.
For the many times that I personally questioned his expertise in bio-pharma, because he has manly written on Satellite Radio topics, he finally showed us why that experience is applicable to Arena because he made a great example of how Sirius / XM has parlayed their NOL.
The reason I feel it marks a turning point is this. Spencer clearly knew about this pile of hidden cash for a while and chose NOT to elaborate on it. His timing says something to people like me who understand how only an ER and professional cheats in the server racks of Jersey City have more influence on the PPS than the press. The press has had a field day creating FUD for Arena for years.
My take is even these guys know the pendulum is now swinging convincingly in Arena's favor. When they look at all things considered, ARNA is going to emerge a huge winner and its time to get on the train instead of wasting efforts and credibility trying to derail it.
Read his article, then add, hold and profit.
Sentiment: Strong Buy
I don't believe spencer was bashing arena. He was just providing devils advocate points of views about what could happen. I own Siri as well and spencer has written in detail about the Nols and he knows what he is talking about on this subject.
how does this now make him an expert in biotech investing/trading, by stating the obvious? Do you think shorts and institutional investors are unaware. This may have been a revelation to you, but not to professional investors. I could care less what Spencer writes and I find the timing interesting, one day after options expire worthless.
Neon in an earlier post I give the breakdown of the NOLs as per the SEC filings, and yes Spencer Osborne’s article today is interesting and well worth a read. Arena’s 1.5 billion dollar NOLs allows the company to off set profits against its losses over the previous years.
Arena is debt free with 200 million in cash it also has a conditional tax incentive arrangement in Switzerland which extends beyond 2022. Going forward I see Arena Pharmaceuticals as a cash cow.
Our Swiss subsidiary, Arena GmbH, has been granted a conditional incentive tax holiday for its operations in Switzerland that is expected to exempt it from a majority of the potential Swiss income taxes. Should this tax holiday come into effect, it would continue for a period of up to 10 years, not to extend beyond December 31,
Sentiment: Strong Buy
I ad to chuckle heavily when reading this thread and then went back and reviewed his article. In the past, while folks were skewering Osbourne, I was discussing him as a measure sensible opinion who stated he was long ARNA in his articles.
Now he puts this article out and everybody seems to believe he is getting with the ARNA program and thus is a nice guy all of sudden and this is the best analysis he has done.
Well I think this is the worst article he has done of the lot and I liked many of his previous articles others found horrifying! NOL is not a driver for a buyout--its a fringe benefit thats always been there for those who know bio regarding all bios R+D!. So his revealing its existence is no surprise or big shaky deal and its no overriding reason for ARNA to get bought out. it doesn;t hurt, but it ain;t all that he says it is!
You can find other bios with a much bigger NOL on the books than ARNA! Imagine what GSK got when they bought out HGSI who had been racking up NOL on multiple R+D development for like 20 years!
Like I said NOL is a fringe benefit that is pale in comparison to pipeline, selling drug in big patient markets, sales, pricing power, and partnerships to help. NOL doesn;t hurt, but it does not get ARNA bought out!
Osbourne said it best at the end of his own article---its simplistic--yes it sure is!