The best explanation I can suggest for the actions of AEZS and KERX yesterday may be inane, but here it is anyway. Some time ago, I think it was on the KERX M.B., Ockerfan suggested that hedge trades had been initiated based upon the premise that the capitalization of the two companies would approach each other. Indeed, this has been the case. The difference in capitalization narrowed yesterday to less than 20% from an earlier almost 100% difference.
If this hedge strategy had been initiated about two months ago at a time when KERX was around 3.15 and AEZS 1.75, the price spread would have been around 1.4. One would have initiated the spread by shorting KERX and buying an equal dollar amount of AEZS. Yesterday, the price spread narrowed to around .90 and AEZS fell about 7% while KERX fell a little more than 2% suggesting the spread had been or was being reversed.
So the best explanation I can suggest for the actions of these two stocks the last week is not the sovereign debt crisis having impacted them or insiders selling because of inside knowledge that PCAP had failed. Simply put, it may be that earlier hedges were being reversed. What do you think?
Franwurl; we enjoyed with different recruitment models issuing - given some parameters - PCAP works.
PCAP DOES work, just by looking at Ph2 Data.
The problem here is "Is possibly control arm doing better or even the same?". In second case would be futility-level.
As final ph3 data approach my mere stress turned into doubt after BPAX debacle (which I'm writing below). The definitive matter for this is the DBSM board.
Forget the bashing articles on SA by that AF... it's actually a favorable point (he's missing every happening lately).
I put together these facts:
- AEZS' insiders aren't buying, after almost -50%
- KERX' CEO sold at 6$ and didn't buy back after a -60% since then
- first KERX' major holder dumped 4/5 pack
- now this BPAX debacle really bashed my consideration about DBSM
We all know every stock dove after market crash in july.
But Consider this.
After last DBSM recommendation, (8/31) both AEZS & KERX have seen a slow going down.
I'm starting to see it better.
In conclusion, I've dumped hard KERX and sliced 2/3 AEZS.
This because AEZS has great pipeline.
In worst scenario, we'll see a -60/-80% in KERX and no worse than -25% for AEZS.
Many catalyst ahead, so many way to buy back.
Still Hope for the best.
I've been beaten down for 2 days after BPAX'libigel failure as I was in. My intention (as most there) was leaving after STELLAR efficacy data releasing. Verdict: futility. No difference between arms.
So one question for you and the MB entire: what is the DBSM board supposed to do?
It Is an indipendent subject for futility and safety valuation. Why after SIX (S*I*X!!!) recommendation they didn't stopped the trial? 3 expensive trials?
I really can't understand this... if you only can....
An innoecent trial like for libigel, isnt a main issue for the DSMB, antineoplastics are. The decision to proceede was a positive event, ONTY got the same and has performed well thereafter. Look around, many if not most small pharmas are down 50 percent and it takes comittment to sit over trials, so many just simply sell due to stress overload. Market doesent give you lots of money, one have to earn them by putting on risk, and its a stressful endeavour. During market downturns we can buy the very best prospective drugs on the cheap, thats why I have exposed myself to Perifosine and Ganetespib from Synta. These are drugs that will excel in targeted therapies fot the years to come. And play with the big boys like Pfizer and Roches inventions.
Good points which I would love to hear rebutted by knowledgeable posters.
The only rebuttal I can offer is that the BPAX trial was aimed at a vastly different medical problem, a problem which has been notoriously resistant to drug based intervention of any kind. Comparing the two trials is an apples/oranges exercise.
What you described wouldn't be a hedge and there wouldn't really be an arb opportunity. The two companies are just valued differently.
Sure, hedge funds are trading in the sector, thats a given.
Whats more likely is that due to the serious, down right disastrous nature of the Europe (yes folks, the eurozone is done and the currency can and will collapse) is creating an environment of de-risking, de-leveraging and when margin calls everything that isn't nailed gets sold. No one really wants to hold risk right now. AEZS, KERX are risk assets.
Second, the recent meltdowns in the bio sector (and not just BPAX) have prompted traders to reduce risk and exposure to tail end events.
People, your going to get killed, time and time again holding through trial results. Mathematically, percentage wise and factually the amount of HOMERUN top line readouts Dendreon, Human Genome type style rocket rides are few and far between.
I'd be careful here and especially with a sleep of rating downgrades of Europe debt that kicked off at 5ish tonight with Belgium. Those downgrades are what triggered Lehman to get collateral calls.
jbc,when the lumming run for the exits and there is blood in the streets its called,"the blue light spl."i love it when you delusional visionary,s prognisticate doom and gloom.put you feet up and let the pipeline play out.take a look at it in 18 mos.this stock is not ibm or xom,its a speck play and patients is in order. lol all and happy merry!!
I read the same tweet and after reading Franwurl's post I was thinking the same thing.
Franwurl, have you now become a surrogate for JR? Does he manage your shares in his fund? I hope you were no more than an interview for his article because the man is no longer trusted by most posters on this board.
That would explain it and every time he does this we get a nice bounce once AF follower clear out. My guess is AF is behind some money making transactions with aezs. He knows every time he slams the bio it takes a short term hit. Someone is making some money. I buy it every time he slams
That is a very plausible theory. Actually thought about iy myself wehen I could not sleep last night.
But like always.....we are only guessing.
Are you still in deep? I am with 107.500 shares. A lot of money for me, but I feel pretty comfortable long term. My only regret is that I dont have the means to buy more if P fails and we take a fall sub 1 buck.
Best of luck to the true longs!
By the way...Yesterday the board was infested by "new" longs concerned about data etc....coincidence? I dont think so.
Had a good round of golf yesterday but not worth coming home to that. They suckered me AGAIN and now I'm down and stuck. Failed set-up and now it's gonna be painful. This stock is walked up and down like a dog.