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  • biorunup May 12, 2010 11:56 AM Flag

    QCOR- A Potential Short Sell On Expected FDA News


    QCOR has an upcoming FDA Date for its drug Acthar on June 11th. I feel that this represents an excellent opportunity to make some money off short selling QCOR. Why would I short an upcoming FDA drug approval? Isn’t that suicide? Lets take a look…

    On 5/6/10 an FDA Advisory Panel recommended the following in regards to Acthar:

    The Advisory Committee voted 22 to 1 that the Company has provided substantial evidence of effectiveness for H.P. Acthar® Gel as a treatment for patients with IS and voted 16 to 7 that the Company has submitted evidence to support its view that a two-week course of treatment with H.P. Acthar® Gel followed by a two-week tapering regimen provides sustained effectiveness. The Advisory Committee also voted 12 to 10 (with one abstention) that the Company has not provided evidence that adverse effects caused by H.P. Acthar® Gel are manageable and reversible. In addition, the Advisory Committee voted 20 to 1 (with two abstentions) that the Company has submitted sufficient evidence of the safety of H.P. Acthar® Gel at an effective dosing regimen.

    Sounds like great news, right? However the next day QCOR fell to $8.13 from the close the day before at $9.16. I believe this was for 2 reasons. First was the “sell on the news” mentality that is pervasive in biotechs. Second was the following vote from the panel, “voted 12 to 10 (with one abstention) that the Company has not provided evidence that adverse effects caused by H.P. Acthar® Gel are manageable and reversible.” This may represent a major obstacle in the granting of FDA approval.

    Keeping these factors in mind I am planning on short selling QCOR, but the real question is when. I believe I have 2 options:

    1.) Before the 6/11 FDA Date. If I open a short position BEFORE the FDA date I will greatly benefit from an “unexpected” CRL from the FDA. The stock price will likely drop to the $3-$4 range on the sell-off. Even if it is approved, I expect the “sell on the news” mentality to quickly drag the price down below the run-up to the FDA date.

    2.) If the FDA approves Acthar, short on the inital price spike. As demonstrated with so many FDA approvals, the price quickly falls after the initial euphoria. Remember SOMX? It hit $10 after approval, but it was back in the $5 range just a few days ago. Also look at POZN, DDSS, and many others.

    Keeping these factors in mind, I will be watching QCOR very closely over the next month to set up my short position.

    Disclosure: No Position.


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    • Bio - not sure about the others, but your recos to play emotional up/dn of QCOR is NOT a "high risk play."
      You should call it what it is - charitable contributions. Look, I've said this before - I'm not saying saying your thesis for the website wrong.
      All I'm saying is that people who generalize need to know when they're not focusing on the fat part of the curve. The FAT part of the curve for companies facing FDA approval ARE NOT profitable co's with safe drugs that's already being used for almost 60 yrs. When you apply the generalization to to an outlier - Bob is correct - you do act like BORAT. You can't get away w/ saying this is just a high risk - you're NOT being honest w/ yourself about your incorrect application on this. For now, it appears that you're heading East looking for a sunset. You may get some dummy followers...but you've lost a lot of credibility. Like I said, that's too bad as you had good concept...just should have stuck w/ the co's in the FAT part of the curve, ie. money losing biotech co's with concept drugs and poor balance sheets and/or will need to go back to market for cash.

    • The stock is up too much. Even if there is an approval, the stock will drop because they will sell on the news. Almost every biotech has dropped after their approval or denial besides some blockbusters like DNDN. Instead of naked short selling, look into limited risk short OPTION plays like bear call spreads.

      There will be a volatility crunch, like all other biotechs, after the news. Take an option position before the news, but hope the FDA don't release the news early before you have time to set up the trade.

      Good luck

      • 2 Replies to dixon2140
      • up too much? This stock is BELOW its price 18 months ago when QCOR's MS or NS revs were not even a possibility? Its earnings power is multiples of back then. Since then, the stock market has recovered but QCOR is still priced at less than 10x P/E on next year's earnings power, regardless of the IS approval. With the current growth,I see no reason why QCOR can't get a 25x-35x P/E in the long-term as a growing pharma company. Remember, QCOR barely has any sales reps covering these doctors - imagine what revs could be if there was better coverage?
        Your basic assumption is wrong, thus your conclusion also wrong.
        Garbage in - garbage out.

      • don't = doesn't

    • the spread on QCOR is too wide for you to make any "real" money on the $12.50 calls...the market maker/broker will absorb most of it. for the risk you take(99% certainty it's worthless less than you paid), you would have been better off going long some stock and trading out before june 11th...better expected returns.
      p.s. qcor board would not approve a sale at $12, imo...perhaps $25-30 in a year, but not now.

    • Racingbold; You guys just love playing with yourselves. Tell me, just who in their right mind would vote to sell this company for $12/sh?

    • Seems like the QCOR VIX is stratospheric on this board. let me add to it: After FDA approval, QCOR is aquired by another biotech/pharma and the stock immediatly jumps to 12 bucks. Still not enough to get biorunup in the money.

      disclosure - I have QCOR july 7.50 calls

    • haha. oh bio, you're good. at first, i couldn't believe how ridiculous you sounded. i kept saying to myself, "no one is this stupid." but now i finally get it. you're borat and us readers are just falling for your gag. the only thing missing are the cameras and you getting paid.

      you almost had. since i have some experience watching "do-it-yourself investors" blow themselves up, i thought your strategy of needing a stock to move either 36% up or 48% down before you even make a penny (all in a mere 25 trading days) to be par for the course. but your last note gave it away. investing as much money as i would spend at a candy store as a youth- really nice touch but it exposed the gag.
      with all the attention you're receiving, i know as you sit in your parents basement, you're starting to feel a bit like a celebrity in the "internet investment chat room world." not bad for a guy who's never amounted to much.

      but, like all car accidents, i've had my fill and it's time to move on. you don't have to worry about me bashing any of your future posts since i already know how the story goes. however, i do want you to know that you've brought some joy to my life as i've gotten quite a laugh out of your posts.

      so i'll end this by quoting a line from one of my favorite 80's movies, heartbreak ridge, delivered by one of my least favorite 80's actors, mario van peebles: "don't go away mad, just.....go away."

      take care.

    • how do you define "cheap"?
      yes, you didn't pay much for it, but that's because it's not worth very much.
      you can buy cubic zirconia "cheap" also, and it's because it's not a real diamond.
      look, i think you have a good thesis on your website...but you're NOT doing enough real work on differentiating what's a "real" company vs. a "concept."
      as an example, you can't compare ITMN's FDA on new drug and its failure to get approval against QCOR's request for Acthar for IS because Acthar's been proven safe for almost 60 yrs and is already used off label.
      when you put both into the same bucket, you're putting in a fancy ferrari that many drivers will crash because they don't know how to drive it, and comparing against an exciting 10 year old (slower) mercedes that could go 250k miles because it's been taken care of by the current owners.

      like i said, i like what you're trying to do.
      just thru this with an open mind - your concept is good, but you're not being thorough w/ your analysis and the stocks you choose.

    • We will see, but either way I got the put and call dirt cheap. Its going to be much closer to one of those two, and if I time it on the hype I will be in the money.

      I will post my results on this thread.


    • you guys are crazy. the spread is too wide you're getting robbed. further, the most likely outcome is after FDA, stock is still between $5 and $12...both losers.

    • Edit: I added 25 $12.50 June 19th Calls @ $.15 just before close. I should be in the money either way now... Approval or not. :)


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