The fact that you've been hanging around this particular corner for four years and have, by your own reckoning, reaped "200% gains", whatever that means, does not make you king, in spite of your somewhat grandiose title. If one had bought this stock four years ago @ 2.84, you would have roughly doubled your money to this point. If you had bought GILD at that same point, you would have multiplied you money 7X; if you'd bought CELG, you'd be up 4X; if you'd bought MDVN, you'd be up 20X; and if you'd bought PCYC, you'd be up 16X. In fact, if you'd bought dumb old BMY in August 2010, your investment would have gone from 22 then to 50 today. In case you accuse me of cherrypicking, note that IBB, one of the more widely traded pharma ETF's, has quadrupled over the past 4 years. And, most obvious of all, if you'd just bought the S&P 500 in August of 2010, you'd have more than doubled your money to this point. So having a "strong buy" on a stock which, even at its recent highs, has gone essentially nowhere, strikes me as dogged, to say the least. Now, when the stock finally looks to be breaking out, you look in your crystal ball and see doom. Incidentally, when and if a secondary offering occurs, you can be sure that the underwriters will give the stock a good hard boost upwards beforehand.
Whenever MDVN jumps, the three weird sisters appear here to dole out misinformation. Oddly enough, all three of these characters also appeared on the ISRG board around May 21 to pump that stock. "Price target $1,000!" "GE interested in acquiring!" they chirruped. Phosteric even claimed to have had DaVinci surgery for his prostate cancer, after which he was back to work within a week, completely continent and potent. This is carrying DD a little too far, I think.
In today's tweets, Adam is (1)casually pretending the ADCOM briefing document was no real surprise to him, (2) blaming the whole fiasco on that "stupid PR person", and (3) continuing to throw out red herrings about osteosarcoma and excess something-or-other in the urine of patients which might result in a thumbs-down from ADCOM after all. It's everybody's fault but his. As for the poor retail investors who listened to him and sold at 26 ...nothing. Why doesn't he blame the CEO for soliciting his help in defusing the "strong investor reaction" to the ADCOM briefing documents? Because it never happened. He obviously tried to pump the PR person for news and the poor sap said, "Well, maybe I can get you an off-the-record chat with the CEO." The CEO, being no fool, nixed the idea and said that the documents could cause a strong reaction among investors. Adam misconstrued all of this to make it seem as if he had refused an opportunity to benefit from inside information. Some journalist.
There is little upside on betting on a sure thing ... even if it wins by 6 lengths. However, after tomorrow, when all the disappointed $2 bettors have torn up their call options and slunk off, this will resume its upward trajectory.
Apparently not satisfied with the press coverage he garnered by his earlier demand that Gilead explain Sovaldi's pricing, Senator Waxman has pronounced himself not satisfied with their explanation. When he sent his first letter back in March, Waxman was joined by only two of his fellow Democratic committee members, one of whom, Pallone of N.J., was his expected successor as ranking member. Pallone, who comes from a state which is home to JNJ, Merck, and several other major pharmas, has apparently rethought his position and not signed this new letter. What foolhardy courage motivates Waxman to press on with the fight? Perhaps the fact that he has announced his retirement is a factor. I suspect that when we next hear from him, he will be a highly paid lobbyist for the healthcare industry, a position for which he is now honing his cv. (We can worry about federal price controls on drugs when more than one of Waxman's fellow Democratic committee members - or a single one of the Republican members - joins him.) Incidentally, Waxman surely; knows the reason behind high prices for exotic drugs: The Orphan Drug Act, of which he was the principal author. By establishing extended patent rights and offering federal funding and big R&D tax breaks, and most of all, by essentially guaranteeing that successful drugs would be very profitable, the ODA underpinned this entire industry. The fault, dear Henry, is not in the stars, but in ourselves that we are underlings. To anyone with a few million bucks in campaign contributions. This is not intended as a partisan post, but merely an observation on the pusillanimity of all politicians.
Looking at AVNR, it seems to me that they have a lot of irons in the fire and are burning through cash. On the other hand, they do have one viable drug ... and a lot of irons in the fire. Mainly, I can't help noticing that in the 13f filed by Baker Brothers Advisors for the second quarter, they had quadrupled their holdings to over 18 million shares -- more than 10% of the float. It was, at that point, about the twelfth largest position in their portfolio.
When Adam F tweeted his 140 characters of wisdom, I posted that it seemed unlikely that the CEO would task his PR person with contacting Adam in order to arrange an "embargoed chat" to defuse a potentially damaging ADCO briefing document. Unlikely that the CEO would be stupid enough to do something so illegal. Unlikely that he thought Adam had enough clout to overrule whatever the common perception of the ADCOM briefing document might be. Unlikely that he'd go through a PR person, whose job, after all, is to blab. Unlikely that any one believed this would have any bearing on the ADCOM vote, which would be coming in two days anyway.
Likewise, it seems unlikely to me that investors, after weathering the peril of the Adcom vote, desperately toss 320,000 shares into the AH market, thus snatching defeat from the jaws of victory. While the shorts sit there smugly without covering. (This must have been the easiest short of all time. A "no" vote means you win. A "yes" vote means that you also win.) What seems more likely is that these were old trades, most of them made in the "dark pools", which were being reported after the fact. I don't own a lot of this, but I'm going to keep it. Two approved drugs is better than one.
Somehwere in India, a snake charmer is reading about an evangelist in West Virgina who died after being bitten by a rattlesnake which he had draped around his neck and thinking, "Holy Krishna, these people are ignorant!"
Note that at the time this trade was reported, the stock did not budge. It's obviously impossible to trade more than 1/4 of the daily volume at one moment without moving the price. Therefore, you can be sure that this trade occurred outside of the regular market, in the so-called "dark pools". All of this would tend to indicate that someone is accumulating stock near its recent highs.
Well, Adam was right about one thing: The release of the ADCOM briefing really DID have an effect on investor sentiment. However, not in the way he implied. I still maintain that the NPSP PR person didn't call him to offer an "embargoed chat". Rather he called the PR person hoping to get some info about the ADCOM briefing document. The PR person said something like "I'll see if I can arrange an off-the-record chat with the CEO." The CEO said, "Hell no -- the release of that document is going to have serious consequences for investor sentiment, and I don't want to get sued!" It's all the order you put things in. Feuerstein twisted things around to make it seem like he had spurned inside info. Kind of absurd that the CEO would be so dim as to try to influence the stock price via a pipsqueak like Feuerstein. If you're going to leak, why not leak to some hedge fund?
You are selling a stock which seems to me to have broken out and today made a new 52 week high. So, yes, I think you will have seller's remorse. In fact, many here seem to have been trading this stock for nickels and dimes and will now take their small change and go home. Baker Brothers is not in this for small change.
I also agree that they will take it very close to 95 sometime before expiration and that it will close well below that on expiration. I don't trade options, but am often tempted by situations like this. I will just sell some shares out of my IRA and buy them back at the end of the day on the 16'th. I will keep my core position in my taxable accounts, since the real opportunity here, I think, is for a substantial long term capital gain. Every bozo hedge fund and portfolio manager will want to be showing lots of this in their portfolios by yearend, I think.
I read the abbreviated DB blog in Barron's. The data is expected in the fall from a small Phase I test being run in New Zealand. The superior efficacy to Sovaldi was recorded for one type of Hep C in a preclinical trial (mice? petri dishes?) This is a long way from being a serious contender to Sovaldi. Their other hope is in combining one of their drugs with Sovaldii -- but everyone's waiting in line for that slot, including Gilead. Interestingly, one of DB's reasons for upgrading Achillion is that their CMO and team came over from Pharmasset, the company which Gilead bought for their Hep C drug. No concern, IMO.
To reiterate, I see no sign of active short selling on GILD. Over the past 10 sessions, the daily short volume only once approached 40%. If there had been substantial short exposure, the stock wouldn't have just sat there and washed out the call holders on expiration. The blowout earnings obviously surprised no one, but the larger players chose not to buy into the headwind of options expiration. Now they will add to their positions and see if they can sell the Aug95's, I believe.
Some days they'll sell you hope. Today they sold you fear in the form of the 87.50 puts. I added shares, certain that it would come back to 91.50 at the close. However, I got jumpy and started selling in the 91.22- 91.40 range. Then, after seeming to trade more or less in parallel with the S&P all day, it surged upwards in the last 5 minutes as the overall market was wilting. This is your guarantee that they will push it up into the 93 range next week to sell you those 95 calls. I'll guess that they'll be painting the tape in the premarket with little phoney trades in the 91.75 area.
Other than for a daytrade, almost no one is reckless enough to short this stock. Those who claim to be short have really only bought some puts, hoping to profit from a dip without risking major losses. In fact, having done a good deal of shortselling myself, I can tell you that it's generally foolish to short a rising market (aka "Don't fight the tape.") And shorting a pharma stock, where an FDA approval or early results from a clinical trial can pop the stock instantly is particularly dangerous. When I saw that the pharma stocks were stalling out on February 24-5, I unloaded many of my positions in my IRA and a few in my taxable accounts. But, other than a modest short of CLDX, I couldn't muster up the courage to take short positions in individual stocks. The safer approach, I now realize, would have been to short the IBB or one of the other pharma ETF's. Incidentally, the tax bill I will get as a result of unloading positions in CELG in my taxable accounts, plus the loss resulting from the fact that I never bought it back again in one account, are sizable.
There is a tendency to demonize shorts as vultures. In fact, just like vultures, shorts serve a useful purpose.
They tend to put a damper on both upward and downward movement. In particular, when a stock is plummeting, shorts are sometimes the only buyers to hold it up. On the other hand, if I am taking a position in an out-of-favor stock ahead of earnings, I like to see a large short position in place, since they will accelerate the bounce. Interestingly, the fact that this stock did not bounce immediately after the blowout earnings report was due to the fact that there were too few short positions.
Now that the company is cash-flow positive with major milestone payments in the offing and about $300 million cash on hand, what could possibly make you forecast a secondary offering?