What a coincidence that of your four (total) previous posts, one was knocking MDVN. Now, tragically, you seem to have one of the rare insurance plans which will cover neither Zytiga nor Xtandi. You seem to be as unfortunate in choosing insurance plans as you are in choosing stocks. The news that Xtandi does not cure cancer is an oft repeated theme here. Revlimid doesn't cure cancer. Rituxan and Avastin don't cure cancer. You would have been fortunate to have invested in some of these noncures.
Over the past two years, PFE Stock has gained about 33%, while GILD has quadrupled. PFE's market cap is now $202 billion to GILD's $125 bilion. But if their growth continued at the present rate, in one year's time PFE will be worth $235 billion and GILD will be worth $250 billion. My point was that GILD and CELG had grown so big so fast that they are probably now too big to be acquired.
Yes, you and a lot of others were expecting a huge spike on an absolutely predictable event. (Witness that big clump of Feb150 calls.) It never happens. Huge spikes come on unpredictable events. You now have a choice whether to hold this as a long term investment or to sell and take a smallish short term gain. Ibrutinib has potential applications beyond CLL. And many of us believe that it will be adopted relatively quickly by oncologists. But I'd say that, given your nervousness, you will probably sell here. I'd wait a few days, though. This level should act more like a floor than a top, and I think the stock will migrate up toward 145 by options expiration.
PS The nonsurprise of the FDA approval is demonstrated by the fact that yesterday's volume of 2 million shares wasn't particularly high. (In fact, if you'd shorted the stock at yesterday's high, as many traders obviously did, you would have had a larger profit than if you'd owned it at the open.) On January 7, when the results of the major trial were released, 4 million shares were traded and the stock moved up from 108 to 125. The difference is that the results of the trial were unknown - there was actually some risk there. Here, everyone knew that the FDA would approve ibrutinib for CLL before the PDUFA date.
I agree that the holders of the weekly call options are surrendering here and driving this down. The 135's have gone from being worth over 5 bucks this morning to zero. That's leverage for you. I am adding more here, but now don't expect it to get above 135 today. What's remarkable here is how little actual trading is going on today.
The MM's are huddled under their duvets in Larchmont, while the retail investors are sitting transfixed like deer in the headlights. Time to pull the trigger, I think.
I just doubled up.(actually more than doubled up in the IRA) I think this is an excellent opportunity here, created by the weekly options washout. The trading here is so lackadaisical that someone just ignited a flurry of trading by putting in a 1,000 share buy order at 13.60.
Or perhaps we have to wait for the options MM's, who sold all those 150 calls to cash in. Once the holders concede that they're worthless, the stock can run up so that the suckers will be tempted by the March 150's, which are still selling for 3.20.
Is anyone really expecting anything out of the earnings call other than perhaps some indication that ibrutinib is being used off-label for CLL in advance of approval?
Curious that while they were passing the shares back and forth trying to sell the 133.50 level to the unsuspecting, there were tons of shares for sale just above that price. (My suspicion that they were accumulating a position there seems to be confirmed by the amalgamated trade for 24,000 shares @ 133.28 which was posted at the close). And now, magically, after hours, there are a pitiful 50 shares being offered at 138 and a few hundred at 140. It seems that now that your shares are in their hands, they've appreciated by 6.50.
Call me a cynic, but when a stock trades up at the open for no apparent reason and then flatlines, I generally assume that they're unloading shares. Conversely, when it trades down at the open and then flatlines ,as this did today, I assume that it's under accumulation. If they give this a nudge up on Tuesday, everyone will assume that there's some good news forthcoming in the conference call, which I doubt. I will sell the shares I added today before the CC.
According to their new 13-f, Baker Brothers Advisors, the premiere healthcare fund, is still holding 8.7 million shares of PCYC, their largest holding, constituting 13% of their portfolio. They sold 290,000 shares during the quarter, I assume to rebalance. Their second largest holding is now INCY, at 12.35% of their portfolio.
You could look at my posting history to see that I've been long this stock since May of 2012. I hold long positions in my taxable account, but often trade in and out with my IRA. At the moment, I have added shares in all my accounts and am looking to lighten up this week ahead of the CC.
Rather than suggest particular companies and be accused of talking my book, I'd suggest a methodology: Go to the 13f's of the more successful biotech investment funds and see what they're buying. Then see if you can figure out what the attraction is. I generally look for some kind of existing revenue stream, products in late stage clinical trials, a balance sheet fat enough so that they won't need to issue a secondary in the near future, management with a history of success, strong partnerships with larger pharma companies, etc. The end-of-year 13f's are just coming out now. Among the funds I'd suggest looking at are Baker Brothers Advisers, BB Biotech, Orbimed Advisors, and Perceptive Advisors. That should keep you busy for a while.
An afterthought: You will note that even the most successful of these biotech stock pickers occasionally end up holding an INFI or ARIA or VVUS. Which suggests that you need to have a portfolio of a dozen or so candidates, culling the losers and adding to the winners as you go.
Don't you think that they will play it close to the vest regarding MM and autoimune indications? It seems to me that the stronger biotechs are always cautious about getting out too far ahead of the FDA. I am not expecting any major news out of the CC. However, I think that any signs of substantial off-label use of ibrutinib in advance of the CLL approval woild bode well for its rapid adoption.