Short's probably do not have a strategy at all!! They are just playing a game of probability..that may biotechs will simply fail! But with ARNA they are stuck with a wrong bet! They thought it was not going to be recommended by the panel or approved by the FDA (reasonable based on all drug applications, but wrong based on the actual outcomes). So rather than moving to the next target and leaving ARNA alone..they kept doubling down expecting that the sales will never pick up due to the FUD that belviq has very low efficacy and mst people will not benefit from it. Yes the pick up has been slow but not because it is not efficacious. Insurance coverage, drs wait and see attitude, and potential patient not aware of Belviq's existence!
While many have discounted and think there will never be a short squeeze in arna..I continue to believe now (after seeing the unbelievable short interest) that there will be one and will be kind of spectacular. I suspect it will happen in 2014!
So far they have been wrong in every account. They can take some credit on the slow and disappointing launch so far..but that could not have been their reason as they have doubled down and increased the SI to all time high at 66M. One thing you have to give them is they have the balls. Naked shorting and other instruments and tools, notwithstanding..they have the guts and money to keep the presure on the pps to be sure. SO one has to ask..what are they waiting for or what is the logic behind this?? I can only think that they are waiting for some catastrophic event such as a death related to belviq treatment. which seems more and more unlikely as the launch has been for more than 6 months and people in P3 clinical trials have been on that drug or have history of more than 4-5 years already! So the chances are lower and lower of any such catastrophic events. Then the question becomes are the sales going to be sluggish forever?? Not likely because except for the holiday related pause or dips the growth has been steady and much faster than qsymia. Upcoming catalysts for 2014 are launches in other countries, TV ads in the US, and seasonally higher demand for wt related drugs and supplements in the first half of the year! So indications are its going to be a pivotal and very likely successful year for arna and its Belviq!
So this may be what some shorts may be thinking as their last opportunity for exit: there will be 2 more weeks of weak sales reported in Jan 3 and Jan 10th due to holidays. Stock will (unfortunately) react to it and they will be able to get out. But 66M is a lot of shares trying to cover within 2 weeks. If the scenario does develop that traction is better than expected and steady in the first half of 2014, and shorts decide to cover..it will take 10 straight 6M days of buying!! Just imagine that? Even when the volume is 3-4M stock goes up substantially, so one can easily imagine a rise of 5 dollars or more if that happens!
to be continued...
Here is the last paragraph from SO's SA article that was apparently rejected by SA??
"This week sales were up 24% (unadjusted) according to IMS Health. Script sales fell short 5,000 (unadjusted) and seem to have demonstrated a partial recovery from the holiday week. Ahead of us, we should now have two weeks of reported gains (numbers reported on 12-20 and 12-27) before we see our next holiday anomaly for Christmas week (numbers reported on 1-3). The numbers reported 3 weeks from today (1-3) will include the Christmas week. The number reported 4 weeks from today (1-10) will include New Years week."
that's a fact over the last 5 trading days when the pps has been going down. Before that pps was rising on high volumes. Say a lot about manipulation. Really no sellers just manipulators..
Like I said. If there was any real buying (higher volume) ratehr than the shorts and MMS playing with themselves with 100 shares back and forth the pps will shoot up. Just imagine what would happen if some tute really bought 2M today?
The real gaps I like LONGS to fill is the one in shorts A$$es..if you know what I mean! With the impending catalysts at the end of this year and early 2014 and beyond..I sure hope that gap is filled!
My crystal ball notwithstanding, intraday turnaround as predicted occurred and you will see higher pps all week. If you read what I wrote, the pps will be week due to those holidays, as it was for the Thanksgiving week. 2014 will be a big winner for arena probably as big as it was in 2012.
Clearly, short term traders are playing it like a banjo as the events of last week (weak script numbers due to 2 day holiday week) was expected and they sold or shorted more. Now that is in the rear view mirror. They will play for much better numbers this Friday..so once the selling exhausts itself today, fresh buying ahead of the numbers will start soon..and absolutely by tomorrow!
I am thinking of taking advantage of that playbook for the next two predictable events..weak sales on Jan 3rd report (encompassing xmas holidays) and then again in Jan 10th (New years holidays). I will sell half of my holdings in the week of Dec 27th and buy back all my shares in the week of Dec 10th (after 2 weeks of expected but manipulated and misinterpreted script numbers). After that no playing and just holding as the insurance coverage will go up, TV ads will hit the airwaves, and the sales will increase as well. Not to mention that arena will report a profitable year in a long time (both Q4 and 2013 will be profitable).
So remember: This week, scripts are going to be 2-% to 40% up, followed by 2 weeks of 5-7% growth. Then 2 bumpy weeks where there will be shenanigans again by the short sellers (and who wish ill on arena). However, after that one has agree that the only thing shorts can count on or will depend on is the scripts never make it above 10K per week..which is a big if especially since first half of the year is generally very strong for obesity related products!
That would be at 6 months, and we haven't see the effect of increased sales force, DTC ad and to be announced TV ads. Stock may reach at least 8.50 to 9 by Dec 31st!
What's your point? ARNA has approved drug that has seen script growth pretty much every week since launch. Has pocketed more than 200M dollars on EISAI deals and has 1.4B in milestones lined up as the script growth continues. Also it collects more in royalty (net sales) than Orex will ever collect. And afder adcom and FDA process at least 6-8 months before launch. SO the pps appreiciation of orex is just the reflection of where WSs dollars are invested now..not necessarily which will be more successful. If I were you you would wnat to ride this pump until adcom and approval afetr which it will have the same fate as the other 2 once the sales #s start trickling in...
The shorts are trying to take advantage of the reduced volume towards the end but it looks like buyers are ready at any weakness..and volume this high for the day...shorts shares don;t make that much influence...
Not true at all. All the weak hands have been pushed out when the pps dropped to 4.05 a few weeks ago. ARNA selling exhausted itself around that time..so the fluctuation you get now is just normal due to so much appreciation (50%) within 3 weeks. This Friday #s are going to be at least 5% or more, and pps will jump come Friday. Next week is tricky because of Thanksgiving week but the tutes may be eying to buy more next week.....due to knee0jerk selling due to lower scripts next week..
What gives? WHo are selling? I believe there is more short selling (likely naked shorting) going on. It may go upto 70M at this rate in the next reporting time!! I guess the day trader trend trader types are getting out before the break??
Oh Yeah I forgot to mention the momentum players getting in on the action..fundamental or not if the stock is on the radar and has a momentum,,it becomes self0fulfilling and pps can jump with or without a reason!
If we close at or above $8 by the end of this year...that will be a good base to spring from and if scripts keep pace and TV ads start having some traction, $40 in 2014 is not impossible....as the demand for shares will create the perfect storm:
1. 60M shares need to cover (demand)
2. Tutes on the sidelines, once the pps is above or near 10 will start buying in earnest (demand)
3. TV ads will create demand at the drs office
4. catalysts from the ROW sales and approvals
5. Progress of arena pipeline drugs (huge indications)
6. Bel-Phen : need I say more??