I cannot believe my eyes. Investors who own SRPT are going crazy in the weekly put market for next week. Obviously they want to gain downside protection for their stock. But they are paying through the nose. I just sold the April 29 weekly with a strike price of $8 for a premium of $1.00 ps. That is a 12% premium for a strike price $6.40 out of the money. Incredible.
If the AdCom goes against SRPT, nobody believes the company will go away and die. ET works but not to the fussy standards of the FDA. SRPT would then reload and obtain more data.
I have never seen this in all my days trading options.
I just laid off some risk by buying the weekly April 29th $5 put for $0.20.
AdCom will be a binary event. My gut instincts tells me that neither the FDA nor the committee will kill ET. The share price will percolate up to $19 where it will hold for a while.
"I'll buy a bottle" said the shill to the medicine man. This is the type of fraud the FDA was set up to stop. For the most part, it has done a good job at a very expensive price. P3 studies typically cost tens of millions $$$.
Are the same protocols useful for the modern day? Are costly clinical trials needed to weed out the ineffective from the truly good drug? How can any DMD patient enroll in a placebo controlled study knowing he has 50% of dying early?
The FDA, being the incumbent, refuses to answer the questions directly. But they turn to the AdCom committee to find some answers. It may be that for just this case ET gets a hall pass. Or the FDA will revert to time honored protocols and call for a statistically driven (large n) study for ET.
Hopefully we will find out Monday.
The afternoon session at Monday's AdCom will be a passion play. Gone will be the statistical demands of the FDA. The committee will hear first person testimonies from many positively affected by Etip. There will not be a dry eye in the room.
The way I see it, if the docs think Etip is not an outright fraud, they will answer the questions positively. This gets the monkey off their backs and onto the FDA.
Hi Len: It is getting interesting at MNKD. But they need money.
SRPT is a different story. Similar to the surprise at the MNKD Adcom, I expect a surprise tomorrow.
I was at the MNKD Afrezza AdCom meeting two years ago. Compare and contrast from the early pictures:
Diabetes population is 4 orders of magnitude larger than DMD. The number of of people at today's meeting is overwhelmingly disproportional.
The Etep AdCom room is twice the size of Afrezza's.
The public and political bombardment pre-meeting for ETEP is much greater than for Afrezza.
Longs should be prepared for a distressing am session. It will be scientists arguing against each other on the technical metrics of Etep. If your child does not measure up to Common Core tests, you must defend why it does not matter.
The pm is where the battle will join. The same parent with a failed Common Core son will say that her son is just as smart as any other child his age notwithstanding the bogus CC tests. She will get support from many corners.
I remember at the Afrezza meeting, the tide turned early in the pm session. I see the same atmospherics in today's meeting. If the committee goes against the public outcry, then I think their personal safety is at risk.
This year's ASM was not as upbeat as last year's. But it was not down. Everyone one knew MNKD has one more chance to take the #$%$ down the ice and score.
The most patients SNY got was 2,500 at one time. This is from the entire US. Drop outs killed the program.
The huge amount of inventory sold to SNY will mostly be scrapped. More losses added to the $60 mln already on the books. It turns out this debt is secured by MNKD's Valencia's building.
SNY used its very large sales and marketing staff to cover the diabetic waterfront. Castanga will only initially have 40 reps calling on endos. Type 2 will be put on the back burner. Primary care also.
The big question is will Mike Castanga run into the same problems SNY encountered? My take is that he is far more focused than SNY ever was. He has 1 year's data to work from. But even he said drug relaunches rarely go well. Because he signed onto MNKD, he must believe this does not apply to Afrezza.
MNKD needs 12 months to prove weather they can make a go of Afrezza. To do so requires more cash, probably another $50 mln.
Titrating Afrezza should not be a mystery given all the clinical trials performed with the product. It is after all, insulin in a different carrier. Having only 20k try the product in the first year is a problem. With over 1 mln Type 1 DB in the US, you would think first year would be six figures. I think SNY gave up after 6 months and quietly told their reps to hump something else. Like Tuoujeo.
MNKD only has 250 people and is still a developmental stage company. Its plant in Danbury is way too large for the market at this time. Cash burn rate is $10-12 mln/mo. Do some back of the envelope calculations and one can estimate they need 100k users just to be cash flow neutral. The existing base is 2.5-3k users. Mike Castanga is an energetic guy and will do well. But to get to 100k users, it will take years.
MNKD probably needs $200-300 mln to get to cash flow neutrality over the next 2-3 years. Partnerships will bring in some cash. So will product sales. But there is a funding gap that will rear its ugly head.
The best hope is that Afrezza goes viral in the diabetic community.
I think it will push to $145-$150. The market already knew about the FDA decision and the trading showed it.
Last year at this time, RCPT was bought out by CELG at a price most longs thought was low. ICPT is further along as they will soon have revenues. My point is that only a bidding war will cause the price to go to the moon. If that were to happen, we would have seen it already. In other words, last night's announcement was not a surprise. All the buyout candidates already knew about the approval through NDA.
If I were to speculate on the obviously very good factors, the numbers would be high.
There was much more trading activity before the AdCom in early April. Last week was distinctly blah. No drama in the price action at a time when there should be is very odd. It means everything is baked in.
I think the future is very bright for ICPT. But when Hillary peed on the entire sector, valuations took a nosedive.
Many people misread GILD's need to acquire. Yes they do need to buy an asset, but it must be immediately accretive to sales and earnings growth rate. Like it or not, this is the Wall Street game. In baseball, teams will acquire a hot pitcher in July or August to make a run for the pennant. This is GILD.
I viewed the Nimbus acquisition as drafting an 18 yo into the farm team. It will take years for Nimbus to commercialize a NASH product. It would seem that GILD made a run at ICPT and backed out when the price got too steep. They then went with Nimbus.
A new drug in a new indication is not a done deal after a successful P3 and FDA approval. There is insurance coverage, foreign markets, and side effects not seen during trials. I would rate ICPT as a promising AAA baseball player who is called up during a pennant race to fill a gap perhaps only for one start.
Getting back to your question: GILD does not need two solutions for NASH.
The last ER for GILD was bad. The stock is in portfolios that demand performance now. Wall Street is dysfunctional this way. ICPT NASH is a few years away and an orphan indication for PBC will not move the needle. I think the Nimbus acquisition was a "tell."
I think a target like REGN will fill the bill. They have growing earnings. No product overlap so the FTC will not stop the merger.
Of course there are others, but this comes to mind.
Since Saturday morning, the posts on the MB have been over the top on the price ICPT will rise once the markets opened up on Tuesday. Some even had a GILD deal ready to be announced on Monday. I was chastised for offering a $145-$150 price today. I will probably not be too far off.
I think ICPT has a bright future but it will take longer to manifest itself. Once GILD bought into Nimbus, you knew that a major liver disease company was out of play. But the real issue is Hillary and her desire to get drug prices down. VRX and Martin Shrikeli did a lot to cause this problem. ICPT's NASH potential is immature but promising, They have $700k in the bank to fund the trial. ICPT will not sell at a Hillary-degraded price. They are smart to wait. Buyers will not offer big prices until the political overhang is gone.
All this played out last week with very poor trading in a stock about to receive FDA approval. ICPT will trade in will defined bounds until something happens to change the value of the company.