Thumb's up Duck. I agree with everything you said. I'm not a fan of more dilution either and a mix of cash and stock makes sense. From the company's perspective, they know a few things that feed into this decision that we can only guess at. Here's a list:
They have approximate dates for the Celestial interims and the final analysis.
They know the exact CaboSun results and are likely already negotiating with FDA to see if they will entertain a supplemental NDA for frontline and any requirements for protocol changes and data treatment.
They know how the Apolo trial is proceeding and whether that data set merits an immediate jump into a ph3 in UTC or perhaps expansion cohorts into other indications (NSCLC).
They know how the Cabometyx launch is proceeding
They know how the Japan discussions are going.
They know if there have been any offers or feelers for M&A discussion.
So I guess my point is that they have a feel for what the future capital requirements are likely to be and also how much is coming in. Remember a $15 buyout is worth about a quarter billion to the holders of company awarded options. That has to be a powerful incentive.
"I'm thinking sell the option and chalk it up to a profitable trade."
I really don't like giving specific advice. If I had both stock and AUG calls in my portfolio I think I made it pretty clear what I would do. If I really believed that there is a good chance we see $8 by Aug, and I really had a desire to play some options, my preference would be to write in the money puts, at least that way the decaying premium is working for me. My real opinion is that It's a relatively low priced stock with lots of beta so there is plenty leverage just by owning the stock outright.
"What do you think is a better strategy selling the options or selling the stock equivalent?"
I see one near term event that might be worth looking at as a good selling opportunity and that would be a European approval this month. If you hold the calls until they're in the money you have that 50 cent premium you paid working against you. I'm not as confident as you are that we go over $8 before the A expiration. I think ESMO will get us there, but it is in October.
"Were your intentions any better when you accused me of lies and threats against you?"
I have a rather low opinion of both your incarnations.
"Bro, you really trade 100 shares? Lol"
If it were true, it would be amusing. I only did one trade this morning for 2000 shares. It was below the ask and I got a fill. I put another order in at the same price for 1800 and that didn't get a fill. The pre-market is usually not very liquid. I have been stuck with 50 share partial fills. I was looking for a 10-20 cent pop at the open courtesy of Cramer and the Fool, but it did not materialize.
Just curious, but what's your plan for the July calls.
"Looks like I inadvertently struck a nerve with an attempt at a little levity. As there were only two trades in pre-market according to Nasdaq, I assumed one or both to be yours, as you stated you bought in pre-market. Is this not true?"
I did buy in the premarket and the 7.36 trade was mine. I find it odd that your first post ever was a little good natured needling directed at me. I also find it very coincidental that you attribute a 100 share buy to me and then point out that after commissions are deducted, I will only have enough left over to eat hamburgers. Does any of this sound familiar?
I don't mind good natured fun, but only from people with good intentions.
"But after they make the redemption announcement, they must stick with whatever offering they propose for that redemption period. If convert holders choose not to convert during the redemption window, then EXEL could change their offering the next time around. That is my interpretation."
Duck we are slogging through the conversion process as a group effort. I don't think the holders can bypass a redemption. As I read it I think works like this. The company notifies the holders of the redemption at par. The holders are given the option to convert at the 188.XX shares per bond rate. The company can then issue the shares or an equivalent cash payout determined by a moving average of the share price. Once the company initiates the process, I think it's binding n both parties. The company also can initiate a partial redemption. They would chose which bonds to redeem. It too, would also be a binding process, but only for the notified bond owners.
"Congrats Ernie, you made some money. Let's see, was that from the 2000 shares at 7.36, or the 100 shares at 7.34?"
Thank you. We can multiple ID's to your bag of tricks now. We have lying, erasing past posts, cyberstalking, threats and general bluster. What's the next wrinkle there southern guy?
"any stipulation they could do both? repurchase some and issue fewer shares to cover the rest? seems like a huge block of cash or stock to be binary."
They can do either or a combination. As difficult as it has been to raise capital in the past and considering his quotes about cash enabling in-licensing and restarting drug discovery, my guess is that it will be all stock when it happens.
"So the quoted language above says the bonds can be repurchased for cash.. I thought the benefit was to convert the debt to equity. What am I missing?"
It's at EXEL's discretion whether they use stock or cash. So they still have the option to preserve cash and wipe out debt. Let some of the trading shares go at 7.40.
Henriette where are you?
"Cramer doesn't quite have the influence he used to have and MF has proven to be as useful as a wet dream."
I'm all about looking for past precedent. The last Cramer recommendation of his fast money segment was Aug 3, 2015. Aug 4 the stock set a 52 week high and Aug 5 it set the $6.81 52 week high that lasted until recently. That plus Sean Williams doing another pump job on the Fool and futures indicate a good open. I think we have a good shot at a nice rally today. I managed to pick up a few more in the pre-market and would have taken more if offered. From a trading perspective I think today will present an opportunity to take some profit.
"...then this 'first start date' for the 30 consecutive trading days is on or about July 1. Correct?"
That is my understanding. July 1 is the first day and if they don't make it on Aug 15, it is a moving window of 30 days. It will be really interesting to see how this plays out. $6.91 is an important threshold. It took a long time to penetrate it and now we bounced off of it once. Speaking of Cramer, $6.90 was the Cramer high. After Meteor topline he recommended the stock, it spiked and quickly dropped back.
"Ok fine, but after realizing the minuscule vol and open interest you can agree that there's nothing goin on with July, yes?"
Yes, mea culpa. I should have looked myself. All the activity is in the Jan 7's
"Why would traders with July call options work to hold the stock below 8? It makes absolutely no sense what so ever..."
Salty, there's a difference between "writing" options and "holding" options.
"I'm not following you with the July $8s, open interest is only 546 and today's vol is only 150, you see that as a lot of pressure?"
Don't know what to tell you. The quote I lifted about the unusual activity was a FlyOnTheWall alert that crossed the wire at 2:45pm. It specifically mentioned the Jul 8's.
"The Aug 8 call options now have a much wider spread .40b .85a, why is that? When I bought 50 calls last week it was 45/55 and I hit filled at .50"
"Bullish option flow detected in Exelixis(EXEL) with 3,425 calls trading, 2x expected, and implied vol increasing over 8 points to 65.18%. Jan-17 7 calls and Jul-16 8 calls are the most active options, with total volume in those strikes near 3,100 contracts. The Put/Call Ratio is 0.00."
I don't usually trade options. I see the above and even though they call it bullish, what I focus on is all the traders who wrote those July 8's working to hold the stock below 8 while the premium slowly erodes over the next 30 days. That's a lot of pressure. I really hope it works for you between now and then.
"#I'mwithyouernie, just repurchased small trading position@ 7.22."
Extra credit for being clever. I need to get back to 7.31 just to pay my commission and cover dinner at the Golden Corral and you'll be eating more of that endangered species Sea Bass at the Red Lobster.
Tivantinib also had to screen for high MET which cuts down on the patient pool and in most cases involves a liver biopsy. I would really like a meaningful update on their progress.
"The trial design has become virtually obsolete."
Even if it slips into the salvage drug of choice position, it is still a reasonable return on investment. Right now there Is only Sorafenib. By the time Cabo is approved, there may be 4-5 drugs to chose from. It all comes down to a comparison of the data.
"What do you think about the prospects for combining Tasquinimod with Cabo?"
It sounds reasonable, but the likely time horizon is beyond the limit of my endurance. It would take a year to get into the clinic and then dose ranging studies can't be rushed. Unless the efficacy is really obvious with high ORR, then add a few more years of randomized ph 2 work.
"..one would hope Papadapolous and the rest of BOD had something to do with MMM changing from "getting the band back together" to in-license compounds."
Better idea than going back to scratch and hiring 200 researchers. I would still prefer they just let the moving parts keep moving and not make any major expansion or acquisition moves.
"It's time to get cabo in the hands of a BigPharm where it can be fully and rapidly developed into it's full potential. There's too much competition to wait for revenues to kick in to start more trials. EXEL has already missed too many opportunities."
Amen to that! Bought more @ 7.28.