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Volcano Corporation Message Board

jacosa 120 posts  |  Last Activity: 16 hours ago Member since: Jan 24, 2000
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  • After a lot of devious thinking, my best present guess is that in the present low interest rate environment they consider commercial real estate a good place to park cash, and they particularly like a building that they are in a position to see keeps its tenant

  • Reply to

    Wells Fargo Upgrades MYGN

    by ttmarun Aug 25, 2015 12:19 PM
    jacosa jacosa Aug 27, 2015 1:34 AM Flag

    The art isn't never to lose money (The Blessed Warren gives that as a goal, but even he sometimes falls short), but to make more on your winners than you lose on your losers. That takes a lot more discipline on the short side than on the long side. [sitting forever on a position that has gone 20+% against you, and where the original "fatal damage" hasn't actually hurt much, doesn't sound like the needed level of discipline]

  • Reply to

    very important announcement made yesterday

    by maddison3 Aug 26, 2015 11:13 AM
    jacosa jacosa Aug 26, 2015 3:26 PM Flag

    Most I can read into this is that somebody is acting as if Incyte will have a use for its own headquarters for a few years. And we already knew that top brass were thinking that way. There isn't a heck of a lot that they could know and not be required to disclose. The really material one, that they would even be forbidden to disclose, would be if Janus 1 JUST failed to get stopped for slaughter. They know the results of the open-label run-ins of the various phase 2-s (a person could go broke very quickly investing based on the run-in parts of phase 2-s). And of course they know a lot about the pipeline that they aren't publicizing. Lilly will be doing the selling on Bari, so that doesn't require more desk space for sales. Any one of the combos, though, probably WOULD put more butts in chairs, and PaCa is different enough for MPNs to probably need new hires. The best guarantee of continued independence is a pipeline rich enough so the uncertainty about the real value of far future business is comparable to or larger than the market cap.

  • Reply to

    very positive cc

    by duhu12 Aug 11, 2015 5:23 PM
    jacosa jacosa Aug 26, 2015 12:38 PM Flag

    Continuing on short interest: came out yesterday. Basically, unchanged report. If I was short, I'd have covered some in this negative market, but we'll have to wait a few more weeks to see if anyone did.

  • Reply to

    Wells Fargo Upgrades MYGN

    by ttmarun Aug 25, 2015 12:19 PM
    jacosa jacosa Aug 26, 2015 12:24 PM Flag

    Not that it would be hard (It would probably be criminal), but I doubt that you know how MUCH EZ I own. That use of 'we,' though--are you a Goldman house login? I'd be sad.

    If you can find where I claimed to be perfect, please ridicule that publicly. You won't have a lot of trouble, though, finding where I said that Myriad's trade secrets were critical but the gene patents weren't, and management distraction due to lawsuits was a drag. And sure enough, that's what time seems to be revealing.

    If you've been short any large sector that MYGN was a logical part of for the last 2 years, you've probably lost a ton. If you were just short Myriad, you still have your skin, and you can save it by covering. And if you're Goldman, well, justice is delayed, but some day...

  • Reply to

    Wells Fargo Upgrades MYGN

    by ttmarun Aug 25, 2015 12:19 PM
    jacosa jacosa Aug 25, 2015 3:31 PM Flag

    Just read the SA summary of the narrative. Basically, WF is believing the obvious. Hereditary cancer holding steady because the value is all in trade secrets (mostly database). Prolaris making a modest real contribution once CMS lists it, and Vectra benefitting from the new selling emphasis. They think the mid-Sept thing may draw some buyers.

    I HAVE to think Goldman and friends are about to make another assault against the database.

  • Reply to

    Close to fair value at $97+

    by jacosa Aug 24, 2015 4:59 PM
    jacosa jacosa Aug 25, 2015 3:05 PM Flag

    I try to keep the ones that should be mechanical pretty mechanical. So "no air" is basically 5 x value of existing revenue streams. I showed my work for "fair value." You could maybe credit for an estimate of milestones earned but not paid, or for a bigger estimate of solid tumor revenues within a reasonable time window. But then again, you might debit for uncertainties of Bari timing (there WILL be political opposition) or of moving from a pure development company to a full drug company. Or you might do things completely differently--we're in the extraordinary situation of being able to put good estimates on trajectory of risk-free rate (constant for 3 years), so a formal Black-Scholes valuation of some of the development programs might be plausible (if you do it, offer it for big bux to the wire houses). Obviously, with no good way of putting a value on the IP assets, a classic Graham / Dodd analysis can't even start.

  • Reply to

    Close to fair value at $97+

    by jacosa Aug 24, 2015 4:59 PM
    jacosa jacosa Aug 25, 2015 12:11 PM Flag

    I should really revisit my old essay on different values. But I don't have time. A few are "All air squeezed out" around $50, "hostile takeover" around $230 and "price when presently-visible pipeline matures" around $400. Each of the Incyte drug targets I know of has the pleasant property that the total loss from a failure of the program addressing it would be much less than a year of the sales that could be generated by success.

    What I called 'fair' was roughly based on money that could be made "beyond reasonable doubt" (in the legal sense), with marketing in sight within 2 years. Jakafi for MPNs, Bari and some success in a solid tumor program (we know for sure that both Ruxo for PaCa and and epac in a combination for melanoma "sorta work;" $1 bln corresponds to 1 of them being a moderate success).

  • Reply to

    Close to fair value at $97+

    by jacosa Aug 24, 2015 4:59 PM
    jacosa jacosa Aug 24, 2015 10:32 PM Flag

    I said some candidate programs are open to the sky. I don't include Bari for diabetic nephropathy because the money, if any, would be 5-6 years out (the condition addressed is the single most expensive disease, but being chronic, it has a hard time attracting accelerated approvals) I DO include Ruxo for toxic cancers beyond PaCa, since it could be sold immediately if Janus 1 succeeds, and wasting (wasting and weakness pretty much define toxic cancer) is VERY prominent in advanced PaCa. I include Epac... in combination with Keytruda because the companion drug is already marketed and an effective booster would be a gimme for accelerated approval...and after that, Merck is good at selling. I include the '110 + '093 program, even though it isn't quite as advanced as the others, because oncologists are really ready to mow down B cell malignancies (so many half-miracles; it REALLY has the feel that one new mode of action should push them over the goal line) (My friend Sara Jane is living on a half-miracle now, against myeloma).

    The BRD drug is another possible sprinter; some of the stuff it did in pre-clinical demos was just "impossible." If partisans of that oligonucleotide drug can point to demos, we can too.

  • Taking 5 x peak sales as fair value for a drug developer. Gonna be at least $1 1/4 bln for Jakafi in MPNs. $1 bln for Bari in RA and at least another $1bln from solid tumors (Ruxo, Epac). Some of that stuff seriously open-ended to the sky (Ruxo for solid tumors is my favorite). Yeah, you can get way below fair value, but a company making its first solid move into black GAAP numbers is a good candidate for fair value or better.

    No China business. EU business a bag on the side. No oil futures that I know of. My understanding of Incyte's institutional ownership is that a minority of it is in mutual funds that could be forced to liquidate. I think the late (but not on-close) weakness looks like a move of available funds into Dow stocks to try to break the drop.

    I have Peter Lynch's story about his family vacation on a shelf somewhere. Gonna re-read it if I can.

  • Reply to

    boy this all reminds of the crash of 1987

    by moreinfo424 Aug 20, 2015 11:12 PM
    jacosa jacosa Aug 23, 2015 2:29 PM Flag

    Couldn't resist.

    WOW! Somebody just read the flyleaf of a book on commodities

  • jacosa jacosa Aug 23, 2015 2:12 AM Flag

    Replying to this seems like a good spot for my guess at why MYGN did well on Friday. I think that at least some (perhaps 10-15 MM shares) of the huge short position is held as part of an "unrelated hedge" in biomedicine. If the holder[s] of that position has enough discipline to survive, selling the long components requires simultaneous covering of the short components. So the gain could have been mechanical rather than motivated by any changed opinion on Myriad. This is not especially better or worse for us than any other cause of the buying, because someone rebuilding an unrelated hedge in the same area is unlikely to choose Myriad as a major part of the short component.

    FWIW, I think the week we just had was mostly a temper tantrum by big players who have been demanding interest rate hikes, and recognize that they aren't going to get one in Sept (I put the over/under at NEXT Sept). So they're taking their money out of risky assets.

  • Some thoughts from your friendly local near-socialist capitalist.

    China shouldn't concern us. Only some know-it-alls are directly invested there. They aren't big customers of US drugs (witness extra regulatory hoops Lilly is jumping to get Chinese approval for Bari). If anything, Chinese troubles delay competition from Sooz's Incyte-alike. If some big banks are among the direct-in-China losers, it might cut takeout-candidate premiums, but that's pretty indirect for us.

    Big investors losing money in energy stocks should also be pretty minor for us. Different populations of investors. But to the extent that they're selling what they can to meet margin calls / internal disciplines, they spread the pain.

    I STRONGLY suspect that the largest component of the present drop is big players who KNOW that they're right having tantrums because they won't get the Fed to raise interest rates NOW NOW NOW. They're just turning financial assets into cash and sitting out. The patience of such people is finite.

    Of course, I had an equally sanguine view of "strength of America" stocks back in 2002, only to find out that many of them were speculating in bubbles rather than sticking to their own businesses.

  • Reply to

    Guess who's going to get a PD-1 inhibitor

    by jacosa Aug 21, 2015 1:30 AM
    jacosa jacosa Aug 21, 2015 1:16 PM Flag

    Note that for this to translate into anything good for Incyte, the phase 2 trial on the combination with Epac... has to show dramatic results (subject of tweets) and that combination has to be at least as good as the other combinations being tried (no tweets to go by).

    FWIW, Oliver Sacks [among many other things NY Times contributor] is receiving "immunotherapy" (presumably single agent, not identified that I know of) for his advanced melanoma, and doesn't sound like he's doing especially well.

  • From The New York Times: " Mr. Carter will receive intravenous treatments of Pembrolizumab, an immunotherapy drug marketed by Merck as Keytruda."

    Yeah, the drug named in the mystery tweets.

  • Reply to

    boy this all reminds of the crash of 1987

    by moreinfo424 Aug 20, 2015 11:12 PM
    jacosa jacosa Aug 21, 2015 1:27 AM Flag

    I sure HOPE it's like 1987--the bull market following that was just LOADS of fun (although I had to borrow more than I liked to participate in it).

    I get seriously annoyed with people who talk as if it's some part of management's job to manipulate stock prices. It isn't, and doing that almost invariably interferes with stuff that IS part of the job. I'm fond of St. Warren's rhetorical question--If you own stock in a company and plan to buy more, are you happy or sad that the price fluctuates?

  • Seems to me that with Diodes manufacturing in the increasingly slack and devaluing Chinese market, and selling internationally, there ought to be a tailwind.

  • Reply to

    Awesome earnings, $100 fair value

    by shortofaname_99 Jul 27, 2015 5:25 PM
    jacosa jacosa Aug 19, 2015 3:42 PM Flag

    There appears to be a "Show me the money" prejudice among investors. Eastman has lately taken several steps that are likely to increase growth, but that haven't done so yet. There is also an extremely tangled knot about how sensitive Eastman REALLY is to petroleum prices, and even in which direction (we're starting to be able to get a read on that, at least, from results. Doesn't seem to be much sensitivity). Of course, 14x is only fair if the growth materializes.

  • I wrote this before with links to everything and it got deleted by The Powers.

    A drug company recently used the [probably over-broad] Supreme Court decision in Reed v Town of Gilbert, Ariz. to overcome FDA and make off-label (but supported) claims for a product with no penalty.

    It goes without saying that I'm appalled, but bidness is bidness. Incyte could already use the results of RECAP to promote Jakafi. That might not be a great idea because to date, Incyte has benefitted from excellent regulatory relations. But if Janus 1 succeeds, the urge might get irresistible. Relapsed PaCa is, after all, an imminently life-threatening emergency, and a market more than twice the size of MPNs.

  • Reply to

    IDO News out

    by soozanie Aug 17, 2015 2:25 PM
    jacosa jacosa Aug 17, 2015 5:29 PM Flag

    A couple reasons to control your enthusiasm. First, tweets of this sort are easily faked, and even when supported they miss important details (I got majorly jerked around by one of these reporting results on a competitive drug to the one Intermune had. The tweet actually got the flavor of the result right, but missed a high incidence of annoying side effects--in context, very important). Second: many analysts are already imputing a lot of value to the IDO inhibitor program; more even than to Baricitinib.

    On the positive side, this was one of the programs where scuttlebutt had it that a sufficiently good collection of phase 2 results might lead to approval without a full registration trial.

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