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Tessera Technologies Inc. Message Board

jacosa 116 posts  |  Last Activity: 18 hours ago Member since: Jan 24, 2000
  • Reply to

    BIDDING WAR starting at $65,

    by koolchik31 Aug 13, 2014 3:55 PM

    I really expect the major use of this drug to be in combination with Pirfenidone.

  • Reply to

    But what if this ISN'T the time?

    by jacosa Aug 18, 2014 10:53 AM
    jacosa jacosa Aug 20, 2014 9:40 AM Flag

    If you look at the posting that started this spate of excitement, it lists a couple earlier times when there was enough buyer interest to move the stock.

  • Reply to

    But what if this ISN'T the time?

    by jacosa Aug 18, 2014 10:53 AM
    jacosa jacosa Aug 18, 2014 12:58 PM Flag

    Nothing against your father, but automatically selling at a target price is a weak policy. When he was healthy, Jesse Livermore had almost the exact opposite strategy, but that was a long time ago. I'd suggest trying very hard to re-analyze the situation as a stock approaches your target.

    My few large gains have come from letting good stocks run for a very long time, far beyond any immediate target. One useful guideline is whether the opportunity you saw when you bought the stock has been used up or not.

  • Reply to

    But what if this ISN'T the time?

    by jacosa Aug 18, 2014 10:53 AM
    jacosa jacosa Aug 18, 2014 11:49 AM Flag

    Reasoned like a poker player. I like it.

  • We ought to be complete. Let's take a fairly bad scenario: there could be some sort of announcement that makes it clear that the possibility of a major deal has been turned off, like a light.

    Short term there would be a sharp drop (I wouldn't rule out $35). I try not to get too caught up in the sharp moves. Where it gets interesting is upon approval of Pirfenidone in the US. I'm not at all sure that there would be much of an immediate stock move against the background of a recent failed auction. We'd be left waiting for actual US sales results (I think Intermune basically knows how to do a rollout, so something encouraging ought to come out around May) That's roughly when the first SoP results ought to come out: I'll presume non-inferiority to Pirfenidone on weak measures of effectiveness and greatly increased tolerability. Normal sell-in and generally good SoP results ought to return the stock to 50 or so. The failed auction wouldn't be such a fresh memory, so it could go higher. In fact, with the prospects for SoP better defined, a takeover would again become possible.

    It's easy to underestimate the importance of SoP. Remember: there's no composition of matter patent on Pirfenidone, so it can be generic in much of the world and in much of the rest, it will be difficult to extend exclusivity beyond a few more years. Shionogi owns Japanese rights (maybe Korean too, but that isn't such a big deal). SoP will be a new composition of matter, and will be Intermune's everywhere. The downside is that IPF will no longer be an orphan disease.

    Last issue: suppose takeover talks end "softly?" Maybe 6 weeks with no climax, or an announcement of suspension until XXX happens? I still think it drops the stock, but probably not lower than $40.

  • Reply to

    There goes Ichan.....I mean Cohen!

    by jvolpi334 Aug 13, 2014 9:25 AM
    jacosa jacosa Aug 15, 2014 10:25 AM Flag

    The alternatives to PDL are overdrafts or "A guy I know...." both of which are more expensive. Rollovers are where it gets abusive, and it turns out that rollovers are not much better than neutral for the lender. Regulation regulation (as opposed to destruction regulation) isn't much of a problem.

  • Reply to

    Stuart Grimshaw

    by jpraschnik Aug 13, 2014 6:19 PM
    jacosa jacosa Aug 15, 2014 10:16 AM Flag

    They paid money; they got [second rate] advice. It never rose above the price customarily paid for advice of that type. Prosecutor would be nuts to even threaten.

  • jacosa jacosa Aug 14, 2014 2:08 PM Flag

    I can't dissect your numbers, but they're wrong. Crudely, taking the maximum defensible US prevalence of 140.000 and 5 year median survival, you get 28,000 annual deaths (but to get the big numbers for prevalence, you have to include undiagnosed cases, and the median survival estimate is post diagnosis; better to add at least a year for survival from start of illness). In my heart of hearts I believe the old estimate of 100,000 prevalence. Looking at death certificates doesn't much help, because IPF kills few people directly (For example, it is neither immediate nor underlying cause of death on my mother's death certificate--it cites stroke and heart failure).

    If the company remains independent, I would put the over/under on Pirfenidone selling price at $61.000 / yr.

  • jacosa jacosa Aug 14, 2014 1:52 PM Flag

    I actually know one of their compliance lawyers. His people get taken seriously up to the very top, at least regarding anything that might show. But there's been stuff in the past.... I can believe that a demonstration like this wins brownie points.

  • jacosa jacosa Aug 14, 2014 12:09 PM Flag

    Reminds me of the time a bar owner told me I might prefer not to come in this night next week. Sure enough, there was a raid looking for underage drinkers that night (everyone had to line up and get carded; took about half an hour). Bar got to display how law abiding they were; ABC got to show how busy they were. Couple token tickets to staffers, who got them dismissed by mail (You can work in a bar under drinking age).

    Goldman is just showing off their "Chinese Wall."

  • Reply to

    What if this is the time?

    by jacosa Aug 12, 2014 10:26 AM
    jacosa jacosa Aug 13, 2014 10:35 PM Flag

    That's it. I would vote against a takeover at $70/share or less, I'd be screaming about possible kickbacks on a $75 deal; I'd go quietly (but a bit sullenly) at $80. A lot depends on how much is in cash (I like cash. Did you ever try to pay for dinner with Sanofi stock?).

  • Reply to

    what is this company worth

    by roosterly9 Aug 13, 2014 9:06 PM
    jacosa jacosa Aug 13, 2014 10:19 PM Flag

    The prevalence numbers mostly being used are smaller than 128K. It's unclear what the least sick a patient should be for the drug to be appropriate, but physicians will start out very conservative; once the disease picture becomes dominated by heart failure (say last 6 months of life), Pirfenidone has little benefit. So even my estimate of 25% of patients using Pirfenidone is optimistic. In the US, method of use patents will extend the period of exclusivity; the regulatory issues that support that can't be relied on even in other countries that have orphan therapy protections. (The last CC has an extended discussion of how this will work in the US)

    There is no remaining composition of matter patent on Pirfenidone, so it tends to be generic in countries that don't offer special protection for drugs treating orphan diseases.

  • jacosa jacosa Aug 13, 2014 5:58 PM Flag

    I've seen this sort of thing before. Companies in the same industry with even vaguely similar names just cast a glow (or shadow) on each other. But in this case, they're roughly comparable in size, so interest in taking one over could actually go along with taking the other one over.

    And Intermune doesn't actually have a serious bid as far as I know [even better for Incyte--the money is still hovering] What has goosed the stock is confirmation that they are working with an advisor that stirs up corporate auctions.

  • jacosa jacosa Aug 13, 2014 3:54 PM Flag

    Here's how you do it. Estimated US prevalence of IPF we'll call 80.000. Figure a quarter of those getting the drug at the peak. Let's start high at $100K a year per patient--$2bln US sales. Now let's go low at $40K /pat/yr: 0.8 bln. The low number is also the low edge of EU eventual prices, so that's $1.6-2.8 bln peak sales for Pirfenidone vs IPF. Production cost is less than 1/4 of selling price, and will go down even lower when (not an if here) the new dosage form is adopted (my best guess is that making pills and QA far exceeds the cost of API). Use of a drug already approved for another indication vs SSc lung disease could happen very quickly, so an optimist would fatten those numbers by 50-100%.

    Buying the company gives you the option to take SoP if and when. That could be a major complication in deal-making.

  • Reply to

    Lowballing went too far

    by jacosa Aug 13, 2014 10:59 AM
    jacosa jacosa Aug 13, 2014 1:32 PM Flag

    Rarely a good idea for a retail investor to sell in expectation of buying back lower. Things don't happen on the time scale you expect. If you can describe what you expect, you may be able to milk it with options with less risk of wanting to kick yourself (and lower transaction fees).

  • Reply to

    Lowballing went too far

    by jacosa Aug 13, 2014 10:59 AM
    jacosa jacosa Aug 13, 2014 12:19 PM Flag

    An analyst who wants to stay employed as such should focus on historical performance and say that the forecasts are of little value. If I was a pro, I'd put my target price about 37 balancing evident strength in the business lines against management confusion. Loss of business wouldn't be one of my risk call-outs [well, I'd have to please my boss by saying it, but I'd deprecate it], but internal mis-allocations hindering growth would be.

    As a private investor, I'm disgusted by the presentation but highly bullish. I'd look to Incyte for a company in a similar space that fumbled a call even worse--they hired a chief commercial officer (in effect, coordinator of all business lines) and took the Founder/Chairman/President off the platform. Meldrum isn't a totally catastrophic speaker, but still, when he talks the stock drops.

  • That's my take. And it happens eventually to just about every company that tries to create earnings surprises by lowballing. When the analysts tried to establish a reason for the low forecasts, management floundered. It looks bad and it offends analysts. The short squeeze will be a little late this year.

    On the other hand, with management basically repeating the best reasonable short case, it doesn't sound bad enough to justify above-average short interest. A squeeze is fun, but in the long run gradual shifting to weaker companies raises the stock price by the same amount.

    Last thought: there was a comment that the rising stock price had increased the fully-diluted share count by putting a lot of non-management employee stock options into the money. Is this normal accounting? I'd hope to see out-of-the-money options included in fully diluted counts too.

  • Reply to

    What if this is the time?

    by jacosa Aug 12, 2014 10:26 AM
    jacosa jacosa Aug 12, 2014 1:20 PM Flag

    Guess, not calculate. Auctions generally run high (but sometimes nobody makes a second bid). I put fair value for the whole company in a takeover in the $7-8 bln range (about $2 bln peak annual Pirfenidone sales for IPF with long exclusivity in US, + mebbe $couple hundred MM for pipeline). But to cross that symbolic $100 share price you'd have to believe in one or another BIG developments.

    With any kind of decent rollout starting before EoY, stock should organically reach mid-60s in a year, so I don't see that being a successful bid.

    Again, the patient experience with Pirfenidone should give Intermune a gigantic lead over BI.

  • Reply to

    SICK

    by razzledazzle5050 Aug 8, 2014 10:14 AM
    jacosa jacosa Aug 12, 2014 10:38 AM Flag

    On the hopeful side, I have long seen management as a bunch of over-enthusiastic kids who were being baled out by having hit on some super products. They seem to be getting acquainted with reality. I could name plenty of companies where management doesn't adjust their actions to work in the real world. The lesson they may not be learning fast enough is to keep production and R&D separate, but we'll see.

  • Reply to

    Friend hearing rumors

    by nelsong650 Aug 8, 2014 11:12 AM
    jacosa jacosa Aug 12, 2014 10:31 AM Flag

    The Reaper is taking market share.

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