You have the problem identified exactly: WE'D like to see them battle it out, but nobody wants to start a bidding war that might result in a competitor getting the goodies. Presently, I'd guestimate the price at which an offer for INCY wouldn't attract a counter-offer as a bit over $160 a share, which is awfully high. And even at that price, if the deal isn't EXTREMELY friendly, there's substantial risk of losing key players from the drug discovery team.
Before the drug world went nuts over checkpoint inhibitors, I think top management chewed on binkies with $220 written on them. Now, I wouldn't be surprised if some of them want 400 or more rubber duckies in the bath. (The choice of imagery is based on Lawrence Mcdonald's portrait of a [doomed] bank at work)
I just looked at the last two Junes. 2014 Was a 20% gain, but 2013 was flat.
I've said before that I HATE buying time value, like selling it and am receptive to spread ideas that mostly cancel it.
What I'm wondering is if perhaps this is one leg of a complex transaction with the other leg[s] less visible. Maybe the other side is short sector fund [options?] on other things that experience a January effect? [something like Russell 2000] Or it could be part of a REALLY complex derivative on Incyte converts.
I think we'll see the rise in oil prices coming a mile away. It may be a while off, depending on what's REALLY causing it (European depression or Saudi economic war against IS could last a long time; manipulation against shale MLPs or against the "ghost tanker fleet" could be a lot quicker.) I'm more concerned with management getting swelled heads and making dumb [especially self-] deals. I'm staying for now.
Those who want to get out early may want to look at the extraordinarily over-shorted medical testing company Myriad, with a time horizon of early Autumn.
One of my favorite bits of market advice:
J.P. Morgan once had a friend who was so worried about his stock holdings that he could not sleep at night. The friend asked, 'What should I do about my stocks?' Morgan replied, 'Sell down to your sleeping point' Every investor must decide the trade-off he or she is willing to make between eating well and sleeping well. High investment rewards can only be achieved at the cost of substantial risk-taking. So what is your sleeping point? Finding the answer to this question is one of the most important investment steps you must take.
-- Burton Malkiel
I was wondering. Sometimes accounting can be a contact sport.
This (together with last year's inventory stocking and the expected course of the PV sell-in) sets up a hellacious boost for May. That's also a plausible time for some first reads on combination therapies [paraphrase: we call it research because we don't know what we'll find] (but we can hope for good results). Anyway, the expected April-August doldrums may be altered this year.
With a CC approaching that can probably be spun as showing ineffective management (they STILL won't be clearing the backlog), there isn't a RUSH to cover shorts, but the May CC figures to be unequivocally good. That's a limited time to get out of a very dangerous position.
It probably would work, too. But that's $25bln+ for a company that it's a stretch to value at $15bln based on existing product [no s]. Also, at that price the old timers inside the company might well feel grumpy and stalk off. The pipeline is valuable, but the organization that generated the pipeline is beyond value.
Adam Feuerstein actually had a worthwhile remark toward the end of one of his reports from JPM:
" Let's stop wasting everyone's time by stipulating now that all cancer immunotherapy drugs will be tested in combination with each other. Don't bug us until you have actual clinical data to report."
I don't see it. No real track record to assign probability of success to the drug combinations, so I don't know what fundamentals are. The next predictable news is the CC, which will certainly include a swing back from black to red numbers, and more likely than not will show slow growth in Jakafi sales. Don't get me wrong: those are both compatible with a wildly bullish outlook, but there's a chance that portfolio runners will take the "news" badly. As HH said at JPM, the timing of news from the Merck JV is determined by trial outcomes, so there are no expected dates.
Listened to the replay. One thing we knew already is that research headlines figure to be sparse in the first half of this year. The big news for the next 3 CCs figures to be about Jakafi adoption for PV.
Stepping back, the breadth of the pipeline is daunting. All these candidates can be brought through p1 straightforwardly enough. Most of them look like they'll need multiple p2s, because they will be targeted against multiple indications with diverse pathologies. That could stretch through 2016. I won't say it's impossible, but I don't see how Incyte builds the financial and organizational bulk to complete development of even a third of the announced candidates. That leads to a pretty tight range of when management would most like to sell off the company: after introduction of the IDO inhibitor (say, year-end 2016), but before they get into a need to go it alone on more than one p3 at a time (maybe Q3 of 2016). If the Bari project is still going well by then, the deal price could be scary high. The generation of attractive drug candidates has been incredibly rapid; I don't see another company wanting to scatter the team and pick up the mess that might be left after an unfriendly deal. So we'll have to live with organic value growth for a while longer.
So your objections are that people who like to think of themselves as professionals aren't REALLY professionals. The MBAs are professionals who treat the wanna-bes well out of the goodness of their hearts, and will stop if the wanna-bes organize. I say cooperation and friendship work just fine in an organization where people genuinely know each other, but beyond a certain size, it's about power. CEO pay is about power, not extraordinary ability (effectively, in most companies, the CEO chooses the directors, who get a no-work job [well, if they happen to be conscientious, about 50 hours a year] paying about the price of a car per year. The directors set CEO compensation. The directors nominally answer to the stockholders, who are generally too fragmented to demand anything. Clever CEOs choose a diverse BoD who will only unite as a force in case of catastrophe) And for special situations you suggest what amounts to an informal union.
BTW, the CEO generally has SEVERAL houses bigger than any of the "little VPs" have.
Workers get power through unions. If too many of the workers are stupid, they may get a stupid union that breaks the company. It happens, just as stupid management breaks companies [many times as often].
I'm overextended and had to buy back my naked $38 puts. Nice profit overall, but it's kind of insulting. Well, when the bears are selling pencils, I won't be buying.
You're still pretty out of it. They didn't have the money when you were asking for a special dividend and they don't have it now. It will be collected in installments over 2 years. So a special dividend is unlikely. There might be an increase in the regular dividend, or not--income from a structured settlement is a bit sideways to the stated dividend policy.
On a few-months time scale, Swiss and US currencies are likely to move in parallel, basically devaluing the Euro and 3rd world currencies. So this move doesn't predictably make acquisition of US companies by Swiss ones more attractive.
I don't give a fig for Switzerland, but the strengthening dollar is dangerous to prospects of the US business recovery.
Unlikely, if only because PDL is the most MBA-friendly business that EZ is in. You CAN evaluate creditworthiness, correct for local business conditions and make risk/reward plans. Pawn is more personal.