With a close today above $4.85 (the 9/16 open), $OREX will paint a bullish outside reversal day. Volume still low, but day is still young. A close above $5 should set up a retest of the MA(50)d. (We added a T3 on the break above $4.80.)
Like you I was invested in arna, and avoided vvus. But have long been impressed by the robust safety and efficacy package that orex has put together. I think after phenfen, safety has been an issue keeping some pts and docs on the sideline. But orex has a robust safety package - in my eyes, better than the two former.
Also, from a marketing prospective, this opportunity is primed to surprise. Takeda is by far a better PCP / endo sector marketing partner, and they will drive NRx trial. And already there are legions of prospective pts those who have tried and failed arna and/or vvus, and are willing to try something new. And then there is Europe, which I think will be a real point of differentiation in terms of sale potential.
We shall see, but this sell the news action was expected. We even wrote about it here a few days back. Hopefully there are those that did as we have and kept some dry powder.
Price action seems to be a combination of shorts (who trimmed & hedged in the run up) are now refilling short positions, given their expectations of similar slow sales uptake, combined with stop loss triggering and technical selling on failure to make new high swing high / breakout of primary resistance.
But I expect obesity Rx market is much better primed for a new agent. Lot of V & B failures who are ready for something new to try. And Takeda is a world class marketer.
Since 11/2013, $OREX is in a pinching triangle, and has yet to break it's rising support trend. Expecting shorts to push technicals why potential longs lick chops and wait to digest news.
Well, a close below $98 level and prior day close is not the worst. Holding above MA(50)d and prior swing high was absolutely required. But the week is young, and technical theory suggests these marks will be retested. And since both cut on first attempt, they are seriously weak.
$AAPL has been a savior for the entire market this summer, allow it to push to new highs. But the new phone is out and sell the news is here... Bearish technicals are everywhere...
Failure to set a new swing high.
Failure to hold $100 mark.
Failure to hold prior day close
Failure to hold prior week close
Failure to hold prior month close
Failure to hold MA(50)d $96.91 (cut on first attempt)
Failure to hold prior swing high of $96.21 (cut on first attempt)
Day is not over, but expect many trailing stop losses to be triggered, which will create both further overhead resistance as well as risk of waterfall impact below. And potential for negative feedback between broader markets and aapl .
Over last wk, we now sold 1/3 of our position, and a second 1/3 today, all of which was purchased between Dec '12 and October '13. Will pull the ripcord on last 1/3 on first close below $96.21.
This 9/9 move to the 5.85 support range is little more than a technical reaction given stop losses to the AM breaks to the MA(50)d and the $6 level. Bulls will note the $5.81 support held (Fridays low). Technically, while some damage has been done, it is still early in the day and a snap back rally would be a very strong bullish technical sign. But even if that does happen, it doesn't get technically ugly unless she closes below the MA(50)d now at $5.55.
Obviously it gets a warning... already stated such is expected. Which is unlike KERX or MNKD, where the warnings were not expected. As such, any warnings will be a nonevent ...though expect shorts to try to make it into one.
Fair comment. But to be clear, I am not advocating any sell the news here....in part as this strategy has been broadly hyped. I suspect that there are many funds that have held off building any position in $OREX given the price action and sales results of $OREX competitors, expecting they can do so post PDUFA.
Of course, neither competitor have Takeda as a marketing partner, so I expect it to be relatively easy for them to beat the beaten down launch expectations.
General read is obviously bullish, with today testing and making a new swing high ($6.14) on its first attempt, plus the rising probability of first close over its once again rising MA(200)d since early july. After the new swing high, the price action rested with a pull back to the prior resistance level ($6), now classically acting as support. With PDUFA date looming, expecting increased volume.
Still, many are suggesting this will be a sell the news candidate after a positive pop. However, consider if the stock price hold in this $6 support range post event, the MA(50)d will soon start to climb and upcross the MA(200)d (golden cross). And if the move should cross the $8 level (a new buy signal on the old school P&F chart) market mechanics might quickly lead an extended rally, given short interest is already about 10 day to cover.
So basically the day ended about the same as yesterday, and a tad higher than the open. Clearly not as bad as the inverted hammer that was at risk of a print ... but still not a lot of conviction either way. Friday's session (end of week & month) should be quite technically instructive. Watching for a retest of either $52 level (putative R1) and $51.20 (putative S1).
So the good news is yesterday was a putative confirmation of the Aug 26th buy-if. And Aug 26th itself suggested a strong buy.
But here's the rub. Aug 26th was not quite the ideal outside reversal day (opened slightly higher than the prior close). And the volume on this day (considered the lie detector for TA) wasn't all that impressive, and on the confirmation day was even worse. Such might seem ticky tacky, but to the TA based algos, these are key differences.
So then let's forward to today. We had a nice AM run (but again on low volume) but then a reversal with no bounce or follow through. In fact, if we closed here, the day would paint a bearish inverted hammer. And if such is indeed the daily print, with a close tomorrow below today's close, it suggest a quick retest of the tested (& broken) $50 support.
Yes, I know the $LGND permabulls among us will hate this read. But I'm just reporting what I'm seeing. As anyone following this board knows, we've long had major differences with LGND management, yet remain long term bullish, given the portfolio and the obvious strategic options we see and continue to encourage management to consider.
But in the short term? Concerns that the low vacation volume and recent convertible debt offering might have created an opening for some to massage the TAs - either unintentionally from those with end of month position adjustments, or intentionally by those seeking to push their dim witted short agenda.
For full disclosure, we are sitting on our highly profitable core & T1, but have yet to refill our T2 & T3. We had picked up a T2 in stock (ave this run ~51) but that tranche was profitable stopped out to protect a quick 10% gain after OPEX. We also picked up a T3 in options (Aug50 calls) which were also very profitable, and which we exercised, but whose also got profitably stopped out after OPEX. So yes, we'd love and expect $LGND to continue higher, but are also ready to reload. Just not quite yet.
What to you want? I'm being quiet as I'm looking to buy more options. ;-)
And $LGND to buy ~700k shares (~$40 mil) with close of convert? She's going higher. Much higher.
Tonight's announced $225 mil convertable debt (tied to a new $200 mil share repurchase plan) is to be offered by BofA Merrill Lynch and Deutsche Bank Securities. As such, one should expect that at least one, and likely both, will start to cover Ligand soon. $LGND's days of lack of tier 1 coverage are now drawing to a close.
NASDAQ report issued today a 4pm eastern show short interest on $LGND is below 3 mil shares short as of July 31, '14 falls to lowest level in 8 month. Such provides further support for our supposition that the short covering has already started, and that some of these position is now being maintained in proxy via options. In particular, we note large OTM call options have been written for the $60 & $65 stikes in the options that close this week, as well as in the $55 & $65 stikes that close in Sept.
Well, I guess it would be true if the stock screamed up, his cost to close his short would likewise rise, yes? So even if he didn't add any more shares short, the value of his short position would have increased. He does excel at phrasing words....
And he does seem to be an active trader. So even if he did add shares short on Monday, I would not be surprised to learn that he increased his position only right before he issued his latest release, and started to take profits on that same tranche today when the technicals started to again chirp buy.
Any way, I'm sort of amazed by all the attention paid to him. Greg is the sole sponsor of his fund, and it still has a small AUM. Furthermore, he reports he's only be at this since 2009 and has no experience or education in the trade. Sure, he might have a hot hand on his 5 for so public picks, but the details of his report on Ligand have been laughable.
Yet another case in point, Lemelson's slam on Hovione, Ligand's CMO for Captisol. I know Hovione well. (I even know how to spell their name - No, Lemelson, it is not "Havione" as you repeat in your original short case multiple times.) For I was the person that first vetted the business aspects of this relationship back in 2004 - I did extensive diligence on their private books - and we loved what we found even back then. Since then, Ligand has had over a decade of working with CEO Guy Villax and his team, and their capabilities have greatly expanded since. Guy is now a globally recognized expert in the CMO industry and gave a talk at BIO2014 on the future of the CMO industry along with a senior rep from the FDA.
Any close this week above $54.04 and bullish momentum traders will step on the gas while the wise technical shorts will take profits. This mark has already been tested once today, and stochastic suggest another run soon.
But even if we don't get this mark today, should we close here or anything north of $53.39, $LGND will paint an uberbullish outside reversal day. As the minutes tick by and as long as the market stays in the green, the probability of this new buy signal is high and rising. Meanwhile, intraday we have the makings of a cute little bull flag to gather energy to challenge the Aug 4th close level.