Zoran, The relatively small float is a sword which cuts both ways.
It is why the stock moves so quickly whether that movement is up or
down as you know. I am not sure why a small float would be a problem
if one is correct about the prospects of the company being favourable.
I am not sure as to your meaning when you say that the float size is
positively and necessarily correlated with "severe selling pressure
on every significant uptick". I may be missing something here which you
could explain. I certainly don't know everthing about these matters but
I would think that the size of the float only bears on the ratio between
the demand and resultant movements in stock price. The direction of
those movements would depend only on the ratio of the up to down interest.
I think I'm just not understanding what you asked.
The 713K shares sold were sold by the venture capitol arm of SmithKline
which I would not regard as typical insiders. The insiders I am familiar
with at IDEC have not sold. You could, of course correct me if you
know otherwise however, the 713K was definately sold by SmithKline and
not insiders at IDEC. Brad Dunlap (who posts to this thread) would be
the most knowledgable person as to SK's possible motivations but, my
feeling is, that unless they want to buy IDEC, they have no reason to
hold converted warrants which I believe is what many of these shares were.
IDEC has 4 "Strong Buys" issued on it and is rated 2nd in the universe
of Biotech stocks as to expected performance in the coming year by Zach's.
I have not seen another company in the industry carrying unanimous
"Strong Buys".
The earnings estimates for IDEC are close to $2/share for 2000 (if I
remember correctly and are
based of what may prove to be slightly conservative numbers should IDEC's
RA therapy prove as efficacious in the market as it has so far in trials.
IDEC's NHL therapy is pending FDA approval which may be expected as
early as this summer. Traditionally, a biotech might be expected to
rise into such an event. I am intimately familiar with the confidence
level at both IDEC and GNE with respect to this issue and in fact, the FDA
apparently used IDEC's NHL therapy application process as a sort of
prototype for the development of FDA fast-track handling of CA therapy
apps.
I believe commercial quantities of IDEC's NHL therapy may already be
in production.
It was not the high call position which attracted me to these calls.
Given that the Oct 25 calls have 6 months to expiration and the speed
with which IDEC stock has historically surged and the fact that I
believe it possible that Merrill Lynch may soon initiate coverage of IDEC
and that these calls are today only less than 2 bucks out of the money,
I believe it possible to make a profit here altough I am buying them
conseratively. I understand they are nonetheless risky, especially
in view of recent market conditions.
IDEC, as all young biotechnology firms, is a volatile issue and, although
I do not personally see 14, I do see your point that we could see
gains followed by losses ad infinitum, until IDEC becomes an established
firm with regular and more predictable earnings.
I am long on IDEC and am therefore not worried about the stock, but
the calls are of course, a different matter but, for reasons stated
above, I am testing them anyway.
I purchased july 25s just about 3 weeks ago at 2 1/2 and was fortunate
to see them climb to 8 1/2 within seven days for almost four times my
money.
I have been following IDEC for some time and, although I seem rather inept
at calling the tops, I have so far been quite successful at calling
the bottoms and for this reason have been pretty fortunate playing the calls.
It should also be remembered that SmithKline does not
have many shares left to sell. The over-hang should not be too great
at this point.
There is a great deal more in depth one could go on the promising therapeutics
IDEC has in trial and the outstanding
The NHL therapy alone has not seemed to generate too much excitement on
Wall Street so far but, I have an aunt with NHL and she (and many other
patients) have been awaiting this day for years. There is also much
anticipation among physicians. This will be the first monoclonal CA
therapy ever approved by the FDA (if it is indeed approved).
I hope you will have time to read the other posts if you have not already
and I look forward to your further comments and/or insights.
BENNETT |
