I've never contributed to this thread before, as I rarely wander away from biotech stuff.
There is a unique situation unfolding, as one of biotech's routine smallcap slaughters has merged with an ARNA short attack to create unique leverage.
Near-term downside is absolutely limited to approximately 50%. Price:cash is approximately two, cash is plentiful, and the balance sheet is clean. ARNA controls approximately 25% of potential profit from a JNJ type II diabetes project, 100% of potential profit from a proprietary obesity project (clean through phase II, dogged by huge doubt that will only be wiped out by a couple of interim phase III looks by the DSMC), and 20% (my estimate, no verification) of potential profit from a Merck atherosclerosis project.
Research premium, non-dilute, is about $230 million. Cash at 3/31 was $290 million. The JNJ project, with two molecules advancing independently, is one of biotech's all-time best. It targets a new GPCR, drugable, that is proposed to serve the same function as that currently targeted by Byetta. Byetta is a biological, and must be administered by injection. Both ARNA/Ortho-McNeil molecules are orally available, small molecule drugs.
Ugly, deep-pocket shorts.
Enough! Hope that my incursion is not out of line.
Rick |
