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Strategies & Market Trends : Calls and Puts for Income
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To: im a survivor who wrote (214)4/22/2007 12:23:21 AM
From: Robohogs  Read Replies (1) of 5891
 
I just found this thread over here and saw the commentary on DNDN and thought I would try to help (or more probably confuse). The IHUB biotech values thread has perhaps the most balanced commentary on what could happen. But basically, the stock was $5 before the panel vote with likely $2-2.50 if it had been not recommended and the ultimate $25 it got to with the positive outcome.

Now with FDA due on May 15, there are 3-4 potential outcomes:
1. Delay in decision (highly unlikely but potentially possible - grounds hard to figure out as all of the work has largely been done) - Stock would drop somewhat as it would likely indicate political struggle
2. Not approvable letter (even more highly unlikely given panel vote - stock likely to open at $2
3. Approvable letter subject to finishing current trials (moderately possible outcome - most folks would be at 25-35%, the crazy bulls would say 10-20%) - stock likely to move to somewhere between $3-5 given long timeline to get to 2-3 years from now with no revenues (possible data look in 2008 but not likely an approval date possibility). This possibility could come with a compassionate use program where DNDN could recover its costs of therapy but no more.
4. Appovable subject to labelling, monitoring or finishing of current enrollment in current trial (probably 2-3 months away) - probably most likely outcome, this is equivalent to full approval but with extra time to dot i's and cross t's - Stock price into mid $20s-$30 if you ask me but some think $40 possible
5. Approval (either straight up or subject to results of current trials but with approval until results are in - may be contingent on finish enrollment of current trial first) - Together with scenario 4, most likely outcome with cumulative odds of 60-65%. Stock would probably be at higher end of range in 4.

An aside on the decision, most pure scientists do not like the drug for approval as the clinical program was poorly run and the purists want things done right. This includes CBER which is the usual arm to approve drugs, and whose members are campaigning against approval pretty vigorously (search for Scher letter information). The decision will be made by CDER which appears to be bending over backward for approval. The decision may get kicked upstairs to very top of FDA. The FDA head has said he wants to be less inflexible on approval processes so this could indicate a lean toward siding with CDER. BUT this decision will ultimately come down to politics so a wildcard is possible with delays.

Jon
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