Amgen Inc. (AMGN) Message Board

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Biotech / Medical : Amgen Inc. (AMGN)

AMGN 317.74

+0.1%

Dec 12 9:30 AM EST

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From: tom pope	5/17/2007 11:37:08 AM
	Read Replies (1) of 1906

ML CERA PDUFA on May 20th provides AMGN derivative trading opportunities. Using our proprietary model, we predict stock reaction to a full FDA approval to be ($4) with a 40% chance, +$5 with not approvable decision (10% chance), +$3 with major delay in approval (20% chance), and +$2 with minor delay (30% chance). We expect Vol to increase thru October from multiple catalysts. 3 major catalysts will increase the uncertainty surrounding the security of Amgen’s $6.6 billion EPO franchise: 1. CMS policy revision, expected this summer 2. A Fall FDA EPO advisory panel for label deliberations 3. Commencement of intellectual property lawsuit with Roche in September Option strategy: Use June vol to buy Oct. vol We believe June options are fairly priced with June "near-the-money" straddles pricing in a ~$3.50 move in either direction. Our scenario analysis leads to a similar conclusion with a 60% probability that Roche's Mircera is hindered in some way and a 40% probability that Roche is granted a full FDA approval. We further expect vols to maintain these levels in the near-term and increase between now October expiry based upon 3 crucial catalysts expected to transpire over the next 5-6 months. We recommend investors looking to add volatility exposure by selling June vol and using the proceeds to purchase October vols.

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