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Biotech / Medical : Biotech arbitrage plays
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To: Robohogs who wrote (2)9/26/2007 12:20:29 PM
From: tuck  Read Replies (1) of 7
 
Tempted to play this somehow? I see Evotec's lead compound is -- gulp -- for insomnia. It's a stock for stock transaction. Options prices seem to imply it will go through (spreads are large so the IV calculation is problematic, but it appears low), but I would be worried about Evotec's share price. They said they intend to partner their insomnia drug in '08. I can see the share price diving as we wait . . . and wait . . . so my inclination, without doing more than cursory research, would be to go long RNVS, and short EVT.F.

Ah, further reading shows they expect P2 results on their insomnia drug within a month. Adds near term risk, IMO. I'd be tempted to wait until the these data are out. If they hit a home run, I would simply buy RNVS.

Edit: Some P2 data already out; we'd better go look.

Cheers, Tuck
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