Two things:
1 - If you're looking at leaps, be careful. First, there's risk that we get bought out (155 looks pretty good right about now), in which case many of the leaps would be out of the money, and worthless as such. Second, there's still alot of time value. Calculate your breakeven between the two investments, assuming margin interest is 8%: $50,000 in 2001 130 leaps (3030 shares control, breakeven 146) vs. $100,000 of the stock (1160 shares - breakeven 100). If the stock goes to 180 by 1/01, you're still better off with the margined stock (181 is when the leaps begin to payoff better). Anything below 146 and you actually lose money on the leaps. For example, a buyout of 155 gets you $26K profit on the leaps, but over double that with the stock. I'd rather just margin the stock - the premiums are just too big.
2 - If you look back to the beginning of 1997, the FDA wrote the following number of letters to drug companies that were similar to that which SEPR received on 3/26:
1997 - 163
1998 - 178
1999 - 40
Of the "partial list" that Rupeh uses in his earnings model, the following drugs were the subject of similar FDA letters in 1997-1999:
Claritin Syrup - 3/3/97
Claritin Tablets - 3/10/97
Claritin D 24 hour tablets - 3/26/97
Sporanox - 3/27/97
Zyrtec - 4/4/97
Zyrtec - 4/28/97
Proventil - 5/7/97
Effexor - 6/25/97
Zyrtec - 6/1/97
Claritin Tablets - 7/9/97
Claritin Tablets - 8/19/97
Oros (Oxybutynin) - 8/28/97 (ALZA)
Claritin Tablets - 9/8/97
Allegra - 11/26/97
Prevacid - 11/7/97
Zyrtec - 3/4/98
Allegra - 3/4/98
Claritin Tablets - 4/27/98
Norvasc - 4/24/98
Serevent - 4/24/98
Zyban - 4/20/98
Propulsid - 6/4/98
Propecia - 7/30/98
Allegra - 9/23/98
Meridia - 10/22/98
Zyrtec - 12/21/98
Ditropan - 2/12/99 (ALZA)
Xopenex - 3/26/99
Cardura - 4/2/99
Ditropan XL - 4/2/99
So in case you guys were wondering why it took until the last day to get the Allegra approval, now you know - they have alot of letters to write! Seriously, though, you don't hear Maris raving about those 3 AZA letters.
POINT: This is just a part of doing business, and the FDA needs to let SEPR know where the line is drawn, and sloppy language won't be tolerated. Tomorrow I will post the results of my study which looks at the link between the stock price and these letters. I don't expect much causality, but we'll see.
By the way, hello SI, adios Yahoo. Please let me know if there's something I need to read over there. And, finally, HPPOLK and are are splitting the big expenditure over here, so in case he posts something koo koo, it's him, not my own version of Sybil. |
