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Biotech / Medical : biotech binary events -- Ignore unavailable to you. Want to Upgrade?

To: Icebrg who wrote (146)	3/26/2004 1:02:41 PM
From: tuck	Read Replies (2) \| Respond to of 295

Anyone have a cut on how binary the upcoming PREOS trial results will be? NPSP is supposed to announce those by EOQ, which leaves two trading days. I personally expect the results to be good. The more binary event will be the FDA meeting in which black box labeling will be the hot button. I think the recent weakness in NPSP amounts to uncertainty, a low possibility of bad safety data versus Forteo. This looks unlikely in the face of the slightly superior rat studies, but it's possible. I had bought a covered write on this a a few weeks back, and I got the dubious privilege of keeping the option sale premium. Now I'm holding the shares unhedged because I think the market will react favorably to benign data, and I think odds are good that it will be benign. NPSP's course regarding marketing is the next uncertainty, and timing that is going to be hard. But I would expect that to come pretty quickly if they want to get the infrastructure in place to launch quickly. I favor a copromotion agreement -- I've mentioned Wyeth as a possible partner -- because I don't see NPS taking on Lilly alone unless they have a clear advantage over Forteo. And we won't know that until the labeling debate is settled. Jackson has said he doesn't think PREOS should get a black box, but what else would he say? NPS management shouldn't gamble on that by going it alone, IMO. Thus . . . a run on decent results back to the low thirties. Then a pullback on uncertainty about the marketing. Maybe another run to test highs if they show some wisdom in marketing. Then another pullback in front of the FDA committee meeting. And that will be the most binary event, IMO. Suitable for straddling, perhaps, as NPSP options enjoy decent liquidity. I should mention that implied volatilities for April contracts looks pretty high Comments appreciated. Oh, and Tularik (TLRK) is due to announce a partner for T131 by EOQ, as well, according to Wilder. Good luck playing the illiquid options in that one, though. Cheers, Tuck