Biotech / Medical : Biotech Valuation

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To: Jon Khymn who wrote (31329)5/29/2009 2:30:53 PM
From: kenhott  Read Replies (2) of 49902
<collect the premium for next 2 week>

I agree with Biomaven re: the expectation that the collective premiums between a reasonable set of calls and puts will not go down much prior to the meeting. In these situations, we may actually see the premiums go up as we get nearer the decision point. I am just guessing of course and maybe you have some mix of options that will win out at the end.

The easiest suggestion for downside is cash level. That would put share price at $1. Upside, I would guess it will be over your $10. A lot depends on what they say at the advisory meeting and then the overall attitude of the market. The market is not behaving normally so a real trading risk is we get the unexpected.

In the last X months, a lot of very smart people have been killed because the markets have traded abnormally. On the other hand, recently, a lot of smart and not-so-smart monies have done well chasing after certain types of stocks, etc.

In SVNT, the stock will be controlled by the FDA decision. I suspect a lot of people who don't know much about SVNT is in this stock because of some non-fundamental reasons. And for the people who actually know about the June deadline, most maybe thinking along the same line as you about getting out before the decision. At least the smart ones.

I'll follow up on RKRW's comment with a little more color. In SVNT's phase 3 program, they had n=170 on drug and n=43 on placebo. About 33% of drug had an infusion reaction with 11% being severe. But the real problem is in the cardiac AE area. There were 3 APTC events and 10 non-APTC events in drug and NONE in placebo. So 1.8% APTC and 5.9% non-APTC vs. 0% for placebo. In the follow-up open label study, n=82 and they had 2 APTC and 7 non-APTC or 2.5% and 8.8% so far. No placebo in the open label study. Patients in this study group had baseline cardiac issues. So the companies' argument is that they have baseline cardiac problems and no reason to think that the AEs were due to drug and something about more people on drug than placebo so the numerical difference is therefore some how not indicative.
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