AMLN - comments?

[New-born baby]

Bad bet?

NB
Just curious but what time did you sell those calls today. Quite a bet on your part no.

Ski,
I sold covered calls on all my shares about 1 p.m. today. I got $2.10 per share for the January $25 calls. I figured I'd be happy with $27.10 per share. I didn't think I'd have that money in less than 24 hours. Today's action wasn't inspiring. AMLN finished down for the day in regular trading. But hey, 16% profit isn't too bad for a month's worth of investing.

[New-born baby]

Tune it up

Jiesen,
Since you are the resident med stock person, what in he%# am I doing wrong? My timing is nearly 100% off on all medical related stocks. If I would post my buys, just do the opposite and you'll get rich. Have lost on BLUD HLEX OMI and others that invariably drop when I buy and soar when I sell. Maybe it's a "sector jinx" . Anyone else have such problems ?

billyjoe

Of course we do. The question is this: what are we going to do when the trade goes against us? If you nail the perfect entry, you jump out with little pain. If not, (most of us do not nail the perfect entry), then you better have another plan. You know what my plan is? I sell covered calls. I figure that if the stock backtracks, I took their money. If the stock surges ahead, I can buy more shares. But you are not jinxed; you just need to do what you do with your other business: figure out how to make money anyhow. And I have confidence in you!

[New-born baby]

Duh!

I don't know too much about VRTX except that they work on HIV treatments, but I'll take a look at them tonight. Speaking of HIV research, there's a pretty siginifanct breakthrough happening courtesy of Panacos today:

http://finance.yahoo.com/q/bc?s=PANC&t=5d

Stupid here. I was advised to buy Panacos about two weeks ago, but no, I wouldn't put my money down on it. DUH!

This VRTX is supposed to be one hot stock soon. I would appreciate hearing what the Dr. says about the company. And thank you again!

[jiesen]

my biotech rant of the day

Stupid here. I was advised to buy Panacos about two weeks ago, but no, I wouldn't put my money down on it. DUH!

This VRTX is supposed to be one hot stock soon. I would appreciate hearing what the Dr. says about the company. And thank you again!

Glad you respect my opinion on these things, NBB, but don't go giving me a big head about it all just yet. I'm a far cry from a Dr. and that's essentially what you'll need to really evaluate VRTX, or any other biotech/pharma company for that matter. I do know a bit more than the average guy about AMLN, since I happen to have worked on both their Byetta and Symlin projects as a contract chemist, and had a chance to learn what promise these drugs actually have for patients- so I realized that approval without an increase in stock price was an opportunity I should jump on. And I did. But I don't think that qualifies me to judge the pipelines of every other biotech out there. That said, I'll give you what I think about VRTX:

I give it one thumb up for the finances. Being a development-stage company there aren't really any revenues, but they seem to have raising funds down so that they'll be around long enough to see at least some of their projects to fruition- probably. The stock has pulled back tremendously from the $100 highs, and has also recovered nicely from an $8 low, to around $18, which I would say is as good a place as any to enter, if you expect them to pull through everything and come out with a drug or two, like AMLN did. Question is: Can they?

To that I'll have to give you a big Question Mark, as I honestly can't say what their pipeline is worth- seeing how many and how diverse their potential products are. They may be biting off more than they can chew- they're coming up with drugs for everything from HCV, to HIV, cancer and even inflammation and infections. The good thing is they're partnering on many of these, so they'll be more likely to stay in business to finish them. You really need to dig down and find what the market is for all of these products they have is likely to be, and how close they are to getting to the final step in that multi-decade regulatory cycle that the FDA puts every biotech through. It looks like most are phase I, or II products, and I don't see any that are likely to be brought to market any time soon (within 3-5 years is soon) so you'll probably be waiting awhile and see the stock take multiple dives probably down 20% in a day or 50% over a month on bad news before you ever see it rise back to new highs again- and that's just the nature of these types of stocks.

If you're satisfied with the value of their pipeline (and you shouldn't be based only on what I've said) then two ways I would suggest to play this would be:
1) buy now- only a small portion- and forget about it for 3 years minimum, check out the price, and if they haven't made much progress, sell, otherwise keep holding for another 3 years.
2) wait until some really bad news comes out that turns people away from this stock (temporarily) and try to snatch some up at a good price (maybe 40% or so below what you think it should sell for). Again don't spend all you intend, because it'll likely drop another 50% below that, and you can pick up more shares then. People tend to panic big-time when a biotech isssues disappointing news, and can send the prices to absolutely ridiculous lows. More often than not, it'll come roaring back when nobody's paying attention.

NBB, normally you should be really careful when trading on tips from other traders- not just because they could be wrong- but because often what works for one trader just might not work for you. However, I've known you to come up with some pretty good stocks on your tips (a few stinkers, too) but especially with FDG, which turned out to be a great call a few weeks ago, and the tip on PANC was also great (though I don't know how many others you got that might have been crap, and you probably don't remember either), so if your source really knows what he's saying about VRTX, maybe it is time to pick up some of those shares.

Oh, and did I mention that the recent ruling against MRK has got me down on all of biotech/pharma in general? If MRK goes down, it's going to take a lot more companies with it, since it'll be much more of a hurdle to get drugs to consumers and still turn a profit, when your company becomes liable for any death of a customer, whether a link can be scientifically established or not. Companies can try to raise prices to compensate for this risk, but in the end, the lawyers will bleed all of them so dry, investors will refuse to throw any more money at these stocks until something is done at the legislative level regarding tort reform to reduce the damage *currently being inflicted* on our country's leading industrial medical research teams by bloodthirsty class-action lawyers who can't wait to get in line for a $250M verdict against a sitting target like MRK (or PFE, or JNJ, or whoever happens to supply the next "evil" pill found to have an unacceptable side-effect). You may want to follow the MRK case a bit more closely before you decide to put any more long-term money into this sector. I know I am.

[skiracer]

Ski,
I sold covered calls on all my shares about 1 p.m. today. I got $2.10 per share for the January $25 calls. I figured I'd be happy with $27.10 per share. I didn't think I'd have that money in less than 24 hours. Today's action wasn't inspiring. AMLN finished down for the day in regular trading. But hey, 16% profit isn't too bad for a month's worth of investing.

As long as they're covered calls you're in good shape. Nice play NB.

[New-born baby]

More Info

Stupid here. I was advised to buy Panacos about two weeks ago, but no, I wouldn't put my money down on it. DUH!

This VRTX is supposed to be one hot stock soon. I would appreciate hearing what the Dr. says about the company. And thank you again!

Jiesen:
Here's some more "dope" on VRTX. [Pun intended].
Key Information:

************************************************** *******

Fundamental:

Sector: Healthcare
Industry: Drug Manufacturer

Liquidity:
Market Capitalization: $1.80 Billion
Average daily volume (3-month): 1.598 Million Shares
Closing Stock Price: $18.80

Risk Proxies:
Beta (3-month): 2.3
Debt/Equity: 2.7
Profitable: No

Valuation:
Price/Sales: 12.28
Price/Book: 12.69
Price/Earnings: Negative
Price/2006 Analyst Earnings Estimates: Negative

Catalysts
Trading:

Institutional Trading

Recent institutional trading has been overwhelmingly positive: 25,903,126 shares were recently bought, much greater than the 7,869,241 shares that were sold.

Short Ratio

8.57 million shares were sold short as of the 12th of July; this represents more than 5 days of the normal trading volume. Short-covering could cause a further substantial rise in stock price.

Pritamani and Singal:

On Friday, VRTX rose nearly 15% on volume that was 4.68 times the 3-month average. The rise was in reaction to an upgrade by JP Morgan that was based on favorable results with the company’s Hepatitis C drug. The upgrade increased the rating from neutral to overweight.

According to a study by Pritamani and Singal (see above) a high volume and positive stock price reaction to analyst news is a positive signal for stocks.



Contrary Information
Trading:

Insider Trading

The CEO and the President of VRTX both sold shares this year. In total, 127,100 shares were sold, with a total value of $1,767,372. This is a negative signal.

************************************************** ******

Now, you see that the institutions are buying the shares up in a big way. That ought to be interesting to you. The insider selling does not bother me on this one; these guys are just taking their pay.

[jiesen]

ick- Cramer agrees with me

Cramer was upbeat and happy about the good clinical trial results for Amylin Pharma (AMLN) drug Byetta. Cramer suggested that investors take half there positions off the table and let the rest run. The stock was up huge after hours.

from:

http://www.maddmoney.blogspot.com/

I hate it when that jackass and I are on the same page.

[New-born baby]

half off

Cramer was upbeat and happy about the good clinical trial results for Amylin Pharma (AMLN) drug Byetta. Cramer suggested that investors take half there position off the table

Well, if everybody takes half off the table, AMLN is going to drop quite a bit.
My covered called has not been exercised as of right now. I still have my shares--thus far.

[Websman]

Cramer was upbeat and happy about the good clinical trial results for Amylin Pharma (AMLN) drug Byetta. Cramer suggested that investors take half there positions off the table and let the rest run. The stock was up huge after hours.

from:

http://www.maddmoney.blogspot.com/

I hate it when that jackass and I are on the same page.

If Cramer likes it, I would....SELL SELL SELL!

Calling Cramer a jackass is an understatement. He's not only a jackass, he's a clown and a stooge.

[jiesen]

If Cramer likes it, I would....SELL SELL SELL!

Calling Cramer a jackass is an understatement. He's not only a jackass, he's a clown and a stooge.

Yep, and a few other things I would have preferred to call him, but I didn't deem appropriate language for this forum.

[jiesen]

AMLN short interest UP for August to 27M

http://www.nasdaqtrader.com/asp/short_interest_resp.asp?searchby=Detail&IssueID=15312

Another million shares short this month, already getting pounded for a 30% loss!
Oh the carnage!

I wonder where AMLN will be after they finally give up and cover...

[Websman]

http://www.nasdaqtrader.com/asp/shor...&IssueID=15312

Another million shares short this month, already getting pounded for a 30% loss!
Oh the carnage!

I wonder where AMLN will be after they finally give up and cover...

If I was in their shoes, I'd would have already gave up before I lost my ass.

[Websman]

Man, I wish I would have got in. This thing is going crazy!

[New-born baby]

It's due

Man, I wish I would have got in. This thing is going crazy!

Due for a major pullback.

[jiesen]

Due for a major pullback.

I wouldn't count on it. Maybe there'll be a major pullback from the 40's, or 50's but not just yet. I think my AH sell at 27 will turn out to be one of my biggest mistakes, and seeing that Cramer was suggesting everybody do that, just confirmed my suspicion that it was wrong to sell it there. I thought I'd get right back in at 25 the next day, but I think I might have just stepped halfway off a speeding train. We'll see where it ends up, though. It'll definitely be quite a ride.