Talking Biotech ETFs: iShares Nasdaq Biochnology to $100 (IBB, OSIP, MDVN)
Today’s price moves in the biotech sector are quite different from what we saw earlier this week. A hostile merger via tender from Astellas for OSI Pharmaceuticals Inc. (NASDAQ: OSIP) got everyone up in arms this week. So much that other investors were going back over buyout candidate notes. We also gave a list of those recently noted biotech buyout candidates this week.
But today’s news out of Medivation, Inc. (NASDAQ: MDVN) severely missing its endpoints in the Phase III targets for Dimebon as a new potential blockbuster to treat Alzheimer’s Disease has everyone reminded of the risks in betting on speculative biotech stocks with no products on the market. That has a sentiment reversal taking place, and unfortunately Dimebon has become Dime-Bag.
But before this morning’s blow-up there was an interesting call that may have more merit than just the bet against the sector. A chart analysis from OptionsZone.com on the iShares Nasdaq Biotechnology (NASDAQ: IBB) showing a potential break-out pattern on its chart. If these levels hold, the call is for the “IBB” to head to $95 to $100….
JON C. OGG
10-Bagger Watch: Cyclacel Meets Biotech Trophy Hunters (CYCC)
Cyclacel Pharmaceuticals, Inc. (NASDAQ: CYCC) was the latest example of trader, speculators and investors running out to pile into the next low-price small cap biotech stock in the quest for the ten-bagger to catch the next 1,000% run-up. The news was good in that this was the publication of two peer-reviewed journal articles featuring the company’s seliciclib drug candidate.
We wanted to delve into the article summaries, give a brief financial prognosis, see where the company has been in the past, see what the company said, see what else has the company has up its sleeve, and then give a quick trader-take mindset and some other recent data on this.
THE TWO ARTICLE SUMMARIES
An article published in Clinical Cancer Research reports that seliciclib was found to be effective in killing lung cancer cells, through a novel apoptotic mechanism or induction of cancer cell suicide. The article noted that nearly all lung cancer cell lines against which seliciclib was most effective had Ras-activating mutations, which make lung cancer cells highly resistant to approved drugs such as those targeting epidermal growth factor receptors.
The second article was entitled “R-roscovitine (seliciclib) affects CLL cells more strongly than combinations of fludarabine or cladribine with cyclophosphamide: Inhibition of CDK7 sensitizes leukemic cells to caspase-dependent apoptosis”. In ex vivo studies, seliciclib was compared to fludarabine and cladribine given in combination with cyclophosphamide and was the most effective at inducing programmed cell death in malignant B-CLL cells while resulting in significantly less apoptosis induction in “normal” peripheral blood mononuclear cells.
Seliciclib has been administered to approximately 420 patients in Phase 1 and Phase 2 trials and is currently being evaluated in the APPRAISE trial, which is a Phase 2b study as a possible treatment in non-small cell lung cancer patients who failed at least two prior therapies and in a randomized Phase 2 study as a single agent in patients with nasopharyngeal cancer.
A BRIEF FINANCIAL PROGNOSIS
What we want to do is to conduct a very early analysis of the market. At this point, it is impossible to know the exact size of the market because it is not known what the total aim can be. If it was automatically deemed to be a first line of treatment for lung cancer this would be instant blockbuster with well over $1 billion in annual sales. That could still be possible depending upon a myriad of scenarios. But that part is not known.
The stock rose 152% or $1.61 to $2.67 today on many multiples of its normal 1.5 million shares. The 52-week range is $0.26 to $2.74 and the market cap at today’s close is only $65.3 million. The company had over $25 million in liquidity a year ago, but as of the last quarter that was down to just over $14.4 million. About 5 years ago this stock fell from over $25.00 down to under $5.00 and it then traded between $5 and $10 per share from 2006 to 2008. Then it slid and slid some more, and today’s price of $2.74 on an intra-day high was the highest share price since May of 2008.
WHAT THE COMPANY SAYS
The company’s chief scientist noted that this shows a high correlation between Ras mutations and sensitivity to seliciclib. Of 52 cell lines of NSCLC origin tested, 2 of the lines (almost 4%) were relatively insensitive to seliciclib and 21 (about 40%) displayed modest sensitivity. The big data showed that 29 lines (about 56%) showed marked sensitivity. Of the 13 lung cancer cell lines which had the highest sensitivity to seliciclib, 12 (about 92%) had Ras-activating mutations, including K-RAS and N-RAS. However of the 15 lung cancer cell lines which were least sensitive to seliciclib, none had Ras-activating mutations. It also reported that inhibition of CDK2 by seliciclib suppressed lung cancer growth both in vitro and in vivo of lung cancer cells addicted to CDK2/cyclin E; and lung cancer cells underwent apoptosis or cell suicide by induction of a novel mechanism called anaphase catastrophe, as illustrated in the journal’s front cover. Combining seliciclib with microtubule-targeting agents, such as paclitaxel or docetaxel, was found to be an attractive clinical regimen to consider in patients with lung cancer.
WHAT ELSE THE COMPANY HAS
Cyclacel has three orally available Cyclacel drugs in clinical development:
- 1. Sapacitabine is a cell cycle modulating nucleoside analog in Phase 2 studies for the treatment of acute myeloid leukemia in the elderly, myelodysplastic syndromes and lung cancer. The Company plans to submit a Special Protocol Assessment (SPA) request for a pivotal study with sapacitabine during the first quarter of 2010.
- 2. Seliciclib (the big news winner Thursday) is a cyclin dependent kinase inhibitor in Phase 2 studies for the treatment of lung cancer and nasopharyngeal cancer and in a Phase 1 trial in combination with sapacitabine.
- 3. CYC116 is a Aurora kinase and VEGFR2 inhibitor in a Phase 1 trial in patients with solid tumors.
Cyclacel’s ALIGN Pharmaceuticals subsidiary markets Xclair Cream in the U.S. for radiation dermatitis, Numoisyn Liquid and Numoisyn Lozenges for xerostomia.
A TAKE ON THE TRADING ACTIVITY
The market is in bull market mode even if there has been a dud of a time in the large cap biotech stocks. Traders are currently chasing up low-priced small cap stocks on any news, and today’s news-reaction looks to be no different. We would note that the company already gave one peer-reviewed article for Seliciclib on December 30, and this news magically follows the notion that the company received a NASDAQ potential delisting notice for not meeting the minimum $10 million stockholders’ equity requirement. Merriman Curhan Ford initiated coverage with a “BUY” rating in late-October, but that was when the stock was under $1.00 and it appears to have a $2.00 target.
The company also released FDA meeting data in mid-December:
“held a Type A meeting with the U.S. Food and Drug Administration (FDA) to discuss a randomized Phase 3 study design for Cyclacel’s oral sapacitabine capsules in acute myeloid leukemia (AML) and separately in myelodysplastic syndromes (MDS)…. Based on the FDA’s confirmation that the proposed study design would be acceptable for a Special Protocol Assessment (SPA), Cyclacel plans to submit a SPA request during the first quarter of 2010.”
The company’s CEO is presenting at OneMedForum 2010 Finance Conference taking place in San Francisco on Wednesday, January 13, 2010 at 10:00 AM Pacific Time (1:00 PM EST).
In fact, a pop of this magnitude, even if followed by additional near-term gains, is usually followed up with a securities sale or a private placement to raise capital. That is particularly the case when a company is not meeting listing requirements.
This won’t be the last you have heard from Cyclacel, but this is also just another incident of traders chasing gains and chasing gains. Technically this has already gone up 10-times from the absolute lows.
JON C. OGG
JANUARY 8, 2010
Vanda (VNDA) Leaps On Novartis Pharma News
Vanda Pharmaceuticals (NASDAQ:VNDA) moved up 14% to as the company disclosed that it has entered into an agreement with Novartis Pharma AG to commercialize and develop Fanapt (iloperidone), Vanda’s anti-psychotic, in the U.S. and Canada. Fanaptwas approved by the U.S. Food and Drug Administration on May 6, 2009 for the acute treatment of schizophrenia in adults. Fanapt is a mixed dopamine D2 / serotonin 5HT2A receptor antagonist. The U.S. anti-psychotic market is approximately $14 billion. Read more
Friday’s Top BioHealth Movers (ACOR, AVNR, CXM, LXRX, SVNT, SQNM, SPPI)
This has been a quiet trading day, but not in the land of biotech and medical technologies that comprise the BioHealth sector. These are this morning’s top movers in the group:
Acorda Therapeutics, Inc. (NASDAQ: ACOR) is down over 15% after the FDA made public the background material over Acorda’s Fampridine. Full data can be found at:
AVANIR Pharmaceuticals, Inc. (NASDAQ: AVNR) is up 6.5% at $2.45 and it was one of the top gainers this morning, but has since come off of highs of $2.68. The company announced additional detailed results from the confirmatory double-blind Phase III STAR trial evaluating two doses of the investigational drug Zenvia™ in the treatment of pseudobulbar affect among patients with underlying multiple sclerosis (MS) or amyotrophic lateral sclerosis (ALS). Zenvia met the primary efficacy endpoint by reducing PBA episode rates by an incremental 11.9% beyond placebo. The lower dose Zenvia group did not achieve a statistically significant reduction in PBA episode rates compared to placebo.
Cardium Therapeutics Inc. (AMEX: CXM) is one of the top winners of all stocks today with a 19% gain to $1.82. This one is set to make a presentation soon, but the move today appears to be based upon a positive recommendation from a boutique firm called Skymark Research.
Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) is getting tooled after a secondary offering. The company sold some 33,333,333 shares of common stock at $1.50 per share after a $1.77 close yesterday. We have shares down about 13% at $1.53. It turns out that 19,894,076 shares are being offered through the underwriters and 13,439,257 shares are being offered to Invus, L.P., Lexicon’s largest stockholder.
Savient Pharmaceuticals, Inc. (NASDAQ: SVNT) is seeing a surprise 7% gain to $14.28 this morning. This is surprising considering that its secondary offering of 4.3 million shares priced at $13.29. One item helping more is that this stock was also Raised to Outperform over at Oppenheimer.
Sequenom Inc. (NASDAQ: SQNM) is running again on no news and is up another 9.8% at $3.67 today. Traders keep touting that there may be no intentional wrongdoing from management and the recently fired staffers. This is still very much an at-risk company, although making any predictions at this point would be based entirely upon incomplete data that still has many unknowns.
Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) is down some 17% at $5.12 after it received a complete response letter from FDA for FUSILEV in advanced metastatic colorectal cancer noting that it did not demonstrate that FUSILEV is non-inferior to leucovorin. The response also recommended that it meet with them to discuss options for continuing to seek approval of FUSILEV in advanced metastatic colorectal cancer.
JON C. OGG
Unusual Number of 52-Week Highs in BioHealth Stocks (BCRX, CRIS, NKTR, OGXI, SCLN, SVA, SPPI, TRGT, VICL)
As you will see, there are many new 52-week highs out there in some drug and biotech names…. Some of this is on swine flu news despite a big drop in the stock market today, but here goes:
- BioCryst Pharmaceuticals Inc. (BCRX) hit $13.24 today…. 52-week low is $0.85.
- Curis Inc. (NASDAQ: CRIS) hit $2.25 today, the drug discovery company has a small cap at $140 million; 52-week low is $0.68.
- Nektar Therapeutics (NASDAQ: NKTR) hit 8.29 but on very low volume, 52-week low is $8.29.
- OncoGenex Pharmaceuticals, Inc. (NASDAQ: OGXI) hit a high of $42.99, also on fairly thin trading volume…. The 52-week low is all the way down at $2.00 on this cancer company. In 2007, this was over a $100 stock…
- SciClone Pharmaceuticals, Inc. (NASDAQ: SCLN) is up big on heavy block trading as it hit $4.90 vs. a 52-week low of $0.63.
- Sinovac Biotech Ltd. (AMEX: SVA) is what led the flu names today after securing Chinese approval for its swine flu vaccine. Shares are up over 40% at $8.90… but it hit $9,44 today versus a 52-week low of $0.75.
- Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) is up over 7% and hit $8.32 on strong volume… 52-week low is $0.55.
- Targacept, Inc. (NASDAQ: TRGT) hit $14.69 today, but on thin trading volume, compared to a 52-week low of $1.40.
- Vical Inc. (NASDAQ: VICL) hit a high of $4.93 versus a low of $1.04. This is on strong volume and is after a rise of flu awareness stocks in China.
JON C. OGG
August 31, 2009
BIO Survey Shows Expected Opportunities Abound in Biotech
There is a very interesting study out of Biotechnology Industry Organization (BIO) which was conducted with Thomson Reuters to look at the investor views of the biotech sector and the expectations for 2009. The study was intended to inform and improve communication between biotech executives and investors. There is a small problem with the data in that it was from December 2008 to January 2009, but that was at least before the February and very early-March slide had the world in a tailspin. The data was also taken from interviews and surveys from more than 80 biotech analysts, investors, and portfolio managers, and it did show a continued optimism for 2009.
Of those in the group, 64% believed that it was a “good” or “very good” time to invest in biotech. Also, 81% of the group said that market volatility and the credit crunch has changed the approach to investing in biotech. The biotech sector was also classified as undervalued by 59% of those surveyed. As far as the best opportunities in the Biospace, that was mostly put in the mid-cap range with 43% preferring valuation there and small-cap coming in at 26%. But as far as which stage of the pipeline, that was overwhelmingly (85%) put in the late-stage pipeline. Most surveyed (62%) also preferred profitable companies, and an overwhelming percent of 93% preferred the U.S. over Europe and 94% preferred the U.S. over Asia.
While most preferred biotech over “the rest of healthcare” most investors (53%) said that when they invest in biotech that they compare biotech stocks to other biotech and other healthcare stocks rather than just to other biotech stocks alone.
But the overall investment process does not actually look that different from traditional investment analysis. 72% of methodology did vary by market capitalization, 85% of the methodology did vary by stage of development, 63% did vary by therapeutic classes, 39% did vary by geography and some 80% did vary by profitability versus unprofitable. The other analysis is actually very similar to traditional growth stock analysis in profitable companies as the the first most important notion was revenue growth and the second was a Price/Earnings analysis followed by earnings growth. In unprofitable companies, the most important notion was still revenue growth.
Companies with high cash reserves are definitely preferred over those with low cash reserves. Of those companies with 6 months of cash on hand, 68% said they would not invest. The lines blur between those with 12 and 18 months of cash, but 76% said they would invest in a company with 24 months of cash. Behold, cash is still king.
The more speculative side of the cycle is also interesting. In companies with no products, 61% would not invest in companies just beyond Phase I studies, but then 48% said yes to investing beyond Phase II. On stocks under $1.00, only 26% said they would invest and 43% said no. But under $5.00 stocks, 74% said they would invest. This also looks like the same notion… small cap or low price is fine, but penny stocks are still too risky for most. Market caps are also important as well and as the market cap goes down so does the interest: 55% said they prefer $100 million but when you get to $10 million the yes group was only 15% and the no group rose to 64%. Unsurprisingly, the same thing was noticed in liquidity and volume per day: 64% would invest in a stock that traded 500,000 shares per day and actually 0% said no to that; when you get down to 100,000 shares per day you get to only 34% that said YES. The risk of stocks trading PINK SHEETS looks the same as investor risk aversion to regular Pink Sheet stocks: 11% said they would invest in Pink Sheets but 53% said that they would not invest.
Of the index drop at the time, Mergers and acquisitions was the top catalyst to move the sector with 47%. Also, 66% believed that biotech would outperform the rest of healthcare and 70% believed biotech would outperform the overall market in 2009. 51% believed that Big Pharma would invest in biotech via acquisitions.
The three most important research methods for investment opportunities in biotech were meetings with management (60%), and then sell-side research and medical/industry conferences coming in at a tie at 45%. Interestingly enough, only 9% said that looking at filings to see where the smart was invested was listed as “very important.” But then the largest method of finding new biotech investor ideas was medical and industry conferences at 40% and 59% of those surveyed listed medical and industry conferences as being of significant value. As far as where the two largest investment opportunities lie, Oncology was overwhelmingly the winner followed by autoimmune and immunology opportunities.
The full 36 page study is available here if you wish to see more detailed notes on other aspects of the survey.
JON C. OGG
AUGUST 13, 2009
Sequenom's Quality of Life: Cash Versus Burn Rates (SQNM)
Sequenom Inc. (NASDAQ: SQNM) gave an earnings report that only highlights its cash on hand versus a total expected cash burn rate. The troubled diagnostics is down over 11% at $5.35 right after the open. The company posted a loss of $20.2 million or -$0.33 EPS on a 29% drop in revenues to $9.17 million. Thomson Reuters had consensus estimates at -$0.27 EPS and $8.2 million in revenues.
R&D spending rose to $10.2 million from $6.4 million, while its SG&A expenses rose to $8.2 million from $4.3 million a year ago. Those SG&A costs are directly tied to legal expenses and to costs associated with a salesforce.
To add insult to injury, the quarter also included roughly $1 million in restructuring costs. The company also gave projections saying that it would lose $65 million for all of 2009.
The company’s MassArray sales have continued to take a hit. We think some is genuinely from the economy and soft sales in medical devices, but we think there is also a cloud over it from the related fallout because of its problems in the Downs Syndrome test data earlier this year. The company’s legal costs are running much higher and of course the reevaluations needed are driving up its research and development costs.
System-related revenue was essentially halved to $3.3 million, services fell to $677,000 in revenues from $1.2 million. There was at least a gain in the consumables revenue, as that figure rose to $5.2 million from $4.9 million.
As far as that annual loss projection of -$65 million, it had previously offered a range of -$62 to -$65 million. The annual target of $32 to $35 million in revenues from genetic analysis was left intact, but we did not get guidance for its molecular diagnostics revenue. This loss expectation for the year is largely in-line with estimates, but it also dashes any quick hopes of a sudden fix after its earlier problems this year.
Sequenom ended the quarter with cash, cash equivalents and short- and long-term marketable securities of $69.3 million and it said accounts receivable were $7.5 million. Effectively, the company just outlined its cash burn rates versus cash on hand.
BioHealth Companies Keep Raising Cash (MNKD, IDIX, ISPH, ARIA, ONTY, NBY, SOMX, ARNA, OXGN)
The appetite for biotech and emerging pharmaceutical companies to raise cash is almost a never ending line of companies. We have some offerings today and have seen many offerings and filings from companies to offer shares. These are just some of the filings and offerings we have seen.
MannKind Corporation (NASDAQ: MNKD) priced a secondary offering this morning of 7,400,000 shares of its common stock, and while the press release did not say what price the deal came at the syndicate group told us this went out at $7.35 per share. Chairman, CEO, and principal stockholder Alfred E. Mann is purchasing 1,000,000 of these shares from the underwriters, which brought in over $54 million before fees and commissions. MannKind shares are down 9.5% at $7.37. Its 52-week trading range is $2.00 to $9.25.
Idenix Pharmaceuticals Inc. (NASDAQ: IDIX) priced a secondary offering this morning of 7,248,936 shares of common stock at $3.14 per share to clear roughly $22 million before fees and commissions. Its shares are down over 14% at $3.15 today and its 52-week range is $1.86 to $10.10.
Inspire Pharmaceuticals, Inc. (NASDAQ: ISPH) priced a 22.2 million share secondary offering of common stock this morning at a price of $4.50 per share. This raised close to $100 million. Share are down 6% at $4.66 and the 52-week trading range is $1.68 to $5.80.
Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) on Tuesday priced its public offering of 19,000,000 shares of common stock at $1.75 per share; the company said net proceeds after fees and commissions was roughly $30.9 million.
Oncothyreon Inc. (Nasdaq: ONTY) announced on Tuesday that it had obtained commitments from several investors for $15 million in a direct offering. The agreement was to purchase approximately 2.28 million shares of common stock and warrants to purchase approximately 684,000 shares of common stock for gross proceeds of approximately $15.0 million. The company noted that investors agreed to purchase the shares and warrants for $6.5775 per unit with each unit being one share of common stock and a warrant to purchase 0.30 shares of common stock and an exercise price of $6.5775 per share.
NovaBay Pharmaceuticals, Inc. (NYSE: NBY) filed this week with the SEC to offer up to $20,000,000 of any combination of common stock or preferred stock upon conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock or debt securities upon the exercise of warrants. It market cap is a mere $48 million.
Somaxon Pharmaceuticals, Inc. (NASDAQ: SOMX) filed this week to cover for the resale of up to 10,212,750 shares of common stock (roughly $23 million) from time to time for existing security holders and certain transferees of the selling security holders. Roughly 5.1 million of these shares were issued in a private placement that closed on July 8, 2009; the additional 5.1 million shares are issuable upon a warrant exercise sold in the private placement which expire on July 8, 2016. If sold, none of the proceeds go back to NovaBay.
Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) filed on Monday to allow the resale from time to time of up to 28,000,000 shares of common stock by the selling stockholders from a July private placement. We will not receive any of the proceeds from the sale of these shares. If sold, none of the proceeds go back to Arena.
OXiGENE, INC. (NASDAQ: OXGN) filed this week for the resale of up to 10,000,000 shares of common stock from time to time by Symphony ViDA Holdings LLC. This was via an amendment dated as of July 2, 2009. If sold, none of the proceeds go back to OXiGENE.
JON C. OGG
AUGGUST 5, 2009
Using Stock Options in BioHealth Stock Screen (KG, ABT, WYE, PFE, GENZ, HGSI)
Whether it is mergers, earnings, or just plain vanilla hedging, it seems there is quite a bit of unusual activity in options trading. We have seen this in many key stocks in the BioHealth arena from drug to biotech shares.
King Pharmaceuticals, Inc. (NYSE: KG) has a couple of key events to watch for this week. King has earnings due on Thursday morning (Aug. 6). But there is also some unconfirmed buyout talk out there. We were doing our normal screens this morning, and Joe Kunkle of OptionsHawk.com pointed out to us some very unusual options activity in the stock. Kunkle noted some possible interest from Abbott Labs (NYSE: ABT) in the company. Oddly enough, as of almost Noon EST we now have almost doubled that activity in August Call Options at the $10.00 Strike Price. That volume now stands at 7,200 contracts versus a prior open interest of 2,789. We would note today that since it has just set earnings on such short notice that these could just as easily be option bets around the earnings since those options do not expire until August 21.
Also seen this morning was unusual options activity in Wyeth (NYSE: WYE). While this was large enough to flag a highly unusual options alert, it may have been nothing more than a close-out or reversal of a bet on the price in the Pfizer Inc. (NYSE: PFE) merger.
Over the weekend, we noted at 247wallst.com Genzyme Corporation (Nasdaq: GENZ) saw a huge amount of trading in the AUGUST $50.00 PUTS, where more than its entire open interest traded, and share were at risk of hitting 52-week lows. Those levels look to have been hit this morning when shares hit $49.62. They have since come back to $50.00. Interestingly enough, the options bets have dried up in Genzyme. This remains one of the most key biotech issues to watch for the weeks ahead after the FDA issues have taken out so much value measured in market cap. This is down 10% in just the last three sessions.
Human Genome Sciences, Inc. (NASDAQ: HGSI) is also showing some unusual options trading, although this is easy to explain. It has raised cash and has made a huge run higher. We do not consider this to be a fortune telling event that has promise of a repeat based only on options trading. But here is a snapshot of that volume as of 12:00 PM EST for the AUGUST-2009 CALLS:
Strike. Volume Op. Int.
$12.50.. 1,356 8,560
$14.00.. 1,775 2,259
$15.00.. 2,864 11,418
$16.00.. 2,623 2,096
$17.50.. 4,119 6,843
Stay tuned, we are just about to release our next round of potential merger candidates in Biotech and Drug shares…..
JON C. OGG
AUGUST 4, 2009
Using Stock Options in BioHealth Stock Screen (KG, ABT, WYE, PFE, GENZ, HGSI)
Whether it is mergers, earnings, or just plain vanilla hedging, it seems there is quite a bit of unusual activity in options trading. We have seen this in many key stocks in the BioHealth arena from drug to biotech shares.
King Pharmaceuticals, Inc. (NYSE: KG) has a couple of key events to watch for this week. King has earnings due on Thursday morning (Aug. 6). But there is also some unconfirmed buyout talk out there. We were doing our normal screens this morning, and Joe Kunkle of OptionsHawk.com pointed out to us some very unusual options activity in the stock. Kunkle noted some possible interest from Abbott Labs (NYSE: ABT) in the company. Oddly enough, as of almost Noon EST we now have almost doubled that activity in August Call Options at the $10.00 Strike Price. That volume now stands at 7,200 contracts versus a prior open interest of 2,789. We would note today that since it has just set earnings on such short notice that these could just as easily be option bets around the earnings since those options do not expire until August 21.
Also seen this morning was unusual options activity in Wyeth (NYSE: WYE). While this was large enough to flag a highly unusual options alert, it may have been nothing more than a close-out or reversal of a bet on the price in the Pfizer Inc. (NYSE: PFE) merger.
Over the weekend, we noted at 247wallst.com Genzyme Corporation (Nasdaq: GENZ) saw a huge amount of trading in the AUGUST $50.00 PUTS, where more than its entire open interest traded, and share were at risk of hitting 52-week lows. Those levels look to have been hit this morning when shares hit $49.62. They have since come back to $50.00. Interestingly enough, the options bets have dried up in Genzyme. This remains one of the most key biotech issues to watch for the weeks ahead after the FDA issues have taken out so much value measured in market cap. This is down 10% in just the last three sessions.
Human Genome Sciences, Inc. (NASDAQ: HGSI) is also showing some unusual options trading, although this is easy to explain. It has raised cash and has made a huge run higher. We do not consider this to be a fortune telling event that has promise of a repeat based only on options trading. But here is a snapshot of that volume as of 12:00 PM EST for the AUGUST-2009 CALLS:
Strike. Volume Op. Int.
$12.50.. 1,356 8,560
$14.00.. 1,775 2,259
$15.00.. 2,864 11,418
$16.00.. 2,623 2,096
$17.50.. 4,119 6,843
Stay tuned, we are just about to release our next round of potential merger candidates in Biotech and Drug shares…..
JON C. OGG
AUGUST 4, 2009
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