Dreary weather, dull day

Slow day with my holdings. SPPI made a bit of a move breaking $15 a couple of times and putting in a new 52-week high. Closed at $14.96 though, up $0.22 on yesterday.

DSCO closed down a penny at $1.77. Very slow day with a 4 cent range and only 80K shares traded.

Adding CRIS today

Today I have been building a 20% position in Curis (CRIS).  I have an average price of $3.62 and have set a stop loss at $3.15.  My initial target is $4.40.

Cris is developing vismodegib in collaboartaion with Genentech. Genentech submitted an NDA in September, which was granted priority review status in November. The PDUFA date has been set at March 8th, 2012. That is 62 trading days from today.

CRIS earned a milestone payment based on the NDA acceptance. They have an additional potential milestone ahead of the PDUFA if a Marketing Authorization Application is submitted to and accepted by the EMA. As of the end of Q3 they had ~$30M on hand.

The drug is being considered for use in the treatment of patients with advanced, inoperable basal cell carcinoma.

Baseline

For the purpose of this exercise I have decided to index my returns to to the opening on November 28th, 2011. At this point I was holding only SPPI. SPPI represented ~40% with the remainder in cash. Later that week I built a position in DSCO.

As of EOD yesterday SPPI represented 41% of my portfolio, DSCO was 26% and the rest was in cash.

Indexed to Monday Nov. 28th, I am up ~8%.

Some DSCO thoughts

As I count them, DSCO has about 60 trading days to go before its PDUFA date. It is trading beneath its 50 day MA and recently put in a 52 week low at $1.57. So I think it has time and room to make a move (hopefully to >$2.00) in the coming weeks.

DSCO is seeking approval for the use of its candidate, Surfaxin, in the prevention of respiratory distress syndrome in premature infants. Surfaxin is a synthetic surfactant. Currently available alternatives are animal derived.

The company received a CRL in April 2009 – their 4th for this drug. The CRL focused on a quality control and stability test. The complete response to the CRL was submitted in September 2011 and the company received a PDUFA date of March 6th 2012.

Company has a market cap of $44M with ~$15M cash on hand. Burn rate is ~$5M per quarter and management has said they will not be raising capital before PDUFA. Stock recently set a 52-week low at $1.57. Today started strong on news about efficacy of ventilator equipment the company is developing.  Price rose to hit $1.88 and then fell back off. It has hovered around yesterday’s close since then.

I remain long DSCO with a break-even stop and initial profit target of $2.00.

Getting started

I have had this domain name for awhile now so I think that today I shall start posting to it. I will try to keep up some sort of semi regular posting habit – an early 2012 resolution perhaps.

My portfolio currently contains 2 positions. My largest position is in SPPI. I have owned this on and off for a few years now. The current position has been in my account since 2009 and has an average price of $7.30. Today it closed at $14.82. Approximately 41% of my portfolio is in SPPI.

My 2nd position is in DSCO. I started building this position last week and am working with an average purchase price of $1.61 per share. Today it closed at $1.78 for a gain of ~11%. My stop is at break even. If it hits $2 I will consider exiting the position for 25%. 26% of my portfolio is in DSCO.