Overall had an 82% gain on the trade. Buying puts after an approval continues to provide phenomenal returns.
ACAD is up ~10% so far today moving nicely from yesterday’s entry point. I ended up buying some ARNA puts yesterday after the news was released. I took a bit of a chance buying the June expiration $12 puts – given the brief time to expiration I took a very small position. Stock fell from its post announcement open yesterday afternoon and has continued to decline today. I sold half of the puts this morning for a ~30% gain.
1) I am adding ACAD to the portfolio. The company is expected to announce data from a phase III trial sometime in Q3. I will try to post some thoughts on this later, but I am optimistic about the outcome of this trial. Having said that, the company had a similar catalyst in Q3 2009 – which people were similarly optimistic about – and the trial failed to meet endpoints. Catastrophic losses ensued. If we look at the chart from Summer 2009, ACAD was trading at ~$2 at the end of June. It achieved a high of $6.60 in mid-August before the trial’s failure was announced at the end of that month.
Currently the stock is trading at ~$1.60. A similar run-up would take it to >$5 over the next 6 weeks. Of course, many variables have changed (internally and externally) since then so there is no reason to bank on an identical run up occurring. However, some appreciation from the current levels is probably to be anticipated. As recently as April ACAD was trading at $2.30 – a 43% gain from current levels.
2) ARNA’s weight loss drug (Lorcaserin) was approved by the FDA this afternoon. The company has had an extraordinary run in the last 2 months. At the end of April it was trading in the low $2s. After the news it has hit as high as $13. I will be looking to buy some puts on this. I think that given the extraordinary move it has made there will be some cool down and an opportunity to capture some of that.
I closed my position in HZNP earlier this afternoon. I exited half of my remaining shares at $7.01; the rest stopped out at $6.70. My initial position was taken two weeks ago at an entry price of $4.07. My three exits combine to give an average price of $6.09 – so the position resulted in a 50% gain overall.
Both of my current holdings are having a very strong day – while the markets in general are suffering from a severe Monday malaise.
NAVB has had a great run over the last 2 weeks and is close to a new 52-week high. It met my initial target earlier this afternoon and so I took some off the table at $3.60. I will let the rest run (hopefully).
I sold ~half of my position in HZNP at the open this morning for $5.34. Gain of 31% since entering the position 2 weeks ago. I have raised my stop loss on the remainder of the position. Holding in the hope that it may run a bit more ahead of its PDUFA.
We also established a new personal best – 8 consecutive up-days. Since adding them last week, NAVB and HZNP are up 20% and 23% respectively. The overall portfolio is up 11% in the same time (currently 50% in cash). NASDAQ and NBI are flat and up 2% in the same time. Of course, if I had actually bought LGND and IRWD last week instead of “looking” at them things would look even better. Still, pleased with the recent performance.
NAVB also closed up. After trying, and failing, to break the $3 mark, it ended the day at $2.93 – up 1.4% on yesterday’s close.
After time on the sidelines I have opened some new positions today:
1) NAVB: I owned this in the past (when it was NEOP) and have started a position today ahead of its September PDUFA date. Purchased the stock for $2.87.
2) HZNP: I owned this very recently. I bought it earlier this year at $3.41 and held for a 20% gain. It is now 44 days out from irs PDUFA date and looks like it might be ger=tting ready to make a move. I added it this morning at $4.07.
I am also looking at LGND today – and IRWD; though I am always looking at IRWD.
Apologies for my erratic and infrequent posting schedule recently. I am still here – and still nervously watching the markets. While I have certainly missed some opportunities in the last month or so due to wariness, I have been concerned about exposure to the pull of the gradually sinking market. So instead I have been focusing some effort on back-testing, refining my strategies, and some reading around potential new models.