Two portfolio moves today

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.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s