Bryce Istvan

Long/short equity, growth, biotech
Bryce Istvan
Long/short equity, growth, biotech
Contributor since: 2011
Can you please explain your comment "DryShips has no control over Ocean Rig's capital and resources?" It seems to me that, with George in charge of both companies, ORIG can use its payout policies to provide cash flow to DRYS
As of now, Ocean Rig is planning to initiate a dividend in 2014 and spin off assets into an MLP that will also pay a substantial dividend. This will provide DRYS with unrestricted cash flow.
Long term I think this is a great deal for NPS. Putting the drug in their hands will allow NPS to maximize value and realize economies of scale, especially around marketing and patient data. See my analysis here.
Be very careful when talking about MCP-A, the preferred issue. Because it is a mandatory convert, you will receive between 1.66 and 2 shares of MCP on maturity early next year no matter what those shares are worth. If you calculate the preferred at its current price, (~31), subtract the market price of MCP (~9 *2 shares received at conversion), and subtract the remaining dividends of the preferred ($6.875), you will notice that the preferred is trading at a $6.125 premium to a sum of the parts valuation. This means your real yield in negative. See my article from December 2011 for a full explanation The numbers are out of date, but the math remains.
The company went ex-dividend today, so people who bought the stock today aren't going to get the 23cent dividend payable in December. Stocks are expected to drop the amount of the dividend after going ex-div all else being equal (which obviously they weren't in this case).
Some additional color from Reuters
Important to note, Acthar already has orphan drug status in infantile spasms which guarantees market exclusivity through 2017.
The NPSP vote came in 12-0 that "benefits of teduglutide outweigh the potential risk in patients with SBS." One voter expressed concerns about the REMS study, but a 10-1 vote approved the submitted plan. The stock was halted all day, but reopened in the after hours to some minor selling. I believe that the FDA comes back with approval and minor, if any, changes to the REMS and a decision well before the Dec. 30 PDUFA. Don't expect a big pop on approval, since it should be all but baked in. However, NPS won't stay out of the news for too long, as they are looking to submit Natpara for approval by mid-2013.
Microsoft is denying the reports. See the revised linked article. They continue to put a big push behind hardware and I think it's unlikely they give up the competitive advantage that Office affords them.
Now that ttnp is above the series b warrant price of .85, do you believe titan calls them or investors exercise in the short term? I believe they expire Oct. 10th. If they are exercised, how far would the cash take them through 2013?
Thanks for your comments and additional information. I agree that these drugs will not give spectacular results when given in late stage cancers. Most appear to be in the 3-5 month life extension range. Just like any cancer, the earlier treatment is given, the greater the efficacy, so I see pushing Zytiga and the other drugs into pre-chemo patients as a positive.
That said, I agree with both of you that the effects, positive and negative, of earlier or combined treatment need to be studied much more. Ted, thanks for the information about ongoing trials in the area. The fact that MDVN is being proactive in their research is a good sign and, in my opinion, shows a clinical team that is on top of what needs to be done.
In terms of combo treatments with Provenge, there does appear to be some scientific rationale, especially since Xtandi doesn't require prednisone. However, I think a roadblock is going to continue to be cost. No insurance companies are going to reimburse for both until there is significant evidence that life extension is dramatically higher when used together.
Update on the article, I never took a long position as, by the time a lot of the volatility died down, the company announced it was planning on doing yet another capital raise. That was completed today at $5/share. Now that the company has removed that headwind, it's likely the huge downward slide over the last month will slow or stop. That being said, it is concerning that the company felt the need to raise another $30 million. This tells me they do not anticipate becoming cash flow positive for a while, raising concerns about how much traction their tests are getting even after Medicare approval. I would take a wait and see approach with this one until they hit that "inflection point" with sales. You will lose some upside, but avoid what could still be large long term downside.
Good article Stephen and I agree with the conclusion. I'm interested to see if all the DNDN bulls come out of the woodwork against you like they have with every other anti-Dendreon article, including mine, or if the negative sales growth shifts sentiment.
Are you referring to the preferred here? Not sure what you mean by "a big discount to par" as the preferred converts to 2 shares of common if the stock is below $50 on 3/1/2014. (Conversion ratio drops if share price is higher) See the article I wrote on it back in December (note the numbers are 7 months old).
I am long MCP here, and have kept an eye on MCP.A, but watch the spread between it and MCP. Current "book value" of the preferred = 2 shares of MCP ($34.76) + $9.625 remaining dividends =44.385
Nobody ever lost money taking gains.
What is the timeline on an EMA, similar to the FDA 10 month? Do they have an opportunity for a priority review in that market?
I was surprised with the market's initial reaction to the CEO stepping down, especially the Jefferies price target drop that followed. Personally, I saw it as a CEO doing the rare thing of what it best for the company, rather than himself. If they can bring in someone with a proven track record of commercialization or, better yet in the eyes of the market, takeovers there could be a nice pop.
As usual, thanks for your great articles and responsiveness.
Hey Ted,
Good call on DVAX. I found the stock based on your articles was able to get in well below the secondary price at the beginning of May. However, I closed the position today partly because of the standard review. Do you see any catalysts for the stock between now and February, or is it likely to be dead money until approval?
The Surface is not for the "value" customer. It's targeted at enterprise where iPads don't have big inroads, and at people who are looking for performance. The Surface Pro will be able to run everything your Windows laptop can. An iPad can't do that. It seems to me that if it works like a laptop it should be priced like a laptop. Customers will be willing to pay for it.
I agree that the healthcare business and the joint venture with GE could be a big plus for the stock that a lot of people are missing. It will never be close to the impact that Windows or Office has, but a few hundred million in additional revenue is nothing to sneeze at. I wrote an indepth article on the partnership that can be found here.
Klarman and Baupost are now out of the picture, selling their entire stake as of 3/31/12.
While this explains a large part of the selling pressure it also means that a large shareholder has given up on the name. TRGT is likely dead money until results from Phase 2 clinical results are published for TC-5619 in ADHD and schizophrenia, AZD1446 in Alzheimer's and potential new trials for TC-6987 in asthma, where the company recently announced successful phase 2 results. However, with a marketcap of $162 million, success in any one of those drugs, especially their Alzheimer's franchise, would make the company dramatically undervalued.
After originally writing this article MACK pulled the IPO citing adverse market conditions i.e. they didn't have enough buyers. However, they have now restructured the deal, reducing the price to $7/share and the number of shares to 14.3 million. This will allow them to raise $100 million and give them a market cap of about $650 million, well below the original valuation of almost $1 billion.
Klarman has 2 different 13G filings with the SEC. The first, filed 12/9/11 shows acquisition of 16.92% of the company as of November 30th 2011.
They then filed an amended 13G on 2/10/12 showing they had upped the stake to 17.97% as of 12/31/11
At this point he would not have to disclose additional trades until his Q1 13F filings (due mid May) unless he exceeded 20% or dropped below 5%.
My inclusion of him in this article was not because I necessarily believe he will buy more. Going over 20% ownership is not something that he usually does. The point was that you can now purchase shares at a lower level than he did.
That said, I could see him, in conjunction with other institutional holders, becoming more agressive with purchases and gaining control if they are unhappy with the company's restructuring plan to be announced at the end of April. Biotechnology Value Fund L.P. owns almost 10% of the company and does have a history of shareholder activism.
My hope/belief is that Windows 8 drives a new form factor, somewhere between an ultrabook and a tablet. All the power, size, keyboard, etc of a laptop, but easily convertible to a tablet. Something like
This allows you the benefits of a laptop and a tablet in a single device.
Why do people buy on this news? Has an underwriter ever initiated with negative coverage? It's called don't bite the hand that feeds you.
Thanks for the compliment on my Dryships articles. Hopefully you get value from them even when you disagree.
I appreciate the feedback that you have brought to the table and the fact that you have done so in a more civilized manner than so many other SA readers. The heads up on the time charter rate is something that I need to look further into. I'm always glad to get other people's opinions as long as they back it up with rationale. I like DRYS because, as bad as the fundamentals are for drybulk, because of ORIG they are in a position to survive and strengthen during the downturn and come out as a market leader when things turn, which I believe will be sooner rather than later. Others clearly disagree which is why for every market there is a buyer and a seller.
You and I have debated the merits of DRYS before so I won't get into that again. However, I do think it is unfair to make such gross generalizations about Dryships investors. Speaking from personal experience, I believe I understand and manage my Dryships risk very well. The company is about 10% of my overall portfolio, which for me is an acceptable level of risk even if I lost it all. Additionally, I often sell upside calls as a way to reduce my basis and prevent me from getting too greedy. As you can see from my disclosure I am currently short calls (on 30% of my position) which I sold based on the volatility before earnings.
Some investors may not manage their positions and overall portfolio construction well, but don't paint everyone with the same brush.
I do also own Ocean Rig shares. However, I believe owning DRYS is providing you with exposure to ORIG for a lower cost than buying ORIG on the market because of the negative valuation being attached to the shipping side of Dryships.
In addition, while I agree that Dryships and the industry are in for a difficult year, I believe that the drybulk industry will recover and probably sooner than many expect. In previous articles I predicted a turnaround by the 2nd half of this year. While that may be pushed back to 2013 Dryships is going to be around to capitalize...unlike many of the pure play, undercapitalized shipping companies.
The problems with waiting until the industry turns the corner is, one, I'm not that good at market timing and two, the stock market will likely turn before you see major industry metrics such as the Baltic Dry shift. Look at the decoupling of the BDI and the shippers this year.
If you have a different macro view on the shipping industry (and many people do), then ORIG as a pure play would be a better bet.
Thanks for the compliment. Glad you enjoyed the article. To answer your question Caradigm is being formed as a 50/50 joint venture meaning MSFT and GE will each own half and no shares will be publicly traded. Earnings will be attributable back to MSFT and GE shareholders. For example, if Caradigm has $100 in net income $50 will go to MSFT's bottom line and $50 will go to GE's.
OSG is taking your advice and halting its dividend.
Another reminder to do your due diligence, especially when yields look too good to be true.
$0.21 EPS was an upside surprise, not a miss. Estimates were $0.14. However, Q1-12 guidance was light
Great article as usual. You've almost made me pull the trigger on DNDN. They have great technology, just haven't done a good job managing the rollout and expectations. We'll see what the new CEO does. I do have a few questions that I thought you might be able to answer.
1. What was the original rational in using Frovenge as the placebo in the original trials?
2. If I recall correctly, DNDN is conducting another study with a true placebo. Do you know anything about that study and when results would be presented?
3. What sources to you use to gain access to these abstracts? Do you know anywhere I can access the full studies?
RS- you can easily justify owning Corning here exactly the way the author did. By pointing out that the numbers you refer to above are for the display segment which is only about 40% of sales and those numbers are already priced into the stock. GLW looks like a value play here if you believe that the company is near bottoming in the display market and will continue to grow rapidly in its other markets. If you disagree and think that things are going to get worse, it's clearly not.
However, I disagree that "the author completely ignores the facts." He just points out facts that others seem to be ignoring.
AAPL gets a $450 handle easy
US Bank (USB) does something similar already. They send customers "Free Money" offers where they give you a certain $ amount off any purchase you make at a particular retailer. Not sure how their agreements work with the retailers.