Arena Pharmaceuticals - Out To Launch Or Out To Lunch? [View article]
Binary....
The point is not to bash anyone, but rather to get people thinking. Passionate fans are great in many ways, but sometimes can be their own worst enemy without realizing it.
I see arena as out to launch. There are some, with irrational expectations that will feel that the company was out to lunch when the numbers begin to come in.
Due to the relative modest performance of Qsymia, even the street seems to have a certain caution in this sector. We need to see if this sector is as viable as what we have been thinking, or if we have all been out to lunch.
Arena Pharmaceuticals - Out To Launch Or Out To Lunch? [View article]
Buster.....
I do not see it as a huge deal. Insiders sell for any number of reasons. They only buy for 1 reason. Insider buys are a bigger deal to me than insider sells.
When executives in speculative companies sell, it is often because this is their lottery ticket and they want something now vs. later.
Arena Pharmaceuticals - Out To Launch Or Out To Lunch? [View article]
Mazan.....
I do not really ride with the street, but as an investor I need to know what the expectations of the street are. More often than not a move with an equity happens based on what the street is expecting and not what individual investors are expecting.
Take a guy like Cramer for example. I often do not agree with him, but need to monitor what he says because he has a huge audience.
Arena NOLs Will Come Into Play Soon [View article]
steve.....
Thank you for the comment. I consider myself a realist. That simply means I can praise good things and be critical of other things. For me, I want to have a very, very, very good understanding of any risk. Money is hard enough to earn, therefore I want to ensure my best chances at holding onto it.
If the bondholder does not have to ever buy the stock to cover the position because it is given to them by the company, then they never have to take a bath. The stock could be trading at $20 and the bond holder is not out anything on the short position.
Let me simplify this by explaining it in another way.
I will use you and I as an example.
You (vito inc.) need $100 that you do not have. Your stock trades at $1 per share
I am willing to give you $100 at 4.5% interest per year on a two year loan PLUS I want the right to convert that $100 into 100 shares (instead of cash) with an exercise price of $1.10.
You accept the deal.
I give you $100
I go short 100 shares of Vito inc at $1.00 per share. I now have $100 in my account.
At the end of the first year you give me $4.50. I still have the $100 in my account from the short position. Vito inc. is trading at $1.50 now.
At the end of the second year I collect another $4.50 and vito inc is trading at $2.00.
I can simply take the 100 shares you owe me and use them to close out the short position, still leaving me with the $100 I got from shorting plus the $9 in interest.
OR
i can take the 100 shares you owe me, sell them on the open market for $200.000 and then use the proceeds to buy 100 shares at $2.00 each to cover my short position, still leaving me with $100 I had plus $9 in interest. (essentially the exact same thing as above)
OR
I can take the $100 you owe me in principal. No right minded person would do this if the stock is trading above the strike price.
The whole point in going short when you have a convertible is that the risk is essentially nothing.
The choice is really simple. typically the bond holder converts to cover the short unless the equity is under the strike price. In that case they take the cash, and buy the shares to cover out of the cash.
Arena Outlines Belviq Launch And Goals [View article]
Big John....
I will be working on things such as that in the near future. I want to get the launch and some channel checks under our proverbial belts first. It is a lot easier to assess the moves with some data in the mix.
There is room in the market for two or three drugs. The talk of demise is likely overblown by loyalists to a company other than vivus. Any reasonable person that looks at this issue would see that neither drug is for everyone
"The bondholder is essentially immune from exposure on the short position (upward price movement) because he never has to buy shares to cover. With the notes being convertible, the shares to cover the short position will be delivered by Vivus itself."
Arena NOLs Will Come Into Play Soon [View article]
Kllj......
I was trying to keep this less complex, as the point is that the NOL's deserve investor attention. There is about $1.3 billion in NOL's in total. Some apply at the federal level, and others for California. I did not even go into the foreign ones. There are distinct uses, rates, etc. that would be getting into a level of detail that went beyond the scope and intent of this piece.
From company filings:
At December 31, 2012, we had Federal NOL carryforwards of $623.5 million that will begin to expire in 2023 unless previously utilized. At the same date, we had California NOL carryforwards of $742.8 million, which will begin to expire in 2014, and foreign NOL carryforwards of $103.3 million, which will begin to expire in 2013. At December 31, 2012, approximately $5.8 million of the Federal and California NOL carryforwards related to stock option exercises, which will result in an increase to additional paid-in capital and a decrease in income taxes payable at the time when the tax loss carryforwards are utilized. We also had Federal and California research and development tax credit carryforwards of $28.7 million and $27.7 million, respectively. The Federal research and development credit generated for the year ended December 31, 2012 of $1.7 million is not included in the Federal research and development credit carryforward, as legislation was enacted in January 2013, which retroactively extended the research and development credit back to January 1, 2012. Therefore, the 2012 Federal research and development credit will be included in the Federal research and development credit carryforwards in 2013. Federal research and development credit carryforwards will begin to expire in 2025 unless previously utilized. The California research and development credit carryforwards carry forward indefinitely.
Arena NOLs Will Come Into Play Soon [View article]
Jaweid.....
I tend to agree about the prospects of a buyout being low for a number of reasons. That is why I phrased that there are perhaps some over zealous thinkers out there and that often in pharma a buyout is about pipeline.
The NOL's are not massive if one considers that a drug in the pipeline might be a blockbuster. However, they are massive to arena itself and those invested in arena. This is why it is good to know about these NOL's and their value.
If, and this is a big if, a suitor came along, they may make an offer that is too low because the NOL's might be meaningless to the suitor. They are not meaningless to arena investors and the company, acting on behalf of investors, needs to ensure that any deal captures the full value. The NOL's are part of that value.
The NOL's do not attract a buyer. The pipeline and cash flow do that. This is why I bring the issue up. These NOL's have far more value to Arena and its investors. There is a way a buyer could use the NOL's, but it would require a specific structure to a deal, and the company would need to agree to their use by another entity. There s value to that as well.
The bottom line is that these NOL's were built on the backs of a lot of investors and we need to start thinking about them now that there s potential uses for them.
Even how they are accounted for could make a huge difference. In the case of sirius XM, the company booked about $1 billion in a single quarter. This made the EPS a whopping 48 cents when everyone was expecting 2 cents. That is just one example of why we should now begin to pay attention to these. As the company gets to a point where they reasonably for see profits to appear and continue, they could wind up showing the value of NOL's at any point.
Imagine arena reporting a huge quarter on the blue of NOL's, the surprise it would generate, and then the retreat as the market digested why there was such an upside surprise. Now imagine being an investor that understood this before it happened.
There are any that dislike me because I have the Gaul to speak about the risk side as well. They will label me a basher, a soft basher, a bear, or a closet bear. They will never be able to back off of their negative opinion of me because they will lose face. The fact is that I simply write about all sides of an equity regardless of whether it is bullish or bearish. Arena has plenty of cheer leaders out there that do not hesitate to put a positive spin on anything. For me to wave Pom-poms does not make a lot of sense.
Thankfully the more informed readers have a true appreciation for what I do and understand that dissecting issues does not mean one is bearish
May Auto Sales Good Enough For Sirius XM [View article]
David....
Thank you for the comment. I write about all sides of the equation. There are some that write about simply the positive side.there is nothing wrong with looking for the positives in anything, but the exposures we have as investors are typically on the risk side. I also tend to write more toward active trading rather than a long term buy and hold type investor. Sometimes any view that outlines risk and exposure is seen as negative (when in fact it is not), and I get the label of basher, soft basher, bear, or closet bear.
Sometimes, when heading into battle, it helps to know tat you are going to get shot at. Those that did not think about that ahead of time sit in a foxhole wondering what is happening and how they got there. Those that are prepared know how and when to react.
Arena Pharmaceuticals - Out To Launch Or Out To Lunch? [View article]
The point is not to bash anyone, but rather to get people thinking. Passionate fans are great in many ways, but sometimes can be their own worst enemy without realizing it.
I see arena as out to launch. There are some, with irrational expectations that will feel that the company was out to lunch when the numbers begin to come in.
Due to the relative modest performance of Qsymia, even the street seems to have a certain caution in this sector. We need to see if this sector is as viable as what we have been thinking, or if we have all been out to lunch.
Arena Pharmaceuticals - Out To Launch Or Out To Lunch? [View article]
I do not see it as a huge deal. Insiders sell for any number of reasons. They only buy for 1 reason. Insider buys are a bigger deal to me than insider sells.
When executives in speculative companies sell, it is often because this is their lottery ticket and they want something now vs. later.
Arena Pharmaceuticals - Out To Launch Or Out To Lunch? [View article]
I do not really ride with the street, but as an investor I need to know what the expectations of the street are. More often than not a move with an equity happens based on what the street is expecting and not what individual investors are expecting.
Take a guy like Cramer for example. I often do not agree with him, but need to monitor what he says because he has a huge audience.
Arena NOLs Will Come Into Play Soon [View article]
Thank you for the comment. I consider myself a realist. That simply means I can praise good things and be critical of other things. For me, I want to have a very, very, very good understanding of any risk. Money is hard enough to earn, therefore I want to ensure my best chances at holding onto it.
Arena NOLs Will Come Into Play Soon [View article]
Thank you for the kind words. I find that when I keep the numbers real I am a much more successful investor.
Arena NOLs Will Come Into Play Soon [View article]
Thank you for the kind words. Best of luck
Vivus Taps Into More Cash [View article]
stop and think for a moment.
If the bondholder does not have to ever buy the stock to cover the position because it is given to them by the company, then they never have to take a bath. The stock could be trading at $20 and the bond holder is not out anything on the short position.
Let me simplify this by explaining it in another way.
I will use you and I as an example.
You (vito inc.) need $100 that you do not have. Your stock trades at $1 per share
I am willing to give you $100 at 4.5% interest per year on a two year loan PLUS I want the right to convert that $100 into 100 shares (instead of cash) with an exercise price of $1.10.
You accept the deal.
I give you $100
I go short 100 shares of Vito inc at $1.00 per share. I now have $100 in my account.
At the end of the first year you give me $4.50. I still have the $100 in my account from the short position. Vito inc. is trading at $1.50 now.
At the end of the second year I collect another $4.50 and vito inc is trading at $2.00.
I can simply take the 100 shares you owe me and use them to close out the short position, still leaving me with the $100 I got from shorting plus the $9 in interest.
OR
i can take the 100 shares you owe me, sell them on the open market for $200.000 and then use the proceeds to buy 100 shares at $2.00 each to cover my short position, still leaving me with $100 I had plus $9 in interest. (essentially the exact same thing as above)
OR
I can take the $100 you owe me in principal. No right minded person would do this if the stock is trading above the strike price.
The whole point in going short when you have a convertible is that the risk is essentially nothing.
The choice is really simple. typically the bond holder converts to cover the short unless the equity is under the strike price. In that case they take the cash, and buy the shares to cover out of the cash.
Arena NOLs Will Come Into Play Soon [View article]
Yes, the decries are a fact of life.
The "Gaul" was a component of auto correct I think, but good catch.
Allow me to return the favor...."spelt" should be spelled.....lol
Cheers
Arena Outlines Belviq Launch And Goals [View article]
I will be working on things such as that in the near future. I want to get the launch and some channel checks under our proverbial belts first. It is a lot easier to assess the moves with some data in the mix.
Thank you for the kind words
Vivus Taps Into More Cash [View article]
There is room in the market for two or three drugs. The talk of demise is likely overblown by loyalists to a company other than vivus. Any reasonable person that looks at this issue would see that neither drug is for everyone
Vivus Taps Into More Cash [View article]
I did explain that. Refer to the bullet points:
"The bondholder is essentially immune from exposure on the short position (upward price movement) because he never has to buy shares to cover. With the notes being convertible, the shares to cover the short position will be delivered by Vivus itself."
Arena NOLs Will Come Into Play Soon [View article]
I was trying to keep this less complex, as the point is that the NOL's deserve investor attention. There is about $1.3 billion in NOL's in total. Some apply at the federal level, and others for California. I did not even go into the foreign ones. There are distinct uses, rates, etc. that would be getting into a level of detail that went beyond the scope and intent of this piece.
From company filings:
At December 31, 2012, we had Federal NOL carryforwards of $623.5 million that will begin to expire in 2023 unless previously utilized. At the same date, we had California NOL carryforwards of $742.8 million, which will begin to expire in 2014, and foreign NOL carryforwards of $103.3 million, which will begin to expire in 2013. At December 31, 2012, approximately $5.8 million of the Federal and California NOL carryforwards related to stock option exercises, which will result in an increase to additional paid-in capital and a decrease in income taxes payable at the time when the tax loss carryforwards are utilized. We also had Federal and California research and development tax credit carryforwards of $28.7 million and $27.7 million, respectively. The Federal research and development credit generated for the year ended December 31, 2012 of $1.7 million is not included in the Federal research and development credit carryforward, as legislation was enacted in January 2013, which retroactively extended the research and development credit back to January 1, 2012. Therefore, the 2012 Federal research and development credit will be included in the Federal research and development credit carryforwards in 2013. Federal research and development credit carryforwards will begin to expire in 2025 unless previously utilized. The California research and development credit carryforwards carry forward indefinitely.
Arena NOLs Will Come Into Play Soon [View article]
I tend to agree about the prospects of a buyout being low for a number of reasons. That is why I phrased that there are perhaps some over zealous thinkers out there and that often in pharma a buyout is about pipeline.
The NOL's are not massive if one considers that a drug in the pipeline might be a blockbuster. However, they are massive to arena itself and those invested in arena. This is why it is good to know about these NOL's and their value.
If, and this is a big if, a suitor came along, they may make an offer that is too low because the NOL's might be meaningless to the suitor. They are not meaningless to arena investors and the company, acting on behalf of investors, needs to ensure that any deal captures the full value. The NOL's are part of that value.
The NOL's do not attract a buyer. The pipeline and cash flow do that. This is why I bring the issue up. These NOL's have far more value to Arena and its investors. There is a way a buyer could use the NOL's, but it would require a specific structure to a deal, and the company would need to agree to their use by another entity. There s value to that as well.
The bottom line is that these NOL's were built on the backs of a lot of investors and we need to start thinking about them now that there s potential uses for them.
Even how they are accounted for could make a huge difference. In the case of sirius XM, the company booked about $1 billion in a single quarter. This made the EPS a whopping 48 cents when everyone was expecting 2 cents. That is just one example of why we should now begin to pay attention to these. As the company gets to a point where they reasonably for see profits to appear and continue, they could wind up showing the value of NOL's at any point.
Imagine arena reporting a huge quarter on the blue of NOL's, the surprise it would generate, and then the retreat as the market digested why there was such an upside surprise. Now imagine being an investor that understood this before it happened.
There are any that dislike me because I have the Gaul to speak about the risk side as well. They will label me a basher, a soft basher, a bear, or a closet bear. They will never be able to back off of their negative opinion of me because they will lose face. The fact is that I simply write about all sides of an equity regardless of whether it is bullish or bearish. Arena has plenty of cheer leaders out there that do not hesitate to put a positive spin on anything. For me to wave Pom-poms does not make a lot of sense.
Thankfully the more informed readers have a true appreciation for what I do and understand that dissecting issues does not mean one is bearish
May Auto Sales Good Enough For Sirius XM [View article]
Thank you for the comment. I write about all sides of the equation. There are some that write about simply the positive side.there is nothing wrong with looking for the positives in anything, but the exposures we have as investors are typically on the risk side. I also tend to write more toward active trading rather than a long term buy and hold type investor. Sometimes any view that outlines risk and exposure is seen as negative (when in fact it is not), and I get the label of basher, soft basher, bear, or closet bear.
Sometimes, when heading into battle, it helps to know tat you are going to get shot at. Those that did not think about that ahead of time sit in a foxhole wondering what is happening and how they got there. Those that are prepared know how and when to react.
Arena NOLs Will Come Into Play Soon [View article]
Sirius XM has just begun using the NOL's