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Sam Quirke
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Financial Analyst as a career. Trading biotechs as a hobby. Learning quickly. I like micro-cap companies, with upcoming catalysts. Their cash situation, vicinity to 52wk hi/lo, volume are all important factors. As well as going long stock I'm getting experience with options, especially calls... More
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  • The Fallacy Of 'If' / Learning Continued 0 comments
    Apr 24, 2013 7:22 AM | about stocks: AVEO, ZIOP, DCTH, RPTP, NAVB, SRPT, RMTI

    A little update on my trades of late, and the lessons learned with them.

    I was long AVEO February $7.50 back in January, looking for a run into the release of Overall Survival (OS) data from the trials of their drug Tivozanib. Volume just didn't hit this one, and it was hanging on precariously to it's support of $7.65 a week from the release. Sold for a 20% loss.

    I was long Ziopharm (NASDAQ:ZIOP) April $4 calls at $1.50, anticipating a run into their Phase III results due in Q1. Weathered the storm when they fell to $.90c and if I was a more experienced trader I'd have doubled down on my position here, as they rallied back to $1.60 in one session when the company announced that their palifosfamide Phase III trial had reached its target number of progression free survival events. I was just glad to be able to get out break-even, but was also concerned the management might do a capital raise pre-data which would dilute the stock, so I sold on Feb 12th. But if I'd held I would have seen them rise to $2.10, before ZIOP self destructed last week on poor Phase III results.

    My poor judgement and timing with my Raptor (NASDAQ:RPTP) trade really sickened me. I'd been stung bad with the FDA's 3 month extension of their PDUFA back on Christmas Eve, so making some money off a run would have been sweet revenge. However, with a new PDUFA date of the 30th April and their May $5 calls at $1.20 towards the end of February, I just felt they were too expensive. I bought some stock at $5.15 around Feb 12th. Guess what; the stock proceeded to fall to $4.70 and the May $5 calls went to $.90c but I just didn't pull the trigger on them. Stupid because if I had, I could have realised a 50% gain when they went to $1.35 with the stocks rally in March. The stock is now trading upwards of $6.30, where it was before it's PDUFA extension last Christmas, and the May $5 calls are almost $2 a contract. Textbook run-up that I called but didn't play.

    I didn't cover myself in glory with Delcath (NASDAQ:DCTH) either, despite making a profit with them. I was long their June $1 call at $.80c at the end of Febuary; they have a AdCom in May and PDUFA in June. By the 11th of March my position was up 50%, and I got greedy and didn't bank profit. The company announced a raise with their earnings on the 13th, big pullback and I sold for 10% profit. Definitely not a loss, but far from the gain I could have had if I'd been smart.

    I was pretty bullish on Navidea's (NYSEMKT:NAVB) stock running into it's Lymphoseek PDUFA (set for April 30th) and had some May $3 calls at around $0.80. Early approval in the first week of March for Lymphoseek, saw a big sell off in the stock, once again confirming just how irrational biotech stocks can be! A non-profitable company, gets it's first approved product - and it sells off?! Needless to say, it killed an chance of a run off, and I took a 30% loss on my May calls.

    In hindsight, I might have been better off if I'd put this money into Raptor who shared the same PDUFA date but who had orphan drug status on their Procysbi drug. I'm sure the coming days will confirm whether this orphan drug status affects the direction the stock goes after a PDUFA approval or denial (I expect the former).

    Sarepta (NASDAQ:SRPT) has been a rollercoaster, with a major date-less catalyst causing the hype; whether or not they will file for accelerated approval (NYSE:AA) with regards to their Duchenne Muscular Dystrophy treatment Eteplirsen. The consensus seems to be that Eteplirsen is going to be marketed successfully, it's just a matter of when. The recent FDA meeting with the company appears to have been a big positive. The FDA have asked Sarepta for all the data from their Phase II study and are conducting a 'mini review' of the drugs safety and efficacy which is rarely done before a company has filed a NDA. So it look's like the road for AA is clear, albeit taking a little longer than originally hoped. Feuerstein sums up what's next:

    'So, what happens now? Sarepta puts together the data and submits it to FDA in the coming weeks. The agency will then review the new data, meet with Sarepta again in the third quarter, and make a final decision on accelerated approval.We don't know what the FDA will ultimately decide, but if the agency tells Sarepta, "Yes, you can file," then investors should interpret this as eteplirsen being approved.'

    The stock traded over $40 in the days preceding this news as investors hoped for AA to be given but has drifted back to $30 since as short term investors get impatient with a lack of AA for the time being. If I had spare capital I'd look to add if SRPT goes below $30.

    Along with SRPT stock, I'm also long Rockwell Medical (NASDAQ:RMTI) August $2.50 calls at $1.75 since the end of March. The stock has had a pretty heavy selloff in Q1 of this year, falling more than 50% from $8 to under $4 due mostly to messy cash management and an heavily discounted offering. However with Phase III trial results due in July for it's lead product Solluble Ferric Pyrophosphate, RMTI stock could see a strong bounce from current levels, given that it rocketed to $8 (albeit before continuing sell off) on positive Phase II results in February. They release earnings in 5 days on the 29th April, and if they're miserable, I will happily go in heavy on any sell off that occurs to the calls.

    So I'm still not making my first million, but I'm learning all the time without losing the shirt on my back which is a more than can be said for a lot of novice investors. Planning to do an in depth article on RMTI over the next week.

    Disclosure: I am long SRPT, RMTI.

    Stocks: AVEO, ZIOP, DCTH, RPTP, NAVB, SRPT, RMTI
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