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jacosa

jacosa
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  • Low Correlation Dividend Aristocrats, Part 1: McDonald's And Medtronic [View article]
    I'm a "and watch the basket" kinda guy, but also a fan of Burton Malkiel, who puts lots of weight on correlation. Only, in the latest edition of his book he backs away a little (in that valuations of various traded portfolios didn't give as much of a diversification premium as they should have) (maybe buyers expect managers to watch the basket too).

    I used to have a major Medtronic overweight; the company appears to have strayed too far from its true expertise in implanted electronics (it did very well for me before then). Basically, it's been dead money for 15 years, with fluctuations caused by (mostly very avoidable) legal problems. That is, the fluctuations have been for internal reasons. McDonalds has had fluctuations mostly in sympathy with the economy at large. Thus, I see the low correlation as coming from regressing an economically sensitive stock against an economically insensitive one with a tendency to make expensive mistakes (The Covidien deal has great potential to turn Medtronic executives into full-time congressional witnesses). I'd take that as a clue and look for an economically insensitive dividend-payer other than Medtronic to pair with McDonalds.
    Jun 28 02:30 PM | Likes Like |Link to Comment
  • InterMune's A Strong Buy As Esbriet Finally Has The Data Physicians, Patients, And FDA Have Longed For [View article]
    That drop was due to a couple of bizarre situations. One was a rumor that somehow became prevalent that the company anticipated $60MM of quarterly sales from Germany (an absurd number) of course this wasn't remotely met, and it was looked on as a failed rollout (the company actually predicted that the rollout would track even or ahead compared to Tracleer, which it did. It's possible that someone interpreted that as predicting sales immediately surpassing Tracleer; hard to say how rumors start). The other was that in the German approval system, about when a drug first hits the market the public/private institution IQWiG gives an opinion of its value. They are specifically forbidden from calling an approved drug for an orphan condition worthless, but they did anyway. Their report focused on the fact that Esbriet does not improve the condition of patients who take it--DUH--they didn't consider its actual effect of slowing deterioration.

    In addition, it is highly likely that manipulation was involved (see SAC Capital stories).
    Jun 15 10:01 AM | 1 Like Like |Link to Comment
  • InterMune's A Strong Buy As Esbriet Finally Has The Data Physicians, Patients, And FDA Have Longed For [View article]
    Jacosa has a PhD in chemistry from Northwestern (thesis on synthetic DNA). He did research on carcinogenesis at University of Chicago, the main consequence of which is that he attended many good seminars. Later, he worked in the food industry (and had occasional contact with FDA).

    Jacosa began investing in stocks about 1972 and using simple option strategies soon after. He was nearly wiped out in 1987 and 2001/2002, but got through 2008 pretty well, so there's a possibility that he can learn from experience.

    Most relevant hobby is poker.
    Jun 14 11:51 AM | 2 Likes Like |Link to Comment
  • InterMune's A Strong Buy As Esbriet Finally Has The Data Physicians, Patients, And FDA Have Longed For [View article]
    Magnificent article, probably the best I've seen on SA (and if you look at some of my comments, I'm not a gentle critic).

    And I'm a huge ITMN bull, but I'd make some cautionary amendments. One is that it would be MOST unusual for FDA to allow a post-hoc survival analysis to appear directly on a drug label. Since they asked to have it included in the submission, there's a good chance that they'll permit reference to the existence of the papers showing survival benefit, but the conclusions? Not as likely. Another is that having lived with an IPF victim, the "severe" cutoff is less arbitrary than you might think. In late stages, progressive heart failure rather than lung scarring dominates the clinical picture.

    I like the way you've handled work on Son of Pirfenidone, but there's a second-order effect that deserves mention: if early work is promising enough, management may "fall in love with" the project, assigning it a value far higher than an outsider would, and making a friendly takeover much more difficult. I'm far from sure that suitors would participate in an auction.
    Jun 14 11:34 AM | 3 Likes Like |Link to Comment
  • InterMune Is Set To Outperform Its Main Competitor [View article]
    The May 18 internet broadcast does a decent job of comparing the drugs. Basically, efficacy looks identical, Pirfenidone has a slight edge in tolerability and the biggest practical difference is in patient-years of experience--favoring Pirfenidone.

    Both drugs have a liver signal, but the patient-years put an upper limit on its importance for Pirfenidone. Nint shows a heart signal that will need to be looked at.
    May 19 10:54 AM | 1 Like Like |Link to Comment
  • Why I Bought Myriad Genetics [View article]
    Opinions are fine, but self-impeaching statements can use calling out.

    "kindergartners can run PCR to look at gene expression"!?!?

    Last I looked, that was like measuring temperature with a compass. (And yeah, that's jacosa, PhD in chemistry)

    Other than that, comes down to nitty-gritty you don't solve difficult cases with SNPs, you go in there and do full sequences. At least Myriad does.
    Apr 30 11:51 AM | Likes Like |Link to Comment
  • Why I Bought Myriad Genetics [View article]
    And there is the short thesis. It's wrong for a couple of reasons. First is that the value of screening [proto-] oncogenes isn't in the detection but in the classification, which depends on the size and especially the quality of the database of variants and their significance. Second is that mass screens (like 23andMe) cover only germline variations, while newer tests look more for somatic mutations. Meanwhile, Myriad is expanding into tests looking at gene expression rather than sequence alone.
    Apr 29 11:39 AM | Likes Like |Link to Comment
  • Why I Bought Myriad Genetics [View article]
    If fear of Obamacare seems like a significant negative, that makes MYGN an even more screaming buy. Obamacare is, in fact, a significant positive for the company for at least two reasons. Insurance plans (including Medicaid) encourage people to get precautionary and prognostic tests; Obamacare gets more people covered by insurance plans. All plans within Obamacare are required to provide a core level of services, and while that isn't entirely tied down yet, it is likely to include payment for precautionary and prognostic testing. The minimal-coverage insurance plans that have been discontinued because they didn't meet the core requirements might or might not have encouraged or reimbursed Myriad's tests; reducing their prevalence reduces uncertainty for Myriad.

    I notice that you particularly call out the possibility that Obamacare might lower reimbursement levels. The only mechanisms I can see for doing that are greater alignment of commercial insurers with CMS recommendations, clearly a market decision, and sharper price bargaining by Medicaid, which will be of limited effectiveness in a market of mostly-monopoly tests of demonstrable cash value to the insurer (you can't plausibly threaten to walk away from bargaining when there's no place else to go and buying the test at the offered price saves you a multiple of the price)
    Apr 28 12:04 PM | 1 Like Like |Link to Comment
  • EZCORP: Oversold Opportunity Due To Macro Factors And Temporary Lack Of Management Focus [View article]
    Much of the "good" expansion of EZCorp was during the presidency of Joseph Rotunda. It is not clear that Paul Rothamel and his team are capable of performing as well.

    Mr Cohen is not ONLY the owner of all voting shares in the company. His company also has been the exclusive investment banker for EXCorp (in return for a negotiated annual advisory fee). It is unclear that a company would ordinarily tolerate the level of investment banking mistakes (most visibly, the bridge loan in the Crediamigo acquisition) that have occurred if the services were provided by an unrelated party.

    In the absence of voting power, Owners of EZCorp with Class A shares must rely on the governing documents of the corporation for equitable treatment should dividends ever be paid or the business wound up. In the past year, a routine matter was handled by creating a new company, having it buy EZCorp and renaming the new entity back to EXCorp. This demonstrates the weakness of our protection.
    Feb 27 08:39 AM | Likes Like |Link to Comment
  • Pirfenidone results "look great" says Summer Street [View news story]
    Unfortunate wording could seriously mislead readers. The primary endpoint was not "improved" forced vital capacity (the drug slows disease progression, but does not reverse damage). The primary endpoint is "predicted" forced vital capacity (a bit of medicalese that expands to change in measured forced vital capacity compared to 'predicted' [From charts, in the ordinary sense, FVC])
    Feb 25 02:16 PM | 1 Like Like |Link to Comment
  • InterMune Is Set To Outperform Its Main Competitor [View article]
    Check the tighter enrollment criteria for ASCEND vs CAPACITY. The largest easy-to-state difference is that the control group in 006 contained an excess of patients with multiple lung diseases (this is a common occurrence, and since IPF progresses faster than most other chronic lung diseases, "less pure" IPF progresses slower).

    There is absolutely no reason to believe that the side effects of the BI drug have been lessened. It is imaginable that better counseling of patients may have lowered the drop-out rate. But a lie remains more imaginable.

    There is a history of very strange things happening around Intermune (HUGE reaction to the advisory panel recommendation; the "whisper number" that they expected $60MM sales in the first quarter after Esbriet introduction; the legally impossible IQWiG report and several others) ITMN also figures in the SAC Capital cases. At least since Harkonen talked too much, the weirdnesses have been outside the company.
    Feb 18 09:10 AM | Likes Like |Link to Comment
  • InterMune Is Set To Outperform Its Main Competitor [View article]
    Well, at least admit that IPF is a tough nut. IFN gamma failed, despite good justification. Steroids have failed, especially in combination with an antioxidant and an immunosuppressant (again, good justification). BI's drug is apparently no better than Pirfenidone. And with nearly a quarter million prevalence in First World countries, and a horrible prognosis, it isn't as if it is unlikely to have been tilted at by big players.
    Feb 12 08:40 PM | 1 Like Like |Link to Comment
  • InterMune Is Set To Outperform Its Main Competitor [View article]
    The full rumor collection includes a claim that the side effects of the BI drug (generally similar to, but a little worse than, those of Pirfenidone) have been greatly reduced. This is unlikely, but not self-evidently impossible. If the drugs are comparably effective, side effects could dictate which one is tried first in new patients.

    Concurrent administration of the two drugs is unlikely on its face because the side effects overlap. However, because the drugs appear to act at different stages of the same pathway, it remains possible that a combination could give a more than the sum of its parts therapeutic effect with only sum of parts side effects (While the side effects are similar, the mechanisms don't appear to be as similar as the mechanisms for the desired effect). I think this is being tested even now.
    Feb 12 02:15 PM | 2 Likes Like |Link to Comment
  • Myriad Genetics' Acquisition Of Crescendo Bioscience: A Question Of Timing [View article]
    In this particular situation, I think the total target is immense (BILLIONS of patients. You don't hear that very often) while RA is comparatively much less significant. If Myriad can participate in the initiative without giving away the protein level store up front, and without losing control of their proprietary database of oncogene variations, the choice is clearly to join up. Those provisos may take a while to tie down.
    Feb 10 02:45 PM | Likes Like |Link to Comment
  • Mincor - Unlikely Low-Risk Window Of Opportunity [View article]
    I'm a long-time holder. The toll processing/sale arrangement is indeed a comfort in slack times. Both high grade nickel concentrate and cobalt byproduct prices are severely affected by general world-wide economic slackness.

    Mincor used to be optimistic about finding another single ultra-scale nickel ore body (USNOB) on its land. They no longer talk much about that, but they have been discovering remarkably high-resource extensions to their existing ore bodies.
    Jan 30 12:56 PM | 1 Like Like |Link to Comment
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