market speculation for October

[gambler2075]

Is the play over with AVNR? A buyout could make the $6 monday price look like a steal (thinking $15 to $20 a share buyout)

I'm done with AVNR. Yeah, sure, maybe it goes to 8$ but I am very happy with what I got out of it.
I still do have a few I am doing deep DD on... we will see about those. what AVNR may do is the typical post-FDA approval bleed for a couple of days, then resume upwards. We'll see.

g

[financebanter]

Re: market speculation for October

Really good one...

[gambler2075]

Really good one...

Thx.
I figure since this board put up with my ramblings for a while I should tell them what I have bought. Remember that this is a speculative position... you could lose it all. Don't bet more than you can afford to lose.

That being said, I am long 72K shares of AFFY. It's here at 5.09 and the market has discounted the value of hematide, due to the slightly higher risks of death in the non-dialysis segment. If you look at the data closely, the dialysis subset is actually slightly SAFER than the standard of care. As far as the patent issue goes I would say you should look at the patents... the 078 patent that JnJ owns does not have any mention of the napthylalanine residues that Affymax put in there, which increased the affinity about 6 fold. Note that the JnJ patent has affinities of ~20nM-250nM, whereas the '033 Affymax patent has about 500pM. Essentially, the street has discounted Affy to below cash value (I think it has 5.50 or more per share in cash) because they think Hematide will never get to market.

The catalyst here is the upcoming pre-NDA meeting with the FDA, which if you look at the slides on the affymax website, is listed BEFORE the ASN meeting (Nov 16-21). BTW the ASN abstracts are already out, there are a couple for Hematide...

http://www.asn-online.org/education_and_meetings/renal_week/archives/RW10Abstracts.pdf

The best abstract is the first one, page 62. This data is not surprising, of course hematide works just as well as aranesp, but this could be spun by Affymax as allowing people to switch over to the billion$ aranesp market.


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F-FC271
A Phase 2 Study of the Safety and Effectiveness of Hematide™/Peginesatide for the Maintenance Treatment of Anemia in Patients Who Were Previously Treated with Darbepoetin Alfa Steven Fishbane,1 Francesco Locatelli,1 Simon D. Roger,1 Edouard R. Martin,1 Grant S. Runyan,2 Ping Qiu.2 1Peginesatide AFX01-202 Study Group; 2Takeda Global Research & Development Center, Inc., IL.
Background: Peginesatide is a PEGylated, investigational, peptide-based erythropoiesis-stimulating agent (ESA) that was designed and engineered to stimulate specifically the erythropoietin receptor that governs erythropoiesis.
Objective: To demonstrate that once-monthly peginesatide can maintain hemoglobin (Hb) levels in patients after conversion from darbepoetin alfa.
Methods: This phase 2 study included CKD patients who were receiving maintenance treatment with darbepoetin alfa and were either on hemodialysis (HD) or not on dialysis (CKD-ND). Starting peginesatide doses were determined with the use of a tiered weight-based darbepoetin alfa–to-peginesatide conversion table. Patients received Q4W peginesatide treatment for 24 weeks (Titration, Weeks 0-18; Evaluation, Weeks 19-24).
Results: A total of 101 patients were included (HD, n=52; CKD-ND, n=49). Mean (SD) baseline ferritin levels for the HD and CKD-ND groups were 448.1 (323.0) and 206.2 (132.9) ng/mL, respectively. Mean change in Hb from baseline by 4-week interval is presented in the Figure. Across both groups, 70.7% of patients maintained mean Hb within target (10-12 g/dL) during Evaluation. The most common adverse event (AE) was diarrhea (13.9% of patients). Four patients withdrew from the study because of AEs; 1 patient withdrawal was considered drug related (nausea, vomiting, decreased appetite).
Conclusions: In this study, once-monthly peginesatide treatment maintained mean Hb levels in CKD patients after converting from darbepoetin alfa, and the safety profile of peginesatide appeared consistent with those of marketed ESAs.
Disclosure of Financial Relationships: Consultancy: Roche, WatsonResearch Funding: Affymax, Takeda, Dynavax, Luitpold, Rockwell; Honoraria: AMAG, Abbott; Scientific Advisor: Affymax, AMAG, Rockwell.

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The second abstract shows the binding affinity of hematide, in ~600pM range (I think I am reading that correctly). I was hoping it would be in the 100pM range, but that is apparently the EPO receptor affinity. STill, far better than the affinities in the '078 patent (still 1.5 orders of magnitude better than the 20-250nM range quoted in the '078 JnJ patent).
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TH-PO233
Hematide™/Peginesatide Binds to the Human Erythropoietin Receptor with High Affinity and Favorable Thermodynamics Jennifer M. Green,1 Yijun Pan,1 Rishi Arora,2 Robert K. Suto,2 Peter R. Young,1 Christopher P. Holmes.1 1Affymax, Inc., Palo Alto, CA; 2Xtal BioStructures, Inc., Natick, MA.
Peginesatide is a PEGylated, investigational, peptide-based erythropoiesis-stimulating agent that was designed and engineered to stimulate specifically the erythropoietin receptor (EPOR) dimer that governs erythropoiesis. Peginesatide is currently being developed for the treatment of anemia of chronic kidney disease. Peginesatide stimulates erythropoiesis by binding to the EPOR at a site cross-competitive with EPO. Methods: Isothermal titration calorimetry (ITC) was used to compare peginesatide with EPO by assessing the thermodynamic parameters that are associated with binding to the extracellular domain of the EPOR. ITC measures the binding equilibrium directly by determining the heat gained or lost when 2 molecules interact in solution. The thermodynamics of binding are characterized by free energy (ΔG), enthalpy (ΔH), entropy (ΔS), heat capacity of binding (ΔCp), and the stoichiometry of the interaction. Results: Calorimetric titrations at 25 °C of both peginesatide and EPO into a solution containing the soluble extracellular domain of the EPOR show strong, high affinity binding events characterized by equilibrium dissociation constants (Kd) of 631 and 172 pM, respectively. The large negative overall free energy associated with peginesatide binding (ΔG = -12.6 kcal/mol), comprised of favorable enthalpic (ΔH = -24.4 kcal/mol) and unfavorable entropic (ΔS = -11.9 kcal/mol/K) components, was greater in magnitude than it was for EPO binding (ΔG = -9.22 kcal/mol). The large negative heat capacities calculated for both peginesatide and EPO binding (ΔCp = -1.047 and -1.230 kcal/mol/K, respectively) suggest that a large amount of the water-accessible surface area on the EPOR is occupied and buried upon ligand binding. As expected, 1 peginesatide molecule was found to bind to 2 EPOR chains, similar to the known 1:2 interaction between EPO and the EPOR. Conclusions: The thermodynamic parameters of binding indicate a favorable and high affinity interaction between peginesatide and the EPOR that may contribute to the prolonged in vivo activity of peginesatide.
Disclosure of Financial Relationships: Employer: Affymax, Inc.; Ownership: Affymax, Inc.

[KTP]

We just can't resist continuing our speculation discussions, eh?

I looked over AFFY and it looks like a decent risk vs reward stock for a small play.

The company has more cash than the market cap (as you said)

They do have some potential for positive news soon.

The downside risk is pretty minimal. ($4 a share would attract a horde of buyers if they still had that cash on hand).

So, $4 on the low side, $10+ on the high side, with a near term move to $7 pretty likely if there is a hint of good news.

I'm in for 1K shares at $5.08 (beat you by a penny). This looks like a fun one to ride for a bit.

[gambler2075]

We just can't resist continuing our speculation discussions, eh?

Well, I would reiterate that I am not a financial advisor, and I am not giving investment advice, but what I am doing is posting about what I am doing with my portfolio (at least part of it).

Don't blindly follow anyone, but do your own research and decide what you want to invest in. Is AFFY a high risk-high reward stock? Absolutely. I'm only investing in a portion of my portfolio I could lose. I would be ok losing 350,000$, given what else I have in my portfolio, and where I am in life (with regards to age, and potential earning power through other jobs)

That being said, I think anyone who is not a trader should put in a limit sell order at around 5.75, and I would also NOT put in a stop loss at 4.95... Yeah, that is where anybody who trades by classical trading rules would put a stop loss. And have seen it a billion times... the market makers take the price down under 5 to grab those cheap stop loss orders before brining it up again. Putting in a stop loss anywhere between 4.90 and 5 is just asking for it.

g

[KTP]

Nah, no worries. I have 32K of my IRA (more than the entire balance was a few weeks ago) in cash waiting for the outcome of QE2 and such before I am going to stick it into a Vanguard fund and forget about it. The remaining money I am feeling free to do what I please. Most of it is still in the microsoft play, because that particular train is just building up steam. Affy is probably lower risk than the microsoft options play, but I only put 5K in it because of limited research (I did spend an hour or so reading up on it, but I don't have the understanding to make an educated guess on what the FDA might require for further trials. I won't get caught by a bear raid though, I am not that stupid

[gambler2075]

I won't get caught by a bear raid though, I am not that stupid

I am not worried about you, I am worried about anyone who decides to copy the Gambla and buy AFFY... I figure they read a "trading for dummies" book or 2, and put in a stop loss at 4.95...

g

[KTP]

I am not worried about you, I am worried about anyone who decides to copy the Gambla and buy AFFY... I figure they read a "trading for dummies" book or 2, and put in a stop loss at 4.95...

g

Ah ok. Yes, someone could have been reading this thread and thought "hey, that guy made $14,000 on microsoft in a few days, and this other guy made $200,000 in AVNR in a few days, maybe I will put my life savings into something...hmm, how about Blockbuster video...that sounds good."

On a lighter point. Is there a good way to take advantage of the bear raids when they happen? Do you just watch the stock like a hawk a few days before a FDA decision or do you put in a buy order 30% or more below the current price? I would have loved to have gotten some AVNR at 1.35 a share...

[KTP]

hmmm, my 40 jan 11 $25 msft contracts I still have were up another 17% today...it is going to be pretty hard for our AFFY bio play to beat my microsoft play, but I guess that is a good problem to have. Still predicting $30 by december, even if I am only holding 40 contracts instead of my original 160. Kinect is about to launch, and Win7 phones are actually going to be a hit...plus microsoft keeps getting more cloud contracts. I don't even remember what we were investing in AFFY for? oh ya, some drug or something I should make enough off my leftover options to cover my losses in AFFY...

[gambler2075]

hmmm, my 40 jan 11 $25 msft contracts I still have were up another 17% today...it is going to be pretty hard for our AFFY bio play to beat my microsoft play

lol, you haven't beaten anything until you sell :P
Same thing with AFFY and your MSFT calls... If AFFY goes to 7 and then back to 5, it doesn't mean anything, and same with your MSFT calls... 46cents to 1.00$ to 2.00$ doesn't matter if it goes back to 46 cents... lol

g

[KTP]

lol, you haven't beaten anything until you sell :P
Same thing with AFFY and your MSFT calls... If AFFY goes to 7 and then back to 5, it doesn't mean anything, and same with your MSFT calls... 46cents to 1.00$ to 2.00$ doesn't matter if it goes back to 46 cents... lol

g

lol I was just teasing you a bit. AFFY is holding steady, which sort of makes sense...how could it drop much in price when they have all that cash on hand?

CADX got an early approval (was supposed to be nov 4) and was down $8.50....very strange, but now it is getting back to $9. Did you ever have a CADX play?

[gambler2075]

lol I was just teasing you a bit. AFFY is holding steady, which sort of makes sense...how could it drop much in price when they have all that cash on hand?

CADX got an early approval (was supposed to be nov 4) and was down $8.50....very strange, but now it is getting back to $9. Did you ever have a CADX play?

CADX was a horrible risk/reward play... one look at the reaction to approval and you can see why. There is absolutely no reason to hold a stock that everyone expects approval for, if the upside is really nothing (same price as before approval) whereas the downside would have been a 50% haircut.

g

p.s. downside on AFFY is that JnJ could countersue, or they could have to do another trial... but we will see. I may sell at any time

[gambler2075]

CADX was a horrible risk/reward play... one look at the reaction to approval and you can see why. There is absolutely no reason to hold a stock that everyone expects approval for, if the upside is really nothing (same price as before approval) whereas the downside would have been a 50% haircut.

g

p.s. downside on AFFY is that JnJ could countersue, or they could have to do another trial... but we will see. I may sell at any time

I did end up trading CADX this morning, +1900$.



g

p.p.s. As an aside, I think it would be very irresponsible for me to mislead SA readers into thinking that trading is easy. I can't speak for KTP (although I would imagine he is similar) but it is not anywhere near my first year trading stocks. And my results over the past two years are very atypical, compared to the vast majority of people who try to trade. I am coming up on my 8th or 9th year trading, an average of 5-8 hours per day actually watching level 2, doing market research and whatnot. I only could do that as my job had weird hours and I could get those thousands of hours of trading time. I can say that for the first 3-5 years I was absolutely unprofitable and kept losing over and over. And blew up 5K$-10K$ accounts multiple times. And I can essentially guarantee you that anyone that has not traded for at LEAST 3-5 years (and by "traded" I mean that they have taken at least 300-400 trades a year) is almost absolutely guaranteed to lose all of their money. So I really would feel terrible if someone watched a few of my trades and thought that trading was easy... then they put in their life savings and lost it all. Because I have heard of that happening to many, many other wannabe traders, and I don't want people on SA to think that trading is easier than it actually is.

[KTP]

Well said, Gambler. Both of us could lose everything we have at risk...this is not a place to put your grocery money for next month.

But on a speculative note , nice play on CADX. Perhaps look back into AVNR when you get a minute. I have been toying with it a bit because there are some weird things going on. I bought some at 4.30 and sold it at 4.60, only to see it fall back to 4.50. Little bitty profits, but having some fun nonetheless. Downside is drop to $3.00 a share, upside is shoot up to $10-$12 bucks on buyout news. (Note that this will happen immediately after the next time I sell it for a $0.30 per share profit .)

Currently no position in AVNR, trading at 4.48

[gambler2075]

Perhaps look back into AVNR when you get a minute.

I personally don't like AVNR at all... Yeah, it has come down to 4.50 (or even 4.22 earlier) from that open of 5.60 on monday, but part of that has been Clarus selling 5M shares over the past couple of days. I also wrote about how I don't really think Nuedexta will be as big of a deal as it could be, given that the two components (dextromethorphan and quinidine sulfate) are available separately.

As I posted on the yahoo finance boards:

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But my question to you is... "Why can't some unscrupulous individuals make their own Nuedexta?"

Let's think about this (and for the record, I am not advising people to do this as it is likely illegal and certainly patent infringement, but I am just asking the question)

You can just buy Dextromethorphan at 18$ for 1200mg, or 2 months worth of dextromethorphan
Amazon.com: SymptomPaK Dextromethorphan, 10 mg, 60-count Bottles (Pack of 2): Health & Personal Care: Reviews, Prices & more

and you can buy Quinidine 200mg tablets at 30 tablets for 10 bucks. Of course you would have to chop them up, since you only need 10mg out of 200mg. So each tablet (which only costs 30cents) would last you basically a month.

Quinidine Sulfate 200mg Tablets - HealthWarehouse.com

So putting these together, you could make your own Nuedexta for basically 10$ per month. Contrast that with the 500$ per month Avanir is planning to charge for it.

Once again, I am not recommending people do this, but just ASKING what is to keep someone from doing this and massively cutting into the profits that Avanir makes?

g