The skepticism is such that 10 of 17 analysts have a HOLD rating; the 10 day Call/Put ratio is 0.98, the lowest since early January just prior to a run from $16 to $24. The $ Put premium was 3X Call premium yesterday. The short interest has surged to 17.6 mm shares or 13% of float - the highest in 19 months, up from 14mm a month ago and less than 10mm in January. Not only is there NO speculation of a buyout in AMLN as seen in below average Call buying volume, but there is an overt bearish bet.
Clearly they are betting that a) LLY, viewed as the natural buyers, will not be stepping up to take them out, or b) competitive drug Victoza,launched in January, will dominate the GLP-1 market for T2-diabetes as its more convenient dosing and needle prevails gaining 26% market share of GLP-1 market from AMLN, or 3) Thyroid cancer risk as assigned a blackbox label to Victoza will also be viewed as an issue with the FDA when reviewing Bydureon.
But there are offsetting positives: 1) the FDA does not require further trials for Bydureon, 2) no unusual incidence of Pancreatitis or Thyroid cancer has be seen in P3 trial data that has been filed, 3) Best in class phase 3 data for 1X weekly Bydureon with weight loss benefit, that should make the October PDUFA straightforward given what is already known about 2x daily Byetta that is on the market and selling at a $700 mm pace, 4) Roche's Taspoglutide recently had a set back that delays additional competition past 2013 after pre-filled Bydureon hits the market that overcomes the needle issue. In the meantime, frenetic takeover activity in mid-cap biotech has been unabated. Since the 2007 bull market top, i've counted 20 biotechs gone: DNA, MEDI, MLNM, IMCL, OSIP, MOGN, TLCR, VMSI, PHRM, ABII, SEPR, MEDX, CVTX, SCRX, CGRB, FACT, SIRT, IDEV, OMTI and now GENZ. Every single pure recombinant biotech were taken out at a median of 9X sales. You would think this trend and resulting scarcity of mid cap biotechs with commercial blockbusters and in-house technology would create a frenzy of speculation. Yet it's been anything but that for AMLN.
AMLN has traded in a narrow $18-$20 range above the 50-day and 200-day MA for 30 days, consolidating the impulse volume surge from $15 to $20. The volatility bands have tightened to $1.75 from $7 a month ago and RS is in the top quartile at 81. A breakout of that range is simmering.
http://finance.yahoo.com/q/ta?
http://www.schaeffersresearch.
Impeccable time. Further excellent contrarian analysis just out from Elizabeth Harrow from Schaeffers whose service I source for the SOIR indicator.
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