Amicus Therapeutics’ (FOLD) positive phase 3 data on Wednesday meant a 50% return on our early August buy recommendation to PropThink Premium subscribers. Amicus reported results from Study 012, comparing migalastat monotherapy to standard of care in patients with Fabry Disease. Though the study results only moved FOLD 15% in the session, a simple options strategy made our trade that much more profitable.
On August 7, we suggested being involved in FOLD ahead of the 012 data, outlining a strategy to improve investors’ risk/reward going into the binary event, on which we leaned bullish. We suggested being long FOLD from $4.10, selling Oct $5 Calls at $1.00, and buying Sept. $2.5 Puts at $0.20, for a cost basis of $3.30. Upside on the trade was capped at 52% ($3.30 to $5.00 via the short Calls) and downside limited to 25% ($3.30 to $2.50 via the purchased Puts). Read more here.
FOLD closed the week at $5.87. In a note to PropThink Premium members on Wednesday, we explained two ways to let the trade play out, short-term and for those with a longer horizon. Click here to get the rest of the story.
You can get ideas just like this – a clearly defined trade backed by fundamental research – with a subscription to PropThink Premium. And, the first month is 50% off.
Also this Thursday we sent out a new trade centered on InterMune (ITMN), the $6B developer of Esbriet rumored to have been approached by potential acquirers. Assuming a U.S. launch in first-quarter 2015, 12-month price targets from Wall Street analysts fall between $44 and $55 a share (the stock closed Friday at $53) and analysts forecast peak sales of Esbriet, once approved, of $1.0B in North American and $400M – $600M in Europe. Rumored bidders include GlaxoSmithKline, Sanofi, Actelion, and Roche; InterMune is supposed to have hired Goldman Sachs and Centerview as consultants during the bidding process. Get PropThink’s latest, actionable take on InterMune.
Medivation (MDVN) has continued to perform, returning over 40% since Mr. Deryugin’s April recommendation, and well ahead of the Nasdaq Biotechnology Index’s (IBB) 17% gain over the same time period. With the company raising guidancetwice since the April note, we continue to believe in the long-term story and expect to publish an update within the coming week.
In early August, we partnered with Dr. Paul Nunzio De Santis on an exhaustive rebuttalto the Gilead Sciences (GILD) bear thesis. In a note to our free newsletter subscribers, as well as PropThink Premium members, we highlighted key components of Dr. De Santis’ report: namely, that pricing and sustainability concerns aren’t the damming phenomena that many on the street make them out to be. The stock is up 13% in the three weeks following, improved further by Dr. De Santis’ recommendation to sell low-$80 Puts given the presence of a major equity buyer in this range; the company is slated to repurchase $1.7 billion in stock by the end of the third quarter.
Also this week, “Auxilium’s Xiaflex Makes Butts Look Good in Midstage Study“and “Pharmacyclics’ Quarterly Results Support Long-Term Imbruvica Thesis“
One or more of PropThink’s contributors are long FOLD, MDVN, GILD, PCYC, and/or own Calls/Puts in ITMN.
