Before you read on, please be aware that the analysis below is my opinion only and may include flawed assumptions and inaccuracy of logic; therefore, caveat emptor applies here. Furthermore, all emphasis (color-coded, boldness, and underlined) on the excerpts are my own.
Look like this week SP500 market action confirmed that last week doji bar was a continuation doji after all. I guess it is safe to assume that the long wick on top of the solid green weekly bar was the result of Facebook’s disappointing earnings. Speculation abounds wondering if Facebook drop would derail the SP-500 upward momentum. At this point, I think it all depends on other tech giants; meanwhile, the weekly chart still looks good for a bullish sentiment.
This week was my give-back week. Yeah, I gave back the gain from last week. Except for $TRXC, all my positions were down.
$AMRN is having psychological warfare going on between the bulls and the bears. Giving the fact that price was down this week, the bears successfully used fear to push price downward. The old fear of FDA “not playing nice” even if Reduce-it is a success was thrown around like free lollipops to kids. But then I remember that Amarin had a 1st Amendment settlement with terms favoring Amarin to promote Vascepa for off-label use as long as they use truthful and non-misleading data. Below is an excerpt from the settlement term: Notice the term, “FDA has agreed to provide Amarin with an optional preclearance provision through 2020 for new off-label claims.”
From the 1st Amendment key settlement terms mentioned above, I would deduce that Amarin can use the data from the Reduce-it (RI) trial result to promote Vascepa for its RI indications almost immediately once the Reduced-it trial result comes back meeting the minimum markers to be declared successful.
Another issue the bears used to bring fear is that even if the Reduce-it trial is a success, the price pop would be at best a double from here. Giving that both H.C. Wainwright and Cantor Fitzgerald both have a buy rating and a $10 price target (assumption including Reduce-it as a success), the $6 seemed plausible so the expectation “seemed” to have legs. However, there is one element the bears would NOT want you to remember is the prospect of a bidding war among BPs trying to buy Amarin so they can combine their version of statin drugs with Vascepa and call it the next miracle heart drug to reduce cardiovascular events. In my humble opinion, the prospect of a bidding war will make $AMRN pops over $10 upon news of successful Reduce-it trial. If this happens, this will upset all the doubters and naysayers and burn the short-sellers. At this point, I dare say that Pfizer will benefit the most when they combine Vascepa with their famous Lipitor statin drug. Suddenly, Pfizer has a brand new drug with many years of patent protection for its new heart drug that combined Vascepa and Lipitor. That is if Pfizer wins the proverbial bidding wars.
Before I conclude my 2 cents on $AMRN, I like to bring to your attention that it is my opinion that the 1st Amendment settlement terms as mentioned above will benefit the BP who ended up acquiring Amarin. Imagine once Reduce-it trial is deemed to be successful, the winner of the bidding war on Amarin can almost immediately promote and sell their Vascepa/Statin drug combo through their own VAST distribution network to doctors around the world. We are talking about reaching the population size of the statin users and promote statin AND Vascepa together. Just imagine the instant multi-millions if not billions the BP can capture almost immediately when doctors begin to switch prescription from statin only to Lipitor with Vascepa combo (assuming Pfizer won the bidding war).
Nevertheless, the instant billions will not happen if they don’t have enough supply of Vascepa to meet the demand. This leads me to believe that the recent dilution may be to purchase a massive amount of Vascepa inventory in the event of a successful Reduce-it trial result. With inventory in place, Amarin will become even more attractive for BPs with a statin drug to bid for Amarin.
Remember the above is just my opinion on Amarin and nothing more. And I only trade the stock per my OWN opinion, and nobody else’s; hence my blog is named “Trading my 2 cents.” We are all entitled to our own opinion, and we are also betting on the stock market based on our personal opinion. Thus, it really doesn’t matter what the doubters and naysayers have to say about Vascepa and Amarin because NOBODY really knows with certainty what is going to happen after the Reduce-it trial result is announced. The only thing that REALLY matters at this point is whether you want to bet on the Reduce-it trial result or not. If you are in for the bet, bet what you can afford to lose, and that is all that matter.
$LRAD took a breather this week after seven weeks of green bars. So the zag following the zig is expected. I’ll wait for the next zig to start the next rally.
$CARA was also facing downward pressure this week. However, from a monthly perspective, despite a temporary setback, it is still on an uptrend.
Giving that this was not a good week for most of the biotech stocks, $IBIO and $AEMD held their ground well waiting for news.
$TRXC was the only stock in my port that went up this week. This is a strong stock waiting for earnings report coming out next Thursday morning (Aug 7th before market open). Hmm… one may wonder why TransEnterix changed their reporting time to before market open. Last earnings report on May 8th was after market close. My speculation for the change is that they may now have more international sales so the shift in reporting hours may have to do with satisfying the foreign customers who want to learn more about TransEnterix. I believe that, despite high valuation at this point, any progress on new orders from the U.S. or the rest of the world will continue to kick this one higher due to the perception that Senhance will be adopted by the laparoscopy community.
Due to overall bearish tone on biotech this week, my port gave back gain from last week.
Current positions (in alphabet order):
AEMD AMRN CARA IBIO LRAD TRXC & cash (up 15.6% YTD)
My 2 cents
From my camera: