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.
This short week, the SP500 made a more significant drop than the last several weeks. The weekly chart showed that price is now settled directly on top of the 79 MA, which is also a strong support.
Starting out the week, I was out and about on Tuesday, so I missed the afternoon downdraft on the SP500. I did not chase the fall on Wednesday, and after seeing a rally to the close, I became a bit bullish for Thursday action. I bought the $SPY calls on Thursday morning but the failure of price action to maintain above the 79 & 89 MA supports on the 5 minutes chart made me reversed course by closing my $SPY call options and opened the $SPY put options. Given the tariff wars that now included Mexico, I have got a bad feeling that this may go further down next week; hence, I decided to hold the SP500 put options over the weekend.
$IBIO – While I discussed waiting for Thomas Isett to perform his magic, I came upon an article, “Advanced Therapies: Landscape, the Road Forward, and M&A,” written by Thomas Isett that was quite impressive not just on the content of the article but his broad-based knowledge of the biotech industry.
Below are two excerpts from the article; but I urge readers to click on the article title to access the hyperlink to read the full article.
The above mentioned “patient-specific” which, to me, sound like a designer drug manufacturing process that “ultimately drives pricing to greater than $350,000 per patient.”
I assumed this $350,000+ per patient cost came from the costly mammalian cell system manufacturing process.
An outline from the above excerpt:
- Heat is on in biologics manufacturing M&A
- Danaher grabbed GE’s BioProcess business for $21 billion
- Thermo Fisher shelled out $1.7 billion for Brammer Bio
- Catalent paid $1.2 billion for Paragon Bioservices
- Thomas Isett said, “Hold on to your hat:”
- There is plenty of activity in advanced therapies, bioprocess systems, and biologics CDMOs in the forecast.
The first excerpt above gave me an idea that iBio may be a solution to keep the “patient-specific” therapies to a more affordable cost much below $350,000 per patient.
The second excerpt implied that biologics manufacturing M&A is far from over.
And guess what?
Per the recent 10Q, Thomas Isett has been retained by iBio as a strategy and management consultant through December 31, 2019, with services to be provided pursuant to statements of work (SOW) that may be entered into between iBio and Thomas Isett from time to time. The May 1, 2019 SOW has a term from May 1, 2019, to August 31, 2019, and is being conducted on a retainer basis at a rate of $40,000 per month.
So, you mix the two excerpts above from the article written by Thomas Isett with the excerpt from the 10Q above together, and what do you get?
Did I hear you say “will iBio be next on the M&A?”
Yeah, that is what I’m thinking as well.
$LRAD – The low volume/liquidity is a double-edged sword in term of getting in-and-out of the stock, so it is pointless for me to try to time it. After learning my lesson that cost me 15 cents/share premium, I’m holding on to my LRAD shares despite a potential downdraft from the SP500.
Technically speaking: While this week ended up in red, the monthly chart reflected a spinning-top green bar for May. The overall trend is still up. And the “handle” of the Cup & Handle pattern is still in good shape.
Due to downdraft from both $IBIO and $LRAD, my port gave back a bit.
Current positions (in alphabet order):
Stocks = $IBIO $LRAD
Options = $TRXC (call); $SPY (put)
Up 21.6% YTD
My 2 cents
From my camera: