Arena Pain, Elan Gain

Time to check in on my drug speculations.

Elan is behaving as though the market thinks uptake will continue with Tysabri.  The shares I bought in the mid-$4’s when an oral treatment was approved have gone up a buck or more, so I’m hoping to see the position shrink by having calls exercised.  At this point, my position will get one third smaller in two weeks when the October options expire.

Arena, on the other hand, is proving itself a true dog.  Still, even dogs have their day.  For this one, it’s looking like $1.50 per share is working as a trading bottom.  The volatility premium in the options has gone down even faster than the stock, however, so I haven’t written the calls on it that would mitigate my losses.

Just to mention a third among my little collection of these speculative pharma’s, SNTA has been rallying nicely lately, and I found myself moved to write a gaggle of February $5’s against the position in one of the accounts.  I got over 50 cents a share for those calls, which is not bad for a $4 stock.

Just be careful when you look at these, because, as ARNA proved so well, $4 stocks can become $2 stocks.  On the other hand, DNDN showed us that $4 stocks can become $40 stocks.

What’s a mother to do?

hh

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2 Responses to Arena Pain, Elan Gain

  1. Ray says:

    I enjoyed your CIM article.

    When it comes to Bios, I have followed these for years and they are widow makers. My recommendation is to keep to just 7 names:
    Large: CELG, GILD, GENZ
    Specs: AEZS, YMI, SPPI, CYTX

    Celg buy of ABBI is excellent
    GILD is cheap and a leader
    GENZ is toppy because of the takeover attempt – but has excellent products and pipeline.
    AEZS – cheaper than KERX and a better pipeline
    YMI – this co has 3 excellent shots on goal and great pipeline
    SPPI – cheap
    CYTX best spec on stem cells

    avoid everything else

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