OK, here's one:
First the background on IMCL vs. ABGX (From briefing):
"Abgenix: Preview of Panitumumab's Phase III data (ABGX) 10.46 -0.53: ABGX is seeing increased volatility ahead of key data expected over the next week. The co is expected to release the results of a Phase III study in Panitumumab in 3rd/4th line refractory colorectal cancer. Panitumumab, a fully human monoclonal antibody targeting the EGF receptor, is 50/50 partnered with Amgen (AMGN) and belongs to the same class of drugs as DNA's Herceptin, DNA/OSIP's Tarceva, or AZN's Iressa. Probably the closest competitor to ABGX's drug is BMY/IMCL's Erbitux, a chimeric MAb also being used for the same indication. Most biotech investors seem to believe Panitumumab's entry will hurt Erbitux's prospects, and have been selling the shares in anticipation of the data. Indeed, while Panitumumab and Erbitux are likely to show similar efficiency, Panitumumab's more flexible dosing regimen (Every 2 wks vs 1x a week) and better safety profile could give it the upper hand. Also worth noting, Erbitux was approved based on Phase II data showing objective responses and median duration, yet Panitumumab's trial has overall survival as a secondary endpoint, meaning the label could include a survival claim. Primary endpoint is progression-free survival. The analyst community in general is fairly positive on ABGX, with 50-75% chance of positive data seen. With estimated peak sales of around $1 bln, Panitumumab holds the key ABGX's future, so be sure to expect an outsized move when the data hits the wires. (Considering the complexity of the data to be released (several endpoints), the safest bet could be to play either IMCL or AMGN off of ABGX's reaction.)"
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So here's the trade. Short ABGX, and short <b>an equal dollar amount</b> of IMCL, and carry it into next week until the announcement. Why? The loser of the two has more to lose than the winner has to gain.
The two possible results:
A) The ABGX phase 3 trials go well. ABGX goes up a bit, but IMCL should go down more, percentage wise. Remember when DNA came out with their positive macular degeneration drug results this past spring? DNA was up about 15%, but EYET went down over 40%.
B) The ABGX trials fail. This is the better of the two possible announcements for my trade. ABGX would get absolutely <b>smoked</b>. Down 30-50%, according to my estimates.
IMCL goes up... but nowhere near a 30% gain.
First the background on IMCL vs. ABGX (From briefing):
"Abgenix: Preview of Panitumumab's Phase III data (ABGX) 10.46 -0.53: ABGX is seeing increased volatility ahead of key data expected over the next week. The co is expected to release the results of a Phase III study in Panitumumab in 3rd/4th line refractory colorectal cancer. Panitumumab, a fully human monoclonal antibody targeting the EGF receptor, is 50/50 partnered with Amgen (AMGN) and belongs to the same class of drugs as DNA's Herceptin, DNA/OSIP's Tarceva, or AZN's Iressa. Probably the closest competitor to ABGX's drug is BMY/IMCL's Erbitux, a chimeric MAb also being used for the same indication. Most biotech investors seem to believe Panitumumab's entry will hurt Erbitux's prospects, and have been selling the shares in anticipation of the data. Indeed, while Panitumumab and Erbitux are likely to show similar efficiency, Panitumumab's more flexible dosing regimen (Every 2 wks vs 1x a week) and better safety profile could give it the upper hand. Also worth noting, Erbitux was approved based on Phase II data showing objective responses and median duration, yet Panitumumab's trial has overall survival as a secondary endpoint, meaning the label could include a survival claim. Primary endpoint is progression-free survival. The analyst community in general is fairly positive on ABGX, with 50-75% chance of positive data seen. With estimated peak sales of around $1 bln, Panitumumab holds the key ABGX's future, so be sure to expect an outsized move when the data hits the wires. (Considering the complexity of the data to be released (several endpoints), the safest bet could be to play either IMCL or AMGN off of ABGX's reaction.)"
____________
So here's the trade. Short ABGX, and short <b>an equal dollar amount</b> of IMCL, and carry it into next week until the announcement. Why? The loser of the two has more to lose than the winner has to gain.
The two possible results:
A) The ABGX phase 3 trials go well. ABGX goes up a bit, but IMCL should go down more, percentage wise. Remember when DNA came out with their positive macular degeneration drug results this past spring? DNA was up about 15%, but EYET went down over 40%.
B) The ABGX trials fail. This is the better of the two possible announcements for my trade. ABGX would get absolutely <b>smoked</b>. Down 30-50%, according to my estimates.
IMCL goes up... but nowhere near a 30% gain.