An Interesting Interim Analysis for Bellerophon is Imminent.

This blog post was being written to discuss the interim analysis of Bellerophon Therepeutic's (BLPH) phase 3 INOvation-1 clinical trial for pulmonary arterial hypertension.  While I was still drafting it, the company announced that the trial was being stopped for futility. As a result this blog post was not completed. 

ASM Microbe Conference, June 2018

With CDC Deputy Director Dr. Anne Schuchat after her excellent keynote presentation on the need for novel antimicrobials.

My Dilemma with Tesla; TSLA

At a $50B market cap (as big as GM and Ford, but at less than one-tenth the revenue) with current liabilities at 3.25x their cash and operating losses at $600M per quarter, Tesla ($TSLA) seems like a classic overvalued short play that is badly in need of cash.  I would guess that the odds of a company in this situation being able to maintain itself as a "going concern" without significant equity dilution or taking on additional debt at significantly worsening terms, are pretty thin.  The confounding issue is, Tesla overcame what I would have to believe are far more difficult odds in accomplishing all it has thusfar. 

This cult favorite, with the largest short position of any in the US stock market, has its supporters and detractors firmly entrenched.  It 's story has now drawn me in, like a good soap opera.  I really want to root for Elon Musk, but every way that I look at their financial statements and position tells me that a fall in Tesla shareprice is not "if", but "when".

With the shareprice at $300 I am scaling into a long-term 400/175 short strangle taking advantage of the high $25 premiums; expecting that bulls and bears will keep the shareprice in this range until my year-end expiration. 

Here is the spreadsheet I've put together thusfar of Tesla's key financial metrics:

And the P&L of each single short strangle mentioned above:

Battle of the Biotech Hedge Funds. 2018-04-27

Baker Bros Supports Merging Two Small Biotech Companies: BCRX and IDRA, while Great Point and RA Capital Oppose. 

Because I like to take advantage of arbitrage opportunities when I can find them, today I researched a proposed merger between BioCryst Pharma (BCRX) and Idera Pharma (IDRA). On January 11, 2018 the companies announced that their respective boards unanimously recommended that their shareholders vote to approve their plan for a "merger of equals".

The problem is, the shareholders don't seem eager to vote for the merger.  Share prices of both companies dropped on the announcement, and in subsequent weeks Great Point Partners (GPP) and RA Capital Management (both are major shareholders of BCRX) wrote letters ( here and here ) to the board of BCRX expressing their opposition to the proposed merger and their intent to vote their shares against it.  Interestingly, they claim that the the merger was an attempt by Baker Bros, the largest shareholder of both companies, to use their ownership percentage of IDRA as a way to increase their ownership of BCRX on the cheap while doing so at the expense of diluting all the other BCRX shareholders.

GPP attempts to expose Baker Bros's plan in their letter with this clever summary below, which was  attached to an SEC Filing:

The two boards have now post-posed their respective shareholder vote deadlines on the merger from May, 2018, to July, 2018 by providing the stated reason of giving shareholders time to review clinical data to be released by IDRA at an upcoming ASCO conference in June.  Methinks they may not be confident in having enough votes to approve the merger right now.

I hope to analyze the deal for arbitrage opportunities once it seems that the merger is likely to happen with solidified terms; I would not be surprised to see the merger renegotiated to give existing BCRX shareholders better terms.