The Mountain View, CA-based biotech managed to spur enthusiasm among the FDA panelists today to recommend to the agency the approval of a new obesity drug, Qnexa. VVUS' shares jumped more than 100% in after hour trading to $21.15 (7:38 p.m. EST) on the great news from what was supposed to be a controversial panel expected to end with a tight vote. As it turned out, the result was an overwhelming yes from the panelists (20-2 for approval).
Trading Roadmap
I was hoping to trade with the 'slide' strategy if the panel result was a tight yes, since some investors would remain skeptical about the final PDUFA result in April and would therefore book their profit immediately, causing a quick decline in share price tomorrow. However, since the vote was one-sided, the chance of a 'slide' is slim. Some even speculate the possibility of a takeover by a large pharma, which may keep the share price up if not propel it even higher. This one is a tough call, but I'm inclined to think that VVUS share price will continue to hike ahead of PDUFA, as the hype of "the first obesity drug to be approved by the FDA in 13 year" becomes more widespread. On the other hand, the other 2 companies, Arena Pharmaceuticals and Orexigen, which also try to push their obesity drugs through the drug regulator, may suffer as a result. I would keep these 3 (VVUS, ARNA, OREX) on the watchlist for the next few days for any trade opportunities.
Finally, congrats to those long VVUS into the panel!!! It was a risky trade and it's worth celebrating!
Finally, congrats to those long VVUS into the panel!!! It was a risky trade and it's worth celebrating!
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