Sometimes you lose

[Fermion]

My pick of Vanda got stomped yesterday. A judge ruled against them on a lawsuit they had against generic manufacturer TEVA for one of their two main drugs.

I read through the ruling and don't really understand why they lost. The judge made comments like "i discounted the testimony of Dr. Mihael Polymeropoulus because he has a financial interest in the outcome" I mean...duh?

Anyway, I am hanging on. I am not selling here since they are trading at $420m and have $454m in cash, no debt and a priority review voucher probably worth at least $100m. Maybe they win on appeal or get one of the other 3 or 4 trials they have running approved.

Still...ouch.

 

[Mr. Tightwad]

That you had the courage to post this is admirable.

Most people are very quiet when their predictions are wrong.

 

[Fermion]

That you had the courage to post this is admirable.

Most people are very quiet when their predictions are wrong.

hah, thanks. I probably would have kept quiet if it had been Carvana or something lol.

 

[JoeWras]

hah, thanks. I probably would have kept quiet if it had been Carvana or something lol.

Or bit... Never mind.

I have a few friends who work in pharma. It isn't an investment that goes bad, they just lose their job. Results come out from a study and they are literally laid off the next day. Brutal.

 

[Fermion]

Or bit... Never mind.

I have a few friends who work in pharma. It isn't an investment that goes bad, they just lose their job. Results come out from a study and they are literally laid off the next day. Brutal.

It is a brutal industry. Very make or break. I sympathize with the people wanting fast generics but someone has to pay for all of these people working in pharma and performing the studies and lengthy trials. I was not expecting a judge to throw all that out the window.

 

[Golden sunsets]

"Brutal industry" is not a good basis for making individual equity purchases. Too risky.

 

[Bigdawg]

My pick of Vanda got stomped yesterday. A judge ruled against them on a lawsuit they had against generic manufacturer TEVA for one of their two main drugs.

I read through the ruling and don't really understand why they lost. The judge made comments like "i discounted the testimony of Dr. Mihael Polymeropoulus because he has a financial interest in the outcome" I mean...duh?

Anyway, I am hanging on. I am not selling here since they are trading at $420m and have $454m in cash, no debt and a priority review voucher probably worth at least $100m. Maybe they win on appeal or get one of the other 3 or 4 trials they have running approved.

Still...ouch.

Misery loves company. I'm sitting on my 1000 shares. Will be my tax lost harvest candidate in 2023 if nothing changes.

 

[Aerides]

iirc you win a lot so I'm glad you shared this loss. I hopped on Endocyte with your recommendation and rode them into the buy out!

 

[NW-Bound]

I learned about VNDA from you. Bought 500 shares in Oct 2020. After "losing" 300 shares to call option assignments, I still have 200 shares at this point. This is one of my smallest positions, and I do not spend much time following the company.

Just looked up Quicken. Net loss on this position: -$799. Total option premium: +$792.

Hah, what a coincidence! I break even at this point.

I was not very actively selling options on this position because it's a smaller one, compared to my larger positions of 6 figures each. Yet, selling options helps me break even.

PS. I looked further. In 2 years, I wrote a total of 17 contracts on these 5 lots of VNDA. I could have written more contracts than that.

 

[marko]

That you had the courage to post this is admirable.

Most people are very quiet when their predictions are wrong.

My predictions are almost always wrong. I don't post about it because I figure it is just assumed.

 

[NW-Bound]

"Sometimes you lose"

Sometimes everybody loses. Like today.

 

[Fermion]

"Sometimes you lose"

Sometimes everybody loses. Like today.

Ah yes, the small amount I am down on Vanda is nothing compared to the huge drop in the 401k today. At least I am at 50% bonds though.

 

[NW-Bound]

As my normal morning routine, I scroll up/down my brokerage stock holding screen, looking for something to sell options on.

Don't feel like selling any puts now. Can't see anything to sell calls on. All the outstanding call options look like they are going to bite the dust. The ones that perish Friday tomorrow, I just let them die in peace. The ones that languish till next Friday, I spent a few pennies per share to buy them back to close them out to get them off the book. Maybe things will turn next week, and I want to be able to sell covered calls on these shares again.

Not a good day.

If things turn further south next week, I may start to sell some OTM puts. Gotta help other investors out, when they are writhing in agony.

 

[Fermion]

I got called away on my Gilead at $65 that I had purchased at $60, and now it is $87...how do you handle that...do you just wait a long time and try to rebuy again on a drop?

I should have just held it and been happy with the 4% dividend.

 

[NW-Bound]

Of course, a stock often surges way past what I dream of. So, if I sell call at 65, and see that it is approaching it near expiration, I would roll the call to 70 for the week after. I may be able to do it and still pick up some extra call premium.

Or if the stock jumps past 65 in a single day, I research it further to see if this stock is good to add more. Perhaps there's some good news, and the jump is warranted. Then, I sell a put also at 65. If the stock ends up above 65, I "lost" the stock to the call, but the put that expires worthless eases the "pain". I then sell put at 65 again for the week after.

If the stock drops below 65, now I end up with more shares. That's why I need to be sure that this is a good stock. If I want to reduce my exposure, I will immediately sell a call at 65.

You can see that instead of trading stocks directly, I do it via OTM options, because the option premium gives me that extra edge. I only do options on stocks that I want to own long-term. The options are just to add some "dividends". And I was surprised to see that they added up to more than $1M since I started being actively doing this a bit more than 3 years ago. Very nice "dividends". You can live on it.

Back when it cost $7 per contract with Schwab, I could not do much of option trading. Friction loss was too high. When Merrill Edge cut it down to $0.35/contract, that let me be more active. Schwab is $0.65/contract now.

 

[Winemaker]

I lost my shirt, pants and 1 sock on Nektar Therapeutics. DW had a mutual fund that had it as their top holding for years in her 403b. When we rolled it into atIRA with another brokerage, they sold the entire position and sent us cash. I cyphered the % of the fund that went into NKTR, and bought a similar amount in her tIRA. It was over $100 at on time, it is now $2.69.

 

[Fermion]

I lost my shirt, pants and 1 sock on Nektar Therapeutics. DW had a mutual fund that had it as their top holding for years in her 403b. When we rolled it into atIRA with another brokerage, they sold the entire position and sent us cash. I cyphered the % of the fund that went into NKTR, and bought a similar amount in her tIRA. It was over $100 at on time, it is now $2.69.

It is a reason I am really quite angry at the generic drug manufacturers which have teams of lawyers pouring over patents looking for any little misstep that they can take advantage of. Yes, some of the big pharma do bad things, but the medium and little guys are depending on one or two of their drugs to survive, and having that huge amount of money ripped away because a judge decides they didn't dot an i or cross a t seems wrong. The generic companies don't have to invest a dime in these multi year studies, they just get to copy the formula and ride on the results of the patent holding compnay.

 

[copyright1997reloaded]

I've lost my fair share (including this year) on individual small cap Pharma.

This is one of those areas where diversification via fund/ETF is likely wise or even better when they get acquired by one of the bigger fish. Even w/larger bio I stick with the XBI ETF for the most part (and even there it has gotten crushed this year).

 

[dunkelblau]

Over the past few months I've been accumulating a wide variety of these small biotechs. I don't recall having ever seen such steep discounts between market cap and net cash balances over such a wide swath of these names. My 'thesis' (aka guess) is that enough of these will shoot high enough at some point so that they more than make up for the majority that wipe out as they run out of cash to burn. OTOH maybe Mr Market is right and I've been fooled by the magnitudes and likelihoods of share price jumps based on what we've witnessed over the past few years in this space?

It's ironic that this rare (IMO) biotech valuation situation occurs just as I'm giving up my regular paycheck after over three decades. I've been careful to avoid these kinds of YOLO bets up to this point, but I'm taking this punt now-- albeit with just a small corner of my net cash balance.

 

[dunkelblau]

Well 2023 hasn't been kind to most biotechs, and VNDA was no exception. Interesting how its net cash minus debt has actually increased a bit even though its market cap fell by almost half. But there are plenty of names out there now with MC less than half of net cash. The big drop in VNDA on Nov 9 caught my eye, so I bought some near the bottom the next day. Since then it has joined in the gradual post-Halloween share price recovery alongside many other biotechs.

What sets VNDA apart from other cash-rich biotechs IMO is its lack of cash bleed; it actually has (had?) income. Maybe the discount is driven by its unexciting pipeline? Anyway my premise for buying these shares is that I believe it's more likely to double than get cut in half (again), although I think neither prospect has high probability.

Before Nov 10, I last owned VNDA for a 9-month stretch between Aug 2008 and May 2009. It was a big winner for me many years ago, and I'm hoping history repeats or rhymes.

 

[olyveoil]

My loss -- MNMD -- rolled the dice on psychedelics. Down 92%. They will likely go out of business. I am keeping it our of spite.

Do have a nice win in bio. RXDX. cost basis of $20.50 per share. Bought by Merck for $200 per share.

1 win may more than outdo 3 losses.

 

[olyveoil]

"Brutal industry" is not a good basis for making individual equity purchases. Too risky.

Who said it was?

 

[SunGuy]

Yeah, there will always be good and bad trades, days and years.

Most I lost in a day was around $12k trading forex, but the years I traded forex gave more the highest % gains I have ever had.

2023 was a good year for my stock/401k accounts, total accounts with contributions and profits grew by about 300%.

Getting a good budget, low spend on wants versus needs, low debt, and a high savings/investment rate of 30%+ will serve you well.

 

[DrRoy]

Black swans like this is why I hold no individual stocks.

 

[Fermion]

Well 2023 hasn't been kind to most biotechs, and VNDA was no exception. Interesting how its net cash minus debt has actually increased a bit even though its market cap fell by almost half. But there are plenty of names out there now with MC less than half of net cash. The big drop in VNDA on Nov 9 caught my eye, so I bought some near the bottom the next day. Since then it has joined in the gradual post-Halloween share price recovery alongside many other biotechs.

What sets VNDA apart from other cash-rich biotechs IMO is its lack of cash bleed; it actually has (had?) income. Maybe the discount is driven by its unexciting pipeline? Anyway my premise for buying these shares is that I believe it's more likely to double than get cut in half (again), although I think neither prospect has high probability.

Before Nov 10, I last owned VNDA for a 9-month stretch between Aug 2008 and May 2009. It was a big winner for me many years ago, and I'm hoping history repeats or rhymes.

I still have my Vanda shares too but not buying more. They DO have three decisions this year, any positive one of which should cause a big pop in share price.

They always seem to have Lucy pull that ball at the last second though.