We are exiting $BCRX and $AVAV; please see separate posts for the reasons.
We are short on $ACOR with average price of $30.28. Our thesis has not changed in that Ampyra is not a very good drug, although Wall Street has termed it a blockbuster drug. .
In the short term, the bulls may be right. For the first time MS patients with difficulty in walking have hope. MS patients, in general tend to be very knowledgeable about new drugs and as such they are likely to demand that neurologists prescribe Ampyra. Anecdotal evidence supports that neurologists will initially cede to such requests.
We do not believe that prescription momentum will continue. Our analysis shows that after a while when patients have real experience with the drug, usage will start declining. It reminds us of Rogaine, the hair growing drug. It is clear that the drug has shown only a marginal benefit in a relatively small sample for such a complex disease. It is not clear that drug would have demonstrated any benefit over a larger sample using more comprehensive walking measurements. It appears that even the patients who benefit from the drug will not show any material improvement to their overall disability over a long period
The wholesale acquisition cost-WAC-for AMPYRA–dalfampridine– Extended Release Tablets will be $1,056 per 30-day supply (60-count pill bottle), an annual cost of $12,850. It is an expensive drug for at best marginal benefit. Outside USA, it is likely that cost benefit analysis will severely hamper adoption, and as such analyst estimates appear too high.
For the above reasons, we will continue to add to short position on this stock especially on spikes up. However, conservative accounts may not want to follow this recommendation as the company is highly promotional and there is always a possibility of it being acquired.
We remain long on $BRCD with average price of $7.19 and will add to the position on dips. We continue to believe that the company forms a good acquisition target.
Our thesis that in the long run $MHS and $ESRX risk disintermediation and more transparency in pricing has not changed. Our average price on $MHS is $65.50 and on $ESRX is $90.55.
We will stay short on $MDT for the time being. There are several reasons for our short position that have not been alleviated even if US health care reform is dead. In the long run Price differential on devices between US and abroad does not appear to be sustainable. Eventually US prices will drop. Our average price is $42.29. Those following ZYX Change Method should have similar cost basis.
We will stay short on $MFE as the bulk of revenues are coming from what has now been commoditized. Our average short price is $43.92.
$ABX is a very short term position and we will maintain a tight stop.