Fifty-five patients were registered in the Phase one study at seven different dosage levels. The results showed that AP26113 is something that will have to be tolerated by its consumers. The most common side effects included fatigue (40% experienced) and nausea (36% experienced). Some major events that occurred in multiple patients were: phenomena, cough, dyspnea (shortness of breath), hypoxia (oxygen deprived to body), and pleural effusion (fluid around the lungs). There were two other patients, one that developed a liver enzyme, and another who had to be taken out of the study due to hypoxia and dyspnea. In another case, one patient experienced hypoxia and dyspnea simultaneously and ended up dying.

Due to the, not-so-great news that was presented at the meeting, many were left questioning the company. With many other companies developing similar drugs to cure the same thing, some have been jumping on their bandwagons and off Ariad Pharmaceuticals’, leaving the company with not to stellar stock performances lately. Even though the drug has high hopes and potential of curing the disease, the patients would have to go through another Phase of testing, and possibly even another after that. Additionally many large-scale studies have shown that some types of patients are better off with less treatment and giving doctors confidence to hold off on certain drugs. This idea of “less is more” was the focal point of ASCO’s annual meeting and released many abstracts on the new clinical treatments, such as the ones provided by Ariad. One of the large, long-term studies showed that men with testicular cancer were better off not taking any of the drugs and instead going with surgery.

ASCO’s incoming president said by opting out of certain therapies and drugs, patients tend to live longer and happier lives. It was statements like these at the meeting that killed the profits for Ariad, and made their idea of having a Phase two much less popular.

One trade thinks there is more downside in ARIA and when the stock was trading $16.92, they bought 818 ARIA Aug 15 Puts for $.80. Lets break this down. A trader has the right, but not obligation to sell stock at $15 between now and August and he is paying $80 for that right to sell 100 shares at $15. If the stock ends up above $15 then the most he can lose is the amount he paid for the options. Further breakdown of this trade:

Risk: $80 per 1 lot

Potential Reward: $1420 per 1 lot

Cash Outlay: $65,440

Greeks of this Trade:

Delta: Short

Gamma: Long

Theta: Short

Vega: Long

In short, it depends on what you think the Fed will do. Below the aforementioned chart is the adjusted US monetary base from the Federal Reserve Bank of St. Louis. One can observe the jump in correlation in mid 2008, as it moved to near perfect during the crisis. For when everything is crashing, assets will then probably correlate, but after the bottom and bounce the correlation continued. Maybe one can deduce from history that when the balance sheet of the Fed starts to shrink, assets will return their true, economically driven, prices.

The ‘tapering’ talk is probably what the market needs given the unsustainable nature of QE. This jawboning is perhaps preparing market participants for the end of QE. Introducing this talk earlier than later is arguably better and healthier for the market, because investors start mulling over the repercussions. 

The repercussions perhaps include a less than impressive economy. Given the economic and financial importance of oil, maybe it is appropriate for it to move first. Looking at other commodities however, it oil hasn’t been the first. Adding lumber and copper into the mix, the chart against the S&P 500 may give even the most bullish of investors pause, at least. Never the less, it is interesting.

salerno.mark.a@gmail.com

One of the main reasons behind ARCP’s surge in the past few months is its acquisition/merger with other real-estate investment trusts (REIT’s). In late February ARCP announced a merger with American Realty Capital Trust III, with the combination of the two marrying high quality net lease companies with complimentary strategies.The result of the merger is a company with a current market cap of nearly $2.5 billion. The increased size of ARCP has made it the 4^th largest publicly traded REIT in the industry and one of the largest in the United States. On May 28^th, the company announced its plan to purchase CapLease, another REIT with investment strategies that compliment ARCP. The total price of the buyout is estimated at $2.2 billion. Unfortunately, the announcement had a negative effect on ARCP’s share prices, which have fallen a full two points from $17.50 at the open on Tuesday down to a current level of $15.37. While prices have dropped over the past few days, ARCP is still performing admirably on the year and with its aggressive strategy to grow its asset base through the acquisitions of other REIT’s, the future looks bright.

I bought the ARCP July 17.5 Calls for $.15

Risk: $15 per 1 lot

Reward: Unlimited

Breakeven: $17.65

Greeks of this Trade: 

Delta: Long

Gamma: Long

Theta: Short

Vega: Long