A few weeks ago a friend was asking me about my opinion
about Portola Pharma (PTLA). My reply was that I did not follow PTLA closely
but it technical looked good and its product waiting for approval was quite
interesting. After that I did some further digging about PTLA and actually
became very interested in it, so much so that I have bought PTLA.
Next week will one of the most critical moments for PTLA as
FDA has a decision date by Aug 17 to decide whether it will approve the PTLA
drug, Andexxa. Betting for the FDA decision is of course with high risk but I
think the potential reward is also enormous. Andexxa is a first in class drug,
an antidote to specific anticoagulants (blood thinners) known as factor Xa
inhibitors. There are many anticoagulant drugs available to prevent blood
clots. Well-known factor Xa inhibitors
include Xarelto and Eliquis and millions of patients are on such blood
thinners. The problem is that these drugs have a notorious life-threatening
side effect, bleeding. Unfortunately currently there is no effective drug yet
to reverse the blood thinners. Andexxa is the first one that has been shown in
clinical trials to be safe and effective in immediately stopping bleeding
caused by the anticoagulants. You can imagine if approved, how potentially
profitable this drug may be for PTLA.
When I bought PTLA call options, I figured that it would move up towards the FDA decision date. This is exactly what has happened as my calls have gained nicely so far. But let me be clear, while I do think the chance of approval is high, there is no guarantee of course. The FDA decision may swing PTLA by 25% either way easily. As such I have also covered my downside risk by partially setting up a bearish call spread in my position. This way, I won’t cap my upside if approved but will not suffer too much if it fails and plunges. Actually if it drops too much, I may even be profitable as a whole with this combo strategy. That’s how I’d like to set up my high risk high return positions.
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