Tuesday, April 20, 2010

Array Biopharma (ARRY) - Good Things to Come?

ARRY is trading 3.98 up 31.9% or $0.96 with IV30™ exploding. The LIVEVOL™ Pro Summary is below.

After all the super serious skew and earnings vol blogs I had to go old school "coin flip high flier." Forgive the digression...

The stock is not just bio or pharma, it's Bio-Pharma! Look at the company name.

Anyway, some good news:

Array BioPharma shares rise on Novartis deal
url: http://www.reuters.com/article/idCNSGE63J0LW20100420?rpc=44
April 20 (Reuters) - Array BioPharma Inc shares rose as much as 38 percent Tuesday, a day after it signed a licensing deal for its cancer drug candidates with Swiss drugmaker Novartis AG (NOVN.VX), its second high-profile partnership in five months.

The deal, which includes early stage candidate ARRY-162, entitles Array to $45 million in upfront payments and $422 million in milestones. [ID:nSGE63I0M5]

Yang said the deal boosted Array's current cash position to about $140 million, which he estimated to be sufficient funding for the next two years.

Array, which focuses on cancer, inflammatory and metabolic diseases, had inked a partnership deal with Amgen Inc for the development and marketing of its type 2 diabetes drug in December. [ID:nSGE5BE0JO]

Rodman & Renshaw analyst Simos Simeonidis said he continued to view Array shares as undervalued, and reiterated his "market outperform" rating and $10 price target on the stock.

He said the stock remained one of his top picks, citing Array's pipeline of four fully owned clinical programs and numerous compounds partnered with big pharma and biotech companies.

Array's clinical programs include candidates for the treatment of multiple myeloma and breast cancer.

William Blair & Co analyst John Sonnier said he viewed the Novartis transaction as further validation of Array's discovery platform.

"Array's partnered programs represent over $2.0 billion in potential milestones, and significant royalty on sales," he said in a research note.

(Reporting by Shailesh Kuber in Bangalore; Editing by Aradhana Aravindan)

I have included the Options Tab (click to enlarge).

There's not exactly a lot going on, but I felt obliged to post it. Maybe sell some calls against stock. Nov 5 looks kinda juicy. Then again, is annualized 65 vol really a sale when the stock moved 30%+ in a day?

The calls that have traded today in May - in particular the May 2.5 - are mostly sales from what I see. The stock is trading size volume (click to enlarge).

12.1 million shares in three hours on total daily average volume of just 327k. A long stock position at $4 and selling the Nov 5 calls @ $0.50 means you're safe to $3.50 and can make 37.5% if the stock goes to $5 on Nov expo (not that anyone reading this blog needed me to do that calculation).

The downside could be limited as it would require some "bad results" to push the stock back down for a while. Anyway, it can only go as low as $0.

This is trade analysis, not a recommendation.

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