Aralez – September 14 FDA approval
by briantassie | September 6, 2016 5:08 pm
So, I’ve been following Aralez (ARLZ)[1] for years. It’s my favorite drug trade. This company has a history of producing valuable drugs. Once they develop a drug, their strategy is to sell the licensing to other companies that produce and market the drugs, and pay ARLZ huge royalties with very attractive minimums, essentially make ARLZ a ”hidden” royalties company investment. This year they shook things up in two ways. One, they moved the company (formerly known as Pozen) outside the US for tax advantages, hence the new name. Two, they decided to market and sell their latest drug, a ”safe aspirin” themselves. Recently they enjoyed higher expenses than normal, due to their hirings and new business strategy.
There have been some good buying opportunities in the past, and right now might be the best one yet. This ”safe aspirin” is waiting for FDA[2] approval on Sept 14.
Here’s the deal on the ”safe aspirin”. Aspirin, as it exists now, has side effects and one of them is bleeding in the intestinal tract. It’s a major problem for the elderly who might need daily aspirin for their heart conditions. The good news is the ”safe aspirin” made up of two components that were FDA seperately and are on the market right now. The approval ARLZ wants is for combining these two elements together. I believe this drug is the most attractive drug awaiting FDA approval. I believe it will be bigger than anyone thinks. Aspirin is huge. Everyone takes aspirin. Is there a drug more commonly consumed? And if there’s a safe version of it, I’d take the safe version, whether I had side effects or not from the original. I’d also give the safe aspirin to my kids. Why wouldn’t I?
Here’s the bad news. ARLZ has had a real problem getting FDA approval so far. Since I’ve been trading the stock, the FDA has denied approval twice, and delayed once. That’s three times investors ran up the price of the stock, just to get slapped down by the FDA. The reason the FDA hasn’t given approval before was one of the manufacturer’s of a component in the drug did’nt meet FDA guidelines for cleanliness. As ARLZ sits now, they have abandoned that supplier.
So I’m in play on ARLZ, and I’ve decided to write my first discussion on here because I want to hear from other people what they think. Also I just got a teaser ad from the Money Map Press[3] about ARLZ. It makes me so mad that these people want you to pay them $1000 all the time just for one stock pick.
Trading strategy: I bought Aralez back when it was 3.50 (it bottomed at 3.00ish), which I’m really happy about. But I also have options[4] strategies that can be used right now for not alot of money.
Right now you can buy the Sept 16 $7 calls for .25 and the $8 calls for .15. My first recommendation, given the fact the FDA has been very finicky about it’s approval, is to buy a bunch of Sept 16 options now and sell half, or all, on Sept 13 the day before the announcement and profit from the run up. The run up is real and went to about $9.50 the first time.
I really want to hold some of my position in ARLZ through the announcement, hoping to get a big pop.
My second idea is sell the Sept 16 $6/$5 put credit spreads.
And my third idea is to buy call options further out like December.
I own shares of ARLZ, and Sept 16 $7 calls, and Dec 16 $4 calls.
Thanks for reading.
- Aralez (ARLZ): https://www.stockgumshoe.com/tag/arlz/
- FDA: https://www.stockgumshoe.com/tag/fda/
- Money Map Press: https://www.stockgumshoe.com/tag/money-map-press/
- options: https://www.stockgumshoe.com/tag/options/
Source URL: https://www.stockgumshoe.com/2016/09/microblog-aralez-september-14-fda-approval/
While reading your article, I was really intrigued with your trading strategy. A very well thought out plan. My only concern for you, after looking through it more closely, is the very low open interest available on both calls and puts in all months. With the low open interest, as such, you’ll have very limited buyers available for you to sell to, whether you are right, or wrong.
Here’s how I feel about low volume trades. I’m not a newsletter with 10,000 subscribers, so low volume doesn’t concern me. On the other hand if there’s almost no volume, i know getting in and out might rip me on price.
As a 25 year ICU RN, I can say it is a daily occurrence to administer the Omeprazole and buffered aspirin combo. So I see the real world potential of this med. combo in one pill. Having said that, I am not a stock market expert. I am going to use a new position in ARLZ for call options later in September. I think this med will eventually be marketed on a large scale. It’s the timing in life…where my reservations lie.
cool, I like the program –
I am long $ARLZ and up about 18% at this point so nothing huge, but I’m thankful!
So, what is your take on approval this time? You said “My first recommendation, given the fact the FDA has been very finicky about it’s approval,…”
But, given the fact that the original rejection was for manufacturing issues and not drug issues, and the fact that both of the drugs are already approved FDA drugs, now that the manufacturing issues have been sufficiently addressed, it seems to me that it would be very difficult for the FDA to say no at this point.
It would be a dirty trick if they did and would have cost the company and investors a lot of time and money. So my thinking is that they will be approved.
However, you still seem a bit concerned.
How well the drug will sell is another issue and there are differing opinions on that. I think I will make $10 -$11 my exit price but may sell out sooner too. Was tempted on the options, but I’ve never done options so I’ll just stick to the stock.
i’m very positive for approval. the big reason for my optimism is ARLZ has pumped alot of money recently into the ad campaign they are planning to launch. I think they know something we don’t. Also I’m not worried about it selling. The people on Travis’ thread are crazy and not acknowledging human behavior. If a million people can take one pill a day instead of two, that’s tremendous!
I sold some of my position to protect my capital and have a couple hundred shares I’m going to let ride through the PDUFA hoping for a nice little pop. This was an excellent play for me. So happy I bought a few shares for a short turnaround.
Glad to hear you are positive. I’m kind of wishing I had kept more, but once I build up my funds a little further, I can take bigger gambles. GLTA!
awesome. Here’s a calendar I use for FDA…
http://www.rttnews.com/CorpInfo/FDACalendar.aspx?PageNum=3
No news on ARLZ PDUFA yet.
Maybe news today after market close, with press conference tomorrow morning?
Hopeful on this one.
ARLZ np –
Aralez Pharmaceuticals Inc. (ARLZ) Resumed Trading
Dow Jones
11:36 am ET
*Aralez Phama Shares to Resume Trade at 11:39:09 a.m. EDT
Benzinga
11:34 am ET
Aralez Pharmaceuticals Inc. (ARLZ) Paused due to volatility
Dow Jones
Well, if it’s good news, the FDA will tell everyone, if it’s bad then it’s up to $ARLZ – no position in $ARLZ
drop on no news yet? Has me concerned.
Big selloff just happened in front of news. Traders taking profits is all
Does FDA ever miss their scheduled announcement day?
FDA postpones, denies for stupid reasons, approves weeks early, basically they do whatever they want. Anything can happen waiting on the FDA
If they are going to give a CRL to $ARLZ then they leave it up to $ARLZ to announce, if they approve the announcement will be today…if this goes long into AH with no announcement then I’d say it’s likely a CRL.
The same thing happened with OPKO when we got our CRL, the day it was to be approved we didn’t hear anything till early morning the next day and the same thing happened as recent as with Elite Pharmaceuticals, nothing all day then the next day they issued a press release that they got a CRL.
ARLZ Yosprala approved!!! Trading halted!!! Holding my breath waiting to see where the stock opens at
Could have been worse. Nice surprise this morning with the approval response but the run-up leading to the news is apparently all there is going to be for the time being. Another buy the lead-up (rumor) sell the news. I’ve seen some convincing math arguments regarding how much $$$ this pill can produce, apparently the street is not convinced that approval automatically means big sales. Anyone know how soon pills will actually go on sale?
I’m hoping the analysts upgrade ARLZ today, and it starts climbing tomorrow. But that said, we would have gotten a huge spike today if the market makers didn’t halt trading twice.
Right! FDA really screwed us here. But I’m just thankful it was approved and that I’m not looking at big losses. Still, they caused a lot of unnecessary stress and financial issues for many people.