Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Seasonality stock rotation is nothing new to investors, and we at PSW have mainly stayed on the sideline in many biotech stocks for the past few months, knowing that late spring and early summer is not a time to start buying. Come July and August, though, it is time to consider accumulating scientifically sound companies for potential rewards later.
Figure 1. IBB 5 year weekly chart.
A few weeks ago, INCY and YMI were in a write-up and we jumped on the pullback in YMI’s stock price in member chat. While it is early for YMI, I still like their chances and one can buy in on the stock and selling the Jan12 $2.5 calls and puts for $1.40. INCY has a similar product that is further along, and the stock has had an impressive run up. Many think they could be a takeover by LLY, and it is not out of the realm of possibility. LLY has a horrible pipeline, and they need revenue…badly. Time will tell if a deal is done.
One of LLY’s biggest revenue generators is in the treatment of diabetes. The next pick is more of a speculative bet on a new mechanism of action for this very large medical need, and one that LLY could also take advantage of in the future.
Diabetes is a group of metabolic diseases in which a person has high blood sugar, either because the body does not produce enough insulin, or because cells do not respond to the insulin that is produced. This high blood sugar produces the classical symptoms of polyuria (frequent urination), polydipsia (increased thirst) and polyphagia (increased hunger).
There are three main types of diabetes:
- Type 1 diabetes: results from the body’s failure to produce insulin, and presently requires the person to inject insulin. (Also referred to as insulin-dependent diabetes mellitus, IDDM for short, and juvenile diabetes.)
- Type 2 diabetes: results from insulin resistance, a condition in which cells fail to use insulin properly, sometimes combined with an absolute insulin deficiency. (Formerly referred to as non-insulin-dependent diabetes mellitus, NIDDM for short, and adult-onset diabetes.)
- Gestational diabetes: is when pregnant women, who have never had diabetes before, have a high blood glucose level during pregnancy. It may precede development of type 2 DM.
Treatment…
