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Friday Roundup: Biotech Blues, Ground War, Small Business, Pfizer


Please wake me when it's October!


Biotech Blues

It looks like my firm dropped the middle third of our short position in IBB a couple of days early. Similar to the end of June, we got one extraordinarily strong day and then nothing by way of follow through. The silver lining was 104 of the 164 stocks in the NBI had lower volume on Thursday than on Wednesday up day.

I'm not crying in my beer, though, as the short position was in reaction to the event risk represented by the Israel/Hezbollah war and it served its purpose through that first weekend. Besides, we still have 1/3 of the position left.

Ground War

Speaking of the war, it looks like Israel will have to go in via ground troops to dig out the Hezbollah terrorists in their caves. No wonder they wanted the Lebanese government to send its own troops in. Take some care with your positions over the weekend because a ground war is more likely to hold event risk than what we've been seeing thus far. I have a couple of more thoughts on this conflict.

  • Where the hell were the UN troops during this huge build-up of rockets Hezbollah has put together? Journalists from around the world reported about the trafficking of weapons to Hezbollah from Iran via Syria, so surely the UN command and its French commander weren't completely in the dark.

  • If anyone in the White House was paying attention, US Navy ships with relief supplies would be steaming towards Lebanon. Hezbollah is in a win-win situation as they get to stand up against hated neighbors and use their considerable oil wealth (Iran's considerable oil wealth, to be more accurate) to play the good guys on the ground in the relief and rebuilding process.

  • If I'm Russia or China, I commit a large number of troops to a UN mission here. Flood southern Lebanon and gut Hezbollah's military capability while making very public statements that you're not gutting their political side. Tell your commanders to be very aggressive in this goal, tell them their help is not needed, and win enormous brownie points from the world community.

Small Business = Economic Powerhouse

What say we give back the dividend tax cut? $80 bln/year extra goes into the government's coffers to help with the deficit and debt and we restore the velocity of money lost when this idiot idea went into effect. Only people who have never started a business would suggest incentives to invest in dividend-paying companies would provide a significant boost to the economy. Spend $80 bln on small businesses instead and we'd have jobs coming out our ears and a much smaller gap in this country between the haves and have-nots.

Mark my words, the global economy will live and die on the health of its small businesses. I've seen it first hand in areas like coastal Washington State where lawmakers and judges gutted the economy by taking hundreds of thousands of acres of productive farmland out of production. The only thing keeping the area afloat economically are the hundreds of small businesses that sprung up.

Microsoft Should Spiff Dell and Intel Instead

Instead of bribing shareholders to stay around for a while longer, perhaps Microsoft (MSFT) should send that money as an apology to companies like Intel (INTC) and Dell (DELL) for being so late on Vista . Don't get me wrong, Vista is not a panacea and neither Intel nor Dell can blame all of their woes on its late arrival. I'll tell you that the longer Microsoft screws around, the more reliable Apple (APPL) looks to these companies as a primary technology partner.

Pfizer's Torcetrapib Sees More Delays

I note Pfizer (PFE) continues to push back their target dates for torcetrapib, their anti-CTEP molecule that will be combined with Lipitor to form PFE's next-generation competitor to Vytorin. I think the clear message is the FDA agrees with the EU regulatory authorities that hard efficacy data (morbidity and mortality) will be required for approval. Normally, drugs like this can be approved on a surrogate endpoint of a decrease in LDL.

You know I don't believe torcetrapib will show clinically significant results on hard endpoints. I was in a discussion the other day with a real believer on CTEP inhibitors (tocetrapib). They were going on and on about the HDL gains – which I don't dispute. I asked them to explain to me the important differences between torcetrapib and the failed anti-CTEP drug from Japan Tobacco. They couldn't, of course. Why is Japan Tobacco's product salient to this discussion? They demonstrated large hikes in HDL with a drug very similar to torcetrapib, but saw no efficacy when measuring hard endpoints.


I'm the last one to be trash talking since I've been on the losing team twice (assuming you accept that Todd was safe at the plate last year, which he wasn't). I have to say I'm looking forward to the game and another shot at redemption. I'm also looking forward to the mountain biking as the trails on the mountain look great and have the advantage, for a guy who spends too much time at this keyboard, of being nearly all downhill!

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