Monthly Archives: February 2014

The Medicines Company: MDCO

I AM NOT A FINANCIAL ADVISER! This is my attempt to better understand the cause/effect relationship of FDA Advisory Committee (AdComm) meetings on BioTech/Pharm stocks. This is for my own education, not to serve to advise or recommend any path for others. If looking for advice look elsewhere. If trying to understand the same stuff I’m trying to understand, please draw your own conclusions… mine are nuts, and would likely put you in the poor house.

Yahoo Finance Quote
FDAAC Meeting on Feb 12, 2014
Twitter Conversation
Meeting Materials

RECOMMENDED REJECTION

Webcast to Morning Break
Webcast from Morning Break to Lunch Break
Webcast from Lunch Break to Afternoon Break
Webcast from Afternoon Break to End of Meeting

The recommendation led to a drop of 4.15 (12.5%) from the close at 33.1 on 2/12 to open at 28.95 on 2/13, and of 3.82 (11.5%) to the close at 29.28 om 2/13.

Date Open High Low Close Change from Prior
2/10/2014
Materials 2/9
31.51 32.86 30.50 32.42 -1.80 (-5.26%)
2/11/2014 32.41 34.21 31.82 33.10 0.68 (2.097%)
2/12/2014 Trading Halted for AdCom
2/13/2014 28.95 29.569 28 29.28 -3.82 (-11.5%)
2/14/2014 29.1 30.045 29 29.52 0.24 (0.819%)
2/18/2014 29.655 30.09 29.55 30 0.48 (1.626%)
2/19/2014 29.76 30.872 29 29.84 -0.16 (-0.533%)
2/20/2014 29.67 30.82 29.41 30.64 0.80 (2.681%)
5-day 28.95 30.872 28 30.64 -2.46 (-7.432%)
  • There was a 5.26% drop from the Close of the Materials Release date to the Close after we had access to the info.
  • Best results (in the event of an approval) would have been to have bought on the 10th, two trading days before the AdComm
  • The first trading day post-vote High was 2.1% higher than the Open.
  • The first trading day post-vote Low was 3.281% lower than the Open.
  • The first trading day post-vote Close was 1.14% higher than the Open.
  • The fifth trading day post-vote Close was 5.838% higher than the first trading day Open.
  • The five-day High was the fourth trading day High.
  • The five-day High was 6.639% higher than the five-day Open.
  • The five-day Low was the first trading day Low. In other words: bad news is very fast to be reflected in the price.
  • The five-day Low was 3.282% lower than the five-day Open.

This could suggest covering shorts at 2% below first-day Open and entering long to exit at 5% of the cover price (or could suggest NOTHING, you greedy pig!). With my lot sizes, 2% isn’t worth it, and getting that complicated for an extra 2% would be silly.