Just returned from a week away with no internet .......

Just returned from a week away with no internet .... glorious!

Anyway, back to reality, and the appalling state of Cephalon's offer.

First, kudos to ShapeofFire for remaining constant and firm in his belief that there would not be a revised offer before the bid closed. It looks like he was on the money.

But where does that leave me (and every other small retail investor)?

Cephalon WILL get the 50% .... once all the traders cash out (no one is building a blcoking stake, based on substantial shareholder notices, so the strong likelyhood is that the trading volumes since the bid are traders).

I hold firm in my view that Cephalon want 100% in the MEDIUM term (6 - 18 months, see previous posts). In that respect the MOST IMPORTANT piece of information from Arana is that the Sri Lankan trial result (for ART621 in arthritis) should be released by the end of September this year (see the commentary on the status of the trials in the most recent announcement). That is only 4 months away!!

Based on the information released to date, I am expecting nothing less than a safe drug with signs of efficacy (there is always the risk that this expectation is wrong and we are all barking up the wrong tree). If the trial can give tentative signs of Proof of Concept then the whole ball game changes and Cephalon will pay A LOT more. After that we can expect results from the larger trial in mid-2010.

In the interim I don't expect any fundamental changes to Arana (although it is impossible to say what Cephalon's 'control' will bring). In theory, therefore, I think the share price will be dominated by general market sentiment towards risk together with trading volumes (which will probably be skinny so volatility is likely to be the order of the day).

Personally, I in a position where I control a number a small holdings. I will sell some holdings to lock in the profits (and pay down a few personal loans) and hold some looking for the upside. At this stage I will hold more than I sell so I am maintaining my hold sentiment.

Also, a word on Cephalon's strategy moving forward. As I mentioned before, Cephalon will definitely get 50% - ie they are not going anywhere. If you hold the view, as I do, that Cephalon want 100% in the medium term, then I think the best way to view Cepahlon's recent actions is that they are locking in around 70% of the company at 1.35. They will look to tie up the balance at a later date. They have obviously done their numbers and decided that, in order to get 100% ownership, the cheapest way is to lock in the low ball price now (for the majority) and pay out the balance at a later date. When is that later date? IMO, within the next twelve months, possibly within the next six.