Wednesday brought a whole lot of pain to the broad markets, and although there were a few hot runners out there like Ampio Pharmaceuticals (AMPE) and FuelCell Energy (FCEL), the color of blood dominated the big boards for the duration of the day thanks to continued worrisome news from Europe where Spain has replaced Greece as the target of negative financial press.
Unsurprisingly, Facebook (FB) continued its post-IPO decline and dropped another two percent on the day as shares tumble down to levels where many investors (aside from the insiders who made bank on the initial offering) would consider to be fair value.
Aside from the aforementioned stocks to watch and the falling knives that investors may be smart to stay away from, like Facebook and Research In Motion (RIMM), for example, there are some other potential opportunities in various sectors opening up with the recent decline that investors might want to jump on, or at least keep on the radar screen.
Shares of Siga Technologies (SIGA) have taken a hit over the past couple of weeks which has resulted in share prices not seen for months. SIGA shares have been known to move quick when they move, and with over $40 million in the bank as of the last quarterly report and a huge contract award from the Biomedical Advanced Research and Development Authority of the United States Department of Health and Human Services (BARDA) last year to boost the nation's biodefense stockpiles with the smallpox antiviral ST-246, SIGA is worth a short term speculative look alone, without even considering the long term potential of the company and its technology.
What continues to weigh down the share price are ongoing concerns relating to a lawsuit filed by rival PharmAthene (PIP). Litigation is still ongoing, but as it stands now Siga would be forced to share future ST-246 revenue with PharmAthene, which limits SIGA's potential upside - even with the award of the near half-billion dollar BARDA contract - and keeps many investors from looking at SIGA as more than just a short term trade.
That said, any positive developments on the lawsuit front could lead to a massive rebound in share price if investors believe that Siga will not be sharing future revenue to the scale as most recently determined by a judge, but as the stock sinks to lower levels amid the market turmoil, it also leaves open the possibility of a short term, speculative rebound, too, whether there is relevant news released or not.
One to keep an eye on.
Another company that should be lighting up investor radar screens is NovaBay Pharmaceuticals (NBY). NovaBay drew some attention in early May with a share price drop to the dollar mark after having traded in a range of roughly $1.30 for months. No news hit the wires to justify the drop and, in fact, the company announced encouraging news during that time indicating that patients were now being dosed in the Phase IIb BAYnovation trial testing its technology in the treatment of Adenoviral Conjuctivitis.
NovaBay's Aganocide technology, administered as NVC-422, holds huge potential as an answer to antibiotic resistance. That fact alone could have investors arguing that the technology itself, without considering the market potential of the Aganocide-based products in development to treat multiple indications, is worth far more than this company's current market cap.
What may have investors shying away from NovaBay is the failure of a previous trial, conducted with then-partner Alcon, for the treatment of 'pink eye' that, at the time, sent investors running for the doors. A further look at the data from the same trial, however, did show that efficacy was demonstrated against the Epidemic Keratoconjunctivitis (EKC) infection, possibly the most contagious form of the infection that often threatens a victim's vision, and based on that data NovaBay has continued development.
While investors may need to be convinced by new trial data in order to jump back on board, the best value may be had by jumping in while there is still some doubt. The current risk/reward of NovaBay may be too good to pass up for those looking for ground-floor potential.
Key data on other fronts has already rolled in with encouraging outlooks, and the company's first marketable product, NeutroPhase, should be on the market this year.
Another solid risk/reward play out there is Synergy Pharmaceuticals (SGYP), and it just so happens that the current downswing in the market dropped SGYP shares by four percent on Wednesday. A stock offering earlier in the year halted what had become an impressive run to over seven dollars, but flush with fresh cash in the bank and a potential blockbuster in the pipeline, Synergy may be ready to roll again.
A weekend article published by the NY Times offered investors another look at just how much of an unmet medical need there may be for Synergy's lead drug candidate, Plecanatide. Plecanatide is being developed to treat chronic idiopathic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C), with Phase IIb/III results due out later this year.
As outlined by the NY Times, other treatments for CIC on the market, specifically Miralax, are not only being misused, overused and abused, but safety data surrounding its use has never been fully investigated nor finalized, raising concerns among many physicians - who admit to over-prescribing the product - about its repeated use.
The chief concern raised in the article relates to the use of Miralax in children. With no FDA-approved standard treatment for CIC in children, doctors have been over prescribing Miralax for years - even though the product was never approved for use in children.
This issue is highly relevant to Synergy, given that Plecanatide is being run through trials to treat the indication and has yet to demonstrate any side effect concerns, not even diarrhea; a significant note because a competing product, Ironwood Pharmaceuticals' (IRWD) Linaclotide, has been known to cause serious cases of runny stools.
The idea of meeting a huge unmet medical need in children only widens the already-robust scope of this company's product potential.
One to keep an eye on as a 'buy the dips' type of play right now, because positive trial results could result in SGYP approaching the current market cap of Ironwood, which sits comfortably above the billion-dollar mark.
Taking a turn of sectors, Capstone Turbine (CPST) is another potential 'steal' to take a look at in the clean energy sector. Although an April appearance on CNBC by the CEO sparked a short-lived rally in share price, the bears in the market have kept this one from enjoying any sustained price increases.
Capstone's microturbines are making huge headway in the energy sector, both in the United States and internationally, and the potential implications of the technology in meeting future energy demands should not be ignored.
Like another clean energy provider, FuelCell Energy, Capstone's struggles have revolved around the company's ability to trip costs, improve margins and ultimately reach the holy grail of profitability. Improvements have been seen on all fronts and with CPST trading at the lower end of its range, in a down market with a fair amount of short interest, it's one that could rebound nicely whenever the market does.
The down market dropped Implant Sciences (IMSC) by five percent on Wednesday, but the stock is still trading significantly higher for the year. That trend higher may continue as the year progresses, making any dips worthy of a speculative buy.
Implant's Quantum Sniffer explosive and narcotic-detecting technology is making huge headway on the international market, with recent orders destined for the Middle East and Africa, but it's expectations of approval for use by the US Transportation Security Administration (TSA) later this year that could provide the catalyst to bring this company to the next level.
This company is already playing significant roles in providing national security for high-level events, as well as growing business in the private and corporate worlds, and the growing security needs of nations around the globe only position Implant to take well advantage of a lucrative market - a market that is not likely to cede traction.
Mannkind Corporation (MNKD) has been hammered by bad news and a bad market, but some recent insider buying and the potential of Afrezza to eventually be an FDA-approved, inhaled insulin alternative to the needle for diabetics keeps this one as an intriguing pick to eventually realize a wallop of a rebound.
When the FDA last denied Mannkind an Afrezza approval, it was not the efficacy that concerned the regulatory agency, but the fact that the trial was conducted with a different inhaler than the one the company intended to market. That bodes well for the success of the next trials.
Investor concerns of financing continue to plague the share price, but with Al Mann already a billion dollars-plus invested in his company, these concerns may be unwarranted.
McDonalds (MCD) has also taken a nice hit with he broad market down turn. Shares of the world's most recognized restaurant brand are now trading ninety bucks or below after trading for at or near the hundred dollar mark earlier this year.
With a long term view, the recent drop in the MCD share price, and any other pullback that may follow, could have opened up a nice opportunity to pick up a few shares. McDonalds continues to bank on international growth and earnings have been solid through the market turmoil, always an encouraging sign for investors guaging whether a company has the firepower to withstand any storms.
The potential percentage gains may not be there for a MCD rebound as they would for some of the more speculative stocks mentioned above, but MCD is a less-risky, secure bet for an eventual rebound.
As the potential deals and steals present themselves, VFC's Stock House will write about them.
Happy trading!
Disclosure: Long CPST, IMSC, MNKD, FCEL, SGYP, NBY, AMPE, SIGA.
Contact VFC's Stock House: vfc@vfcsstockhouse.com
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