Some hot stocks and stories to watch mid-week...
Human Genome Sciences (HGSI): Long on potential but short on results has been the name of the game for the lupus-treating drug Benlysta since its commercial launch last year, but an offer last month by Human Genome's partner GlaxoSmithKline (GSK) to purchase the company has not only reinvigorated investor interest in the company's pipeline, but it also sparked a quick rally in the HGSI share price that returned investors about a double overnight.
The swift rally placed HGSI right in line with the valuation of Glaxo's offer, which stood at $2.6 billion and a $13 share price.
As was the case with other high profile takeover offers this year, specifically in regards to Illumina Inc. (ILMN) rejecting two offers from Roche Holding AG (RHHBY) and Amylin Pharmaceuticals (ALMN) saying thanks but no thanks to Bristol-Myers Squibb Company (BMY), Human Genome quickly rejected the Glaxo offer and called into question the valuation of the deal.
During the early hours on Wednesday, however, with the UK machine already rolling hours before daylight struck the former colonies, Glaxo announced it would go hostile with its bid and take the offer directly to the shareholders.
Although the news will not move the share price much - if any - it brings some added excitement to the story, but it's also worth watching whether or not the shareholders will accept. The HGSI share price is roughly half its 52-week high, and with Benlysta starting to pick up steam, it's unlikely that long time shareholders would agree to the $13/ per share offer knowing that the valuation of the company was much higher not too long ago based on the same amount of potential.
This consummation of companies will almost certainly take place, but it's this guy's opinion that the hostile bid is not the last step. Expect a higher bid at some point for the deal to be done.
In the meantime, Wednesday's news is just noise.
TrovaGene, Inc. (TROV): TrovaGene Inc. has been a stock to watch lately as volume and news catalysts picked up enough over the past couple of weeks to support a near double in share price. The company has announced some key additions to its management team in an effort to boost its leverage in bringing a unique diagnostics technology to market.
TrovaGene is developing different diagnostic tests that, if successful in development, would be able to detect numerous cancer types and various infectious diseases by identifying specific transrenal DNA and RNA originating from normal and diseased cell death in urine.
The market for such diagnostics is over $20 billion and with a strong position of patents and technology, TROV has the potential to chip away at a significant portion of that market share. Although early along in development, early studies have demonstrated that TrovaGene's technology could be superior and more accurate to the current market standards, and the company also boasts a strong patent position to protect is proprietary assets moving forward.
In addition to adding Dr. Carlo Croce, already a key player in the field of trans-renal molecular diagnostics, to the scientific team, the latest share price rally was supported by news that the company had made progress regarding the development of a diagnostic test to determine the presence of high risk Human Papilloma Virus (HPV) subtypes from urine specimens.
Until April TrovaGene had been trading relatively under the radar, in terms of volume, but the recent news bytes have put this one back on the map.
This week's action shows that investors are now paying attention.
Oncothyreon (ONTY): It's now been nearly a couple of months since the announcement of a perceived delay in Stimuvax trial results and a stock offering sent shares of Oncothyreon heading south, but with the share price now hovering at just above the four dollar mark, it might be time to take a look at the stock as a speculative buy again.
The current prices are nearly one third of the fifty two week high - which were achieved last year on a fair amount of hype - and given the amount of lull time between now and the new advertised date of results release, which now stands as early next year, investors may not be paying too much attention to ONTY.
Although the results have been pushed back, an interim advisory committee suggested that Stimuvax demonstrated enough success to continue the trial. Had the team not been convinced that Stimuvax had a chance, then they would have halted the trial.
Previous expectations had the results coming at some point later this year, while some investors expected the ongoing trial would have even been halted due to overwhelmingly positive results thus far, but since those results never led to an early halt, many took that to mean that the data is not compelling enough to justify approval just yet.
That, in turn, brought concerns of the final outcome.
Oncothyreon's CEO Robert Kirkman attempted to soothe the shattered souls of investors who may have expected too much too soon by reiterating the fact that investors hoping for an early trial completion held "unrealistic expectations." He also added that the continuation of the trial "should be viewed as a positive."
Stimuvax is being tested in the treatment of non-small cell lung cancer and is partnered with Europe's Merck KGaA.
The lower this one falls, the better speculative buy it becomes - especially because many similar stocks have a history of spiking during the lead-in to an expected catalyst, such as the announcement of results. Those events give investors an opportune time to flip a few shares and come out on house money by the time the big news hits.
Sirius XM Radio (SIRI): Earlier this year rumors were hot that Liberty Media Corporation (LCAPA, LCAPB, LSTZA, LSTZB) was gearing up to make a full takeover bid for Sirius XM (SIRI) and as a result the share price start to inch higher, but when nothing firm materialized and the market as a whole started to pull back, shares start to dip.
On Tuesday, however, an announcement hit the wires stating stating that Liberty has a contract in hand to up its stake in SIRI to 45.2%, an effective purchase of over three hundred million shares for a price of $2.15/per. The announcement comes a week after the U.S. Federal Communications Commission dismissed Liberty Media's application to take control of Sirius' operating licenses.
Liberty also noted its intent to potentially take up to a 49% stake in the company, part of a larger plan, according to Gabelli & Co analyst Brett Harriss, who stated that, "It's part of their plan to eventually get a stake large enough to execute a Reverse Morris trust. Such a move could allow Liberty Media to spin out its Sirius stake and combine it with the rest of the company as a way to distribute Sirius shares to Liberty Media shareholders in a tax-efficient manner."
As far as investors are concerned, the fact that Liberty is intently looking to take a larger stake, if not somehow effect a complete takeover, is a testament to the fact that SIRI is being perceived as a valuable asset moving forward - and where there is a valuable asset, then there's the potential for some nice share price increases.
Sirius has weathered the storm since nickel share prices and near-bankruptcy very well over the past couple of years, and a recovering economy that boosted car sales has combined with solid listening content to keep consumers subscribing to the company's services.
Barring any broad market downturn, SIRI could again be trading near the bottom of its range and building support for another run higher.
Premier Alliance Group (PIMO): The trading range for shares of Premier Alliance Group (PIMO) has become more active as volume has started to flow in over the past couple of months, and a quick look at the increasing volume since early 2012 shows that investors are starting to take notice of this company, which has undertaken numerous acquisitions and management additions in order to boost its standing in a booming industry.
As interest and volume have picked up since early in the year, there are numerous reasons to believe that such actions are justified. Premier has demonstrated the ability to land high-profile clients, which include big players such as Exxon (XOM), Coca-Cola (KO), and Bank of America (BAC), and land big contracts, as demonstrated by the deal with the Department of Defense (DOD) to conduct energy audits of two large bases in California.
Premier has also boosted its revenue streams in other areas of its advisory and consulting services and has made huge strides within its GreenHouse division, which has thrust itself into the market of advising municipalities, businesses, corporations - and the DOD - on how to cut costs through means of energy efficiency.
The resume is there for this growing OTC company. The recent spurt of good news from the past few months has circulated to investors, who look to have digested the news as the basis for building a solid foundation in a potential growth story.
Disclosure: Long PIMO. VFC's Stock House has been compensated by a third party, The ProActive Network, to provide research and coverage of Premier Alliance Group (PIMO.OB) for a period of thirty days beginning on 16 April. The goal of VFC's Stock House is to bring new ideas, companies and discussions to investors and readers. With respect to the increased amount of time necessary to maintain quality, VFC's Stock House is at times compensated from third parties to research and cover certain companies that fit the profile of what interests the readers of VFC's Stock House. While taking compensation poses as an inherent perception of bias in coverage, the ultimate goal is to bring ideas and information to the eyes of readers, who can then decide what is and what is not relevant. Happy Trading.
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