At the conclusion of each week, VFC's Stock House examines the stocks and stories that made news through various sectors during previous trading week, but may also make headlines or influence trends during the upcoming week as well.
This week the focus is on the biotechnology and pharmaceutical sectors, where many stocks have already experienced significant runs over the past few weeks, while others have not - but might be primed to do so. A special emphasis is placed on the cancer immunotherapy sector, where Dendreon's revival has attracted new interest to the sector as a whole.
Here's just a few of the stories to watch, as if the Giants laying it down in Lambeau wasn't enough...
MNKD: There has been a whole lot of early noise being made in the biotech and pharmaceutical sectors during the opening weeks of 2012, but among all the racket being made by those early big runners, Mannkind Corporation (MNKD) has remained relatively silent.
That could all change in a hurry, however, as very heavy short interest and a fair amount of insider ownership have many looking at this one as a potential short squeeze candidate. We'll keep in mind, though, that it'll take relevant news to turn what has been slow and steady short covering into a big-money squeeze.
Mannkind's Afrezza, an inhaled insulin product for diabetics, still needs to complete the additional Phase III trials requested by the FDA after the product was denied for approval a year ago, so it would need to be news on the financing or partnership front that sparks any potential short squeeze. The trials will test Afrezza using the company's next generation inhaler, as requested by the FDA, since the previously-completed trials were undertaken using a different inhaler than what Mannkind intended to put to market.
Insiders remain confident of an eventual approval, if insider interest is any indication, and CEO Al Mann has already put nearly a billion dollars of his own fortune into the company.
Keep an eye on this one for its short squeeze potential. Any investment geared for the long term is one based on the potential of an Afrezza approval, which would likely take place in 2013, barring any trial setbacks.
IMUC: While Dendreon (DNDN) made history by being the first company to receive an FDA approval for an immunotherapeutic cancer treatment with Provenge, Immunocellular Therapeutics (IMUC.OB) looks to usher in the next generation of such treatments. Immunocellular may even do one better, as its technology holds some logistical advantages over Dendreon's that could potentially alleviate the growing pains experienced by Dendreon in terms of Provenge pricing and reimbursement.
IMUC flew to over two dollars in 2011 based on the potential of its cancer-fighting technology in ICT-107, a potentially ground-breaking immunotherapeutic treatment for the very aggressive form of brain cancer, glioblastoma (GBM). Shares quickly departed from those highs, however, as concerns regarding financing entered the picture and investors saw nearly a year left on the table before results would start trickling in from the ongoing ICT-107 Phase II trial.
The decline in the IMUC share price on those concerns dropped the company's market cap to well under fifty million, hardly justifiable for a pipeline that holds a potentially game-changing technology that was heavily validated in a very successful Phase I trial.
But now IMUC could be back in the game.
The anticipated financing deal which weighed heavily on the share price over the past months is now out of the way and investors are free to look forward to interim results from the Phase II trial that could start rolling in within the year. Speculation about those results - given the encouraging Phase I data - may lead to a swift increase in IMUC share price, as could the occasional buyout speculation that dominates the biotech industry these days.
Short sellers usually take advantage right around the time a company announces a financing deal, but as those parties move on to other targets, they leave fresh pickings and lower prices for longs looking to add to their positions.
Given the depressed share price, low market cap relative to the pipeline potential, and risk of imminent financing out of the way, IMUC is again one to keep an eye on.
CVM: On the theme of developmental cancer immunotherapy treatments, Cel-Sci Corp. (CVM) is another company worth noting, given the recent spurt of trading activity that culminated in a 16% price increase on Friday that was accompanied by volume more than three times the daily norm.
Cel-Sci's Multikine is currently being investigated in a worldwide Phase III trial as a standard of care treatment for cancers of the head and neck.
Like IMUC above, CVM recently conducted a financing deal to fund trial progression and it looks like the company may be ready enjoy some additional attention as more eyes are turning to the cancer immunotherapy sector.
Although no data from the Phase III trial has been released to the public at this point, recent comments by CEO Geert Kersten emphasized that encouraging "observations" from the trial have led the company to authorize a trial expansion by 15 sites.
"We are encouraged by recent observations from the study and therefore feel that all resources should be put into getting this study completed as quickly as possible to definitively establish Multikine’s effectiveness. That is why we are adding as many as 15 clinical centers in these 4 countries,” noted Kersten.
This one has been known to move quick when attention and speculation create a perfect storm of buzz, so pay the company due attention following last week's spike.
DNDN: It's tough to discuss the cancer immunotherapy sector without giving mention to Dendreon (DNDN), the grand-daddy of such treatments. It was the recent surge in DNDN share price after a positive update on Provenge sales numbers that saw the sector as a whole benefit from increased coverage, and although other early-year stock runs have petered out, Dendreon's has not.
It will most definitely take more than just one quarter to convince the skeptics and the analysts that Provenge sales are truly on the rebound, but with less than a month of 2012 in the rear view mirror, DNDN is already sitting at just under a double. Not bad for the true believers that loaded up under ten dollars during the closing months of last year.
The sector generally rides on the coattails of Dendreon, so if you're eyeballing any of these companies, it's worth also keeping a close eye on DNDN.
CLDX: Celldex Therapeutics (CLDX) is yet another cancer immunotherapy company that suffered along with Dendreon this summer but has been on the rebound of late. Results from a Phase II study for CDX-011 in breast cancer are due to be released before the summer months get underway. The company is also conducting a Phase III and Phase II trial for its Rindopepimut in the treatment of glioblastoma.
Previously a high-roller, it was a divorce from Pfizer (PFE) that sent shares spiraling south in 2010, but recent events and progressing late stage trials again have this company on the radars of investors who like to play in the sector.
Dendreon is still the milestone that investors look for when determining the potential of a successful cancer immunotherapy stock, and CLDX is again starting to gain attention as one that could match that potential.
With a late stage pipeline, trial results due this year and a modest gain already realized in 2012, CLDX is a stock to watch for both short and long term investors.
BDSI: Taking a break from cancer immunotherapy, BioDelivery Sciences (BDSI) is trading with a renewed volatility of late that has both traders and long term investors taking another look at the company's rejuvenated pipeline that was written off as all but dead for the duration of 2011.
The resolution of the REMS issue for the already-approved Onsolis and a new partnership with Endo Pharmaceuticals (ENDP) has had BDSI on fire during the opening weeks of 2012, and as the pipeline develops, the stock may be able to reach its previously-traded highs.
Especially if Onsolis sales can gain steam with the REMS settled.
BioDelivery's partner for ONSOLIS, Meda Pharmaceuticals, looks to have the REMS in place by the end of the first quarter of this year, at which point the product will succeed or fall on its own merits, and not due to variables outside of the company's control.
This company's big-name partners also have it on the watch list for a potential buyout. Big pharma is on the prowl these days for pipeline depth and new technologies. BioDelivery has both.
Expect volatility moving forward, as evidenced by Friday's six percent drop, but it sure looks like the worst days are behind this company.
GNBT: Generex Biotechnology Corp. (GNBT.OB) has quietly returned near-triple gains in just over a month. Trading volume towards the end of last week was increasingly heavy, as well, indicating that there still might be a little bit more fuel left in the canisters as the company's subsidiary, Antigen Express, gained recent attention for the development of AE-37, an "off the shelf" immunotherapeutic treatment for breast cancer.
Previous updates were unable to move the GNBT share price, so there may be something more to this run, but also beware that the company has long been advertising a reverse split in conjunction with an Antigen Express spin-off. It's a generally accepted rule of thumb that share prices quickly drop on the back end of reverse splits, especially if the share price rallies before the split is announced.
NBY: NovaBay Pharmaceuticals (NBY) jumped eight cents and six percent on Friday on more than double the average trading volume. This company - whose technology may provide a solution for the growing concerns of antibiotic resistance - has numerous catalysts expected this year, including the commercial launch of its first FDA cleared product.
NovaBay recently announced that a partner was on board to launch NeutroPhase, a treatment for chronic wounds, in China, while a US partner is expected to be signed by mid-year. Already inching higher on speculation, news of a US product launch could swiftly attract the attention of new investors.
HGSI: Shares of Human Genome Sciences (HGSI) have already made some noise this year, with a decent price spike following a months of decline. Recent reporting from various media outlets has turned positive and many predict that sales of the lupus-fighting Benlysta - partnered with GlaxoSmithKline (GSK) will start picking up steam this year.
Additionally, there is constant buyout talk surrounding this company, which is always good for a temporary spike in price.
Always worth watching.
BVTI: Another cancer immunotherapy play, Biovest International (BVTI.OB) could enjoy a rebound year as the company finally moves forward with plans to file with the FDA for the approval of BiovaxID as a treatment non-Hodgkin's lymphoma.
Biovest, a majority-owned subsidiary of Accentia Biopharmaceuticals (ABPI.OB), has already seen a volume boost as the result of increased attention on the sector, and that trend could continue this year as the short term catalysts start to play out.
KERX: Depending on the results from Phase III trials that are due out this year, Keryx Biopharmaceuticals (KERX) could become one of THE big winners for 2012. Although shares are relatively unmoved so far this year, that could quickly change if media coverage shifts positive and speculation about a successful trial materializes.
One of 2012's money stocks to watch.
Disclosure: Long MNKD, CVM, BDSI, NBY. May initiate a long position in BVTI and IMUC within 72-hours.