At the conclusion of each week, VFC's Stock House examines the stocks and stories that made news through various sectors during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.
Encouraging job numbers last week supported the recent sustained higher prices in the markets, while the DOW still hovers right around the 13,000 mark. Many analysts and economists, however, still predict that a market correction is in store at some point over the coming months which will only add to the continued volatility in the markets that - while making some of the long term investors nervous - has led to plenty of ample trading opportunities.
The prospect of a correction is also supported by the continued civil, geo-political and economic unrest around the globe that dominates today's headlines.
European leaders agreed last week on a plan to set the Greece economy straight, but many investors had to swallow huge losses and few are convinced that the economic woes of other large players in the European economy, namely Spain and Italy, won't also have to be dealt with.
The threat of eventual military action in Iran over its nuclear program is still contributing to inflated oil prices, while the potential for air strikes in Syria, as proposed by US Senator John McCain, reinforces the fact that the Middle East is still far from stable - a full year after the Arab Spring sprang into action.
Vladimir Putin has returned to his position as President in Russia - as if he ever really left - and as long as oil prices are high, expect him to feel emboldened enough to continue to launch Russia to the forefront of international affairs, often times in opposition to what may be good for the US economy and policies.
In sports, Peyton Manning was announced as a free agent last week, and maybe it's time he comes to New York to join his brother Eli - as a backup to the TWO-time Super Bowl champ. We need something to talk about this summer since the best the Mets will have to offer is the trade talk that'll surround David Wright and Johan Santana (if he even makes a start).
Another exciting trading week lies ahead, here's a few stories to watch...
Sirius XM Radio, Inc. (SIRI): Shares of Sirius XM (SIRI) moved higher towards the end of last week after CNBC's Jim Cramer interviewed Sirius CEO Mel Karmazin on Thursday evening's airing of 'Mad Money'. The interview marked a stark turnaround for Cramer, who had been bearish on the company for years. During the interview, both he and Karmazin painted a rosy picture for the current and future state of Sirius, emphasizing the growing free cash flow that, they argued, will continue to enhance the value of the company.
The growing subscriber base was also highlighted, as was the rebound in new car sales that is expected to continue to add new subscriptions - and therefore revenue - to the company's bottom line.
As a result of the pretty picture painted by the two, SIRI sharesclosed Friday at $2.35, just a penny below the high for the day, and significantly higher than the $1.84 price that opened the year.
The Cramer pump was a solid follow-up to the fourth quarter earnings numbers - announced last month - that reinvigorated the move higher, and investors may now have more of a warm and fuzzy feeling than at any point since the collapse of a few years ago that saw SIRI trade for a nickel.
With that being said, there's still reason for investors to remain on their toes regarding the short and long term future of this stock. The longs and shorts have battled it out for quite some time, and as argued before, there are still cases to be made for both sides of the fence.
Although a 'Cramer Pump' can lead to a quick rise in share price for a particular stock, it's also common to see those stocks take a dive shortly after the highs of the short term spike are reached following the positive mention. Once could use Oncothyreon (ONTY) as an example, a company that spiked after receiving a similar positive mention last summer, only to see shares slide back to previously-traded levels once the hype died down.
There is also concern among many Sirius investors as to why many insiders are exercising options and selling shares at this time, including Karmazin himself, if the future of the company and its share price remains so bright. A little bit of insider selling should not cause alarm, as even the big boys need to realize some extra 'Grey Goose and Good Life' free cash flow once in a while, but the amount of shares being sold in SIRI right now is more than just noticeable.
The late-week Cramer interview has assured investors that the coming week should be an eventful and volatile one for shareholders of SIRI. Keep an eye on it and don't be afraid to keep an active trigger finger if shares start to slip as investors digest the insider selling and prospects that the best percentage price gains may already have passed.
Also take notice of SIRI's growing short interest.
Dendreon Corp. (DNDN): Although never closing below the mark last week, shares of Dendreon (DNDN) slipped below ten dollars again amid concerns that Johnson & Johnson's (JNJ) Zytiga was priming to mount a huge challenge to Provenge on the open market as a treatment for advanced prostate cancer.
A review by an independant monitoring committee confirmed the success of Zytiga in late stage trials and concluded that "it would be unethical to continue" the trial, according to statements published last week. The committee also "effectively ended the trial early so that the patients getting the placebo could be offered Zytiga instead."
The decision was a huge boost for JNJ and understandably contributed to the ongoing woes of Dendreon, as Provenge is having enough trouble gaining significant traction without the competition of Zytiga.
It's been a volatile ride for DNDN, thus far into the new year, as early-February highs of nearly seventeen dollars were quickly erased following the cautionary tone of company officials in the fourth quarter earnings call, and the upcoming week should prove no different.
Investors who have loaded up on DNDN for below ten dollars have done well playing the short term peaks and valleys of this stock over the past year, but every time news such as last week's Zytiga threat hits the wires, long term investors grow a little more squeamish about the future of Provenge as potentially reaching the billion-dollar plateau that many once predicted.
A rebound could certainly be in store, especially if sales numbers continue to improve and additional Dendreon pipeline news materializes, but this company cannot shake the risk and volatility from its share price.
Continue to watch this one during the upcoming week.
Lpath, Inc. (LPTN.OB): Shares of Lpath, Inc. (LPTN) took a dramtic dive this past Tuesday after the company announced a licensing deal that priced shares roughly twenty percent lower than the market price at the time. The pullback came on the heels of an announcment last month that Lpath's ongoing trials would be halted due to the fact that its finish/fill contractor was found to not be in compliance of some FDA-enforced standards.
While both of these events led to a swift decline in share price, all the bad news may be out of the way and LPTN could be primed to rebound back to the dollar mark in relatively quick fashion.
Lpath already has the foundations of success for a small company, given the large commitment by Pfizer (PFE) in its technology and its recognized status as the leader of a potentially groundbreaking field of medicine.
The ImmuneY2 platform has thrust Lpath into the forefront in the field of lipid-based therapeutics and is the only company to have taken the technology as far in development as it has. ImmuneY2 contains the ability to generate therapeutic antibodies that bind to and inhibit bioactive lipids that contribute to the spreading and growth of various diseases and inflammatory/auto-immune disorders. The market potential for this technology in treating a plethora of modern day illnesses and diseases, should it advance past the clinical stages, is huge, and Lpath is first applying its technology to the treatment of Wet AMD and cancer, both multi-billion dollar markets.
The recent pullback in share price has posed no threat to the Pfizer deal and is not related to the potential or effectiveness of Lpath's treatments, so it's not generally expected that this dip is going to last for too long.
A trial re-start may be just what this one needs to rebound.
Human Genome Sciences (HGSI): A strong close on heavy volume Friday afternoon has investors of Human Genome Sciences looking forward to the coming trading week that could again push shares back towards the ten dollar mark.
Having pulled back following another earnings report that demonstrated a continued "trial stage" for HGSI's lupus drug, Benlysta, on the open market, shares were quick to rebound on Friday as - you guessed it - rumors again started swirling around the Internet that the company was set to become an acquisition target of its big-name partner from the UK, GlaxoSmithKline (GSK).
Glaxo already has its hand deeply involved with HGSI through the Benlysta partnership, and never does a few months go by when the buyout speculation ramps up. Although Benlysta sales have been slow to ramp up, it's still widely expected that it will still eventually become a blockbuster, once Doctors are convinced that it is a viable alternative to other treatments on the market; therefore, it could be argued, it would make sense for Glaxo to strike early, and swallow up the remaining HGSI pipeline in the process.
Friday's late day spike resulted in a climb of more than ten percent in the closing minutes of trading and should lead to an interesting day on Monday, especially if there is something to this roudn of rumors or if a large media outlet picks up the story.
That said, this popular rumor has never panned out before, so it might be wise to stand by and play some trading shares into any pronounced spike.
Here we go again.
Immunocellular Therapeutics (IMUC.OB): Immunocellular is another one that has recently demonstrated the current volatility of the markets. The new year opened with IMUC trading for near the dollar mark on the announcement of new financing, but a sharp run backed by new institutional interest and talk of a move to the AMEX had shares touching the three dollar mark before a pullback to the $2.50 range.
Immunocellular is straddling too popular fields right now with its technology of targeting cancer stem cells to prevent the growth and spreading of cancer, and should continue gaining increased attention as potential plans to move to a larger trading boards take shape.
It's also common to see investors take positions in developmental stage companies in the months prior to the release of trial results, and that could provide another catalyst for shares later this year, since initial results from the ongoing ICT-107 glioblastoma trial are due to start trickling in as soon as December.
The recent price run and strength of its technology should continue to have IMUC shares in the spotlight for the coming week.
Agenus, Inc. (AGEN): Agenus received quite the boost last week when it became wrapped up in buyout talks of its own after the expansion of a partnership agreement with GlaxoSmithKline (GSK) included a 'first right of refusal' clause for Glaxo in the event of an Agenus buyout.
The two are already married through a partnership for QS-21 Stimulon, a vaccine adjuvant being used in many of GSK's late stage vaccine candidates, and the two became even closer under the terms of the amended agreement, as outlined in a press release issued early last week that stated:
"GSK will pay Agenus a non-refundable payment of $9 million, of which $2.5 million is creditable against future manufacturing technology transfer royalty payments. The agreement also includes royalty payments for an undisclosed indication upon commercialization of a vaccine product."
Agenus has been trading under the radar for quite some time as a Phase II Prophage trial for glioma progresses, but the growing association with a big player like Glaxo is sure to bring in additional attention for the company.
Keep in mind, however, Prophage is still a long way from market and QS-21 royalties alone will not be enough to bring this company to superstardom, so it may take continued buyout rumors for this one to sustain prices much higher than they are now for any extended period of time.
Volume was high last week, and the fact that AGEN is on the map again makes it a stock to watch.
Oncothyreon (ONTY): After a 40% haircut last week for Oncothyreon (ONTY) shares, investors were left to speculate as to whether or not the perceived success of the Phase III Stimuvax trials would actually pan out. Many had concluded that the trial might end earlier than expected if the interim results looked at recently by an independent monitoring committee were strong enough, and investors who had their hands in that basket were disappointment and rattled when events didn't pan out that way, although the committee did recommend that the trial continue.
Stimuvax is partnered with Germany's Merck KGaA (MRK.F).
In a statement released by Oncothyreon CEO Robert Kirkman last week, he noted that investors hoping for an early trial completion held "unrealistic expectations," and that the continuation of the trial "should be viewed as a positive," even though the expected release of the results has been pushed back into early 2013, vice the expected late 2012 expectations.
A year is very long time in today's fickle and volatile trading market, and many short term traders and investors have neither the time nor the inclination to sit around for that long waiting for results, which likely contributed to last week's swift share price decline.
Some of those investors may come back, however, towards the end of the year when another pre-results runup could be expected, but the short term may not provide any price catalysts until then.
Should Stimuvax prove successful in these trials, and that is a subject being debated by some high profile investment websites right now, then ONTY could perform much as DNDN did after positive Provenge Phase III trials a few years back, but it's also worth noting that a full collapse would most likely be in store should the trial results not necessarily meet the endpoints.
As always, take advantage of any peaks and valleys that these speculative plays offer in order to reduce risk exposure and bank a few trading bucks.
Peregrine Pharmaceuticals (PPHM): Shares of this developmental company slipped by over twenty percent on Friday after the company announced that its trial-stage cancer drug bavituximab may not have provided the expected benefits of survival and progression in a mid stage non-small cell lung cancer trial.
Full results will be released later this year, but many investors are jumping ship after the less-than-encouraging initial look, although the company attempts to maintain a positive light in its press release.
It's a risky proposition right now, in my opinion, to try and jump in here in hopes of a rebound, but maybe keep it on the watch list for any potential positive developments.
At this point, however, I wouldn't count on it.
Capstone Turbine (CPST): Capstone was on the slide last week after a recent stock offering priced shares at $1.11.
Orders for the company's low-emission microturbine units, on the other hand, have continued to come in at an encouraging rate and heavily contributed to another round of positive earnings growth for the last quarter as the company continues to trek towards profitability.
CPST does dip below the dollar mark from time to time, so that can be expected during any lull in significant news. Those moves are generally short-lived and are often followed by decent moves (in terms of percentages) to the $1.50 mark, so this stock may be back into buying territory.
Keep an eye on it for its short term rebound potential, with an eye also to the long term. Capstone's microturbines fit right into the green trend of evolving technology.
OncoVista Innovative Therapies (OVIT.OB): OncoVista's quick move higher was stalled late last week and on Friday shares fell ten percent and returned to the fifty cent mark. Volume and price had been on the move and propelled OVIT to the north side of sixty cents for a short time, well more than double where shares had been trading just weeks before.
The pullback is likely a sign that many of the swing, momentum and day traders might have moved on looking for the next big, short term mover. It doesn't help that there has been no news released to support a sustained run - a stock can only move so much and for so long on speculation alone - and some may have seen the lack of news and quick reversal as a sign that the traders are finished and it's a waiting game again for OVIT.
Still worth watching, but it may take news at this point to see a push to the dollar range.
McDonalds Corp (MCD): A slowdown in same-store sales had shares of McDonald's (MCD) slip by a few percentage points during the mid week last week, and the company was also mentioned in reports of the 'Pink Slime' that is used in US ground beef. To be fair, McDonald's was only mentioned in the reports as having stopped using the substance, but any mention associated with the pink slime surely made investors - and consumers - a little sickly in the stomach region. Yum (YUM) has also stated that the company does not use the slime in its meat.
For those that have MCD in the long term or retirement portfolio, the pullback might be an opportune time to add a little bit. This stock has been at the hundred dollar mark very recently, and could return there rather quickly on the back of positive international growth, although there is the risk that another slip may materialize if a general market correction takes place.
Regardless, the Ronald gang is a powerhouse and it's doubtful consumers will stop buying cheap burgers any time soon - even with images of pink slime monsters running around in their heads.
Keryx Biopharmaceuticals (KERX): The Keryx (KERX) saga continues to play out in the headlines as shares continue to trade for over bucks. The debates about the success of failure of the Phase III Perifisone trial should be dominating the Keryx headlines right now, but it's the statements and credibility of various Internet bloggers that is stealing the thunder. With the meat and potatoes of the company no longer ruling the day, it's tough to stick around to see this one play out. A nice trading opportunity was already realized here, so it might be wise to pull a few profitable shares from the table.
Advanced Cell Technology (ACTC.OB): Back to trading for a dime, it might also be a time to jump back in on Advanced Cell Technologies (ACTC). Fresh off an early-year run that culminated in a solid mention in 'The Economist', Advanced Cell has been gaining acclaim for the early success of its RPE stem cell-based treatment for severe vision loss.
Although falling below a dime at times still, ten cents has been the general re-load time of late. It's always one to keep on the radar for both the potential of its stem cell therapies, but also because a buyout could materialize quickly.
With Geron (GERN) currently removed from the stem cell research game, ACT is arguably the recognized leader in the field.
Disclosure: Long LPTN, HGSI, AGEN, CPST, OVIT, MCD, ACTC, IMUC.