At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.
The economic news wasn't all encouraging last week, not from Europe nor from the United States, but the markets didn't mind so much as stocks jumped on both Thursday and Friday and soared to new four year highs. What the markets liked - and grabbed on to for momentum - was that the European Central Bank (ECB) pledged last week to offer stimulus to the European economy by buying up some debt of the most troubled Eurozone countries. The Euro rebounded on that news and the US markets also jumped as investors became increasingly optimistic that the US economic authorities would follow suite and initiate another round of stimulus bond-buying during a two-day meeting this week.
With investors giddy over the stimulus news, Friday's weak jobs report was pretty much shrugged off by the markets. The numbers - which came in at under 100,000 new jobs created, well below the predicted 125,000 - indicated a significant slowing of jobs growth and sparked a new round of political debate with the campaign season in full swing. While investors were not overly concerned with that news, as the sluggish rebound is far from a secret, the average American may have received an education of just how insignificant a number the jobs report - and specifically the unemployment rate - really provides.
Given that those who give up looking for a job are no longer counted in the overall number - and there were a number of other pronounced variables aired over the networks all weekend - it's relatively safe to say that the only landscape in which those numbers play a relevant role is in the political landscape; both parties twisted the jobs report to support whichever argument they were trying to make. The report did, however, support the argument that the Fed was preparing to follow-through on promises earlier this month to provide some more measures of stimulus, and that was enough to keep investors happy.
The mid-week Fed meeting in the United States - which is predicted to decide on policy relating to any new stimulus plans - will dominate investors' attention this week, but many may also be on edge as pundits and analysts are of the belief that the markets have peaked and that a correction could be on the horizon.
September is historically a slow month for the markets anyway and the volatility created by a presidential election is also likely to come into play, so while enjoying the good times while they last is always fun, it may be wise to have a backup plan in effect in case a drop materializes - which often means selling some paper profits now in order to have a little cash on the sidelines in case some nice buying opportunities open up into any protracted dip.
Stimulus and caution may be the words of the week, but there are always sure to be plenty of stocks and stories to keep an eye on. Here's just a few of them...
Healthcare, Biotech, Pharmaceutical:
Amarin Corporation (AMRN): Whether as exciting as the last two weeks or not, it's bound to be another high-profile trading week for shareholders of Amarin Corp. Last week marked the realization of major patent milestones that will ultimately ensure protection of Vascepa until at least 2030 for indications relating to the highly successful MARINE Phase III trial, for which Vascepa recently received an FDA approval. Next up will be the outcome of the FDA's decision to grant Vascepa a new chemical entity (NCE) status, a designation that could again secure additional years of market exclusivity from generic competition and help investors and potential buyers of the company to better gauge the overall value of the product.
It has been highly speculated since Vascepa's approval that the product would warrant an NCE designation and - as was the case following the patent news - AMRN's share price could react accordingly if the status is ultimately granted.
News on that front could be imminent.
Amarin in also drawing interest from investors who speculate that the company will be bought out by a larger player in the sector. It's no secret that 'big pharma' is on the prowl for new pipelines and products to replace popular drugs coming off patent, and considering the blockbuster potential of Vascepa, larger companies could swoop in and make a deal for a relative discount.
It's also worth noting that Vascepa's chief competition, GlaxoSmithKline's (GSK) Lovaza, holds a far inferior safety profile to Vascepa. Given that fact, it may be safe to assume that Vascepa could quickly eat away at - and then eventually exceed - the billion dollar market share that Lovaza rakes in annually.
Such speculation has led to drastic AMRN share price runs before, with buyout talk last year propelling shares to near the twenty dollar mark. It's likely that the buyout speculation, in combination with anticipation of the NCE status, will dominate AMRN's trading patterns for the near-term future, but it's also possible that - barring any encouraging news releases - shares could again pull back if the broad markets dip from their current highs.
Still and exciting one to watch, especially since many analysts and investors consider AMRN a mid-twenty dollar stock, considering Vascepa's potential and the possibilities of a buyout.
TrovaGene Inc (TROV): Having been labeled as a stock to watch last week because of its previous dip back towards the two dollar mark and the potential of the company's diagnostic pipeline, TrovaGene shares rebounded swiftly last week on modestly-increasing volume and will be worth watching for the coming week, too.
TrovaGene is developing a still-clinical-stage line of diagnostic tests that may be able to effectively detect the presence of various cancer and infectious diseases through simple urine samples. Such a technology, should it be proven effective, could provide significant relief on a global health care system that is currently over-burdened with high costs and highly-intrusive procedures. The current standard of screening for cancer and infectious disease includes biopsy and/or blood tests, both of which come with increased costs and intrusiveness than would a screening via a urine sample.
While there are write-ups circulating that advertise TrovaGene as a nice technical chart play, there are some catalysts pending over the near term that could also draw in new investor interest and have positive implications on the share price.
The company intends to launch a trial later this year that will test its proprietary diagnostic technology in identifying pancreatic cancer by means of a patient's urine sample. In addition to this catalyst, results from other ongoing trials are slated for interim review around the same time frame. Should the combination of news include positive interim results, then TROV could potentially be positioned for a nice up-tick, considering the impact that these diagnostics could have on the cancer detection market, should they prove effective. Judging by the relatively modest market cap - even for a still-speculative company - the street is still skeptical, but a good round of encouraging results could change all that.
Worth keeping an eye on this one as the company's exposure grows and the trial catalysts draw nearer.
Sunshine Heart (SSH): Following an explosion in share price earlier this summer that saw shares jump from three to seventeen dollars, shares of Sunshine Heart have settled right around the $7 share price of a recent stock offering, SSH could be primed for another move, however, following a vote of confidence expressed by a popular analyst last week and pending milestone catalysts that could develop over the next few months.
In a report that sent Sunshine shares temporarily back over the seven dollar mark, an analyst at Canaccord Genuity initiated coverage of the company with a 'buy' rating and a price target of eleven dollars. In justifying the new rating, Canaccord cited the encouraging results of the North American feasibility trial for the C-Pulse Heart Assist system, a device that has thus far proven to not only halt the progression of heart failure in patients with Class III and ambulatory Class IV heart failure, but potentially reverse it as well.
Aside from the encouraging results on the American continent, C-Pulse also received an approval in Europe this summer, making it a likely scenario that the company could register its first commercial sales in conjunction with the launch of a US trial planned with an eventual FDA approval in mind.
Sunshine shares soared following the European approval news, although not quite to the levels seen during the previous run when investor enthusiasm initially sent shares north of the seventeen dollar mark.
With the stock offering putting the company on firmer financial ground as the company ramps up for the official launch in Europe of the C-Pulse - and with the backing of new analyst coverage - this is a company to keep on the radar again. C-Pulse targets a billion dollar market and its potential looks to have attracted the backing of a major investor - or potential partner.
According to an amended S-1 filed by Sunshine in conjunction with the recent stock offering, a large "strategic investor" took a significant position in the company and will send a "board observer" to Sunshine to "monitor developments." Such actions could be construed as at least the first stages of a significant partnership with a larger company or even an all-out buyout of Sunshine and/or its technology. Although dilutive to shareholders at the time, the offering also funds Sunshine through the expected interim analysis of data (50 patient mark) for the upcoming US trial. This is significant in the fact that the fifty percent mark may be enough to convince the said "strategic investor" to either partner or buy the company.
Sunshine may have had this in mind when determining how much cash to raise now.
Ironwood Pharmaceuticals (IRWD): Ironwood shares have trended lower since the announcement that the FDA approved Linzess - previously known as Linaclotide - for treatment in adults with irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (CIC). The drug taps a billion-dollar-plus market, so the possibility does exist that future price increases could be in store, but the lack of any significant move - either to the up or down side - is an indication that investors feel the company is fairly valued and are taking a 'wait and see' approach.
One item that prevents a major run in the IRWD share price is the fact that Linzess is already partnered with Forest Laboratories (FRX), so right off the bat half of the revenue stream is not Ironwood's. With this in mind, there may not be much incentive - at least not at the current time - for investors to predict any significant moves from the current market cap of 1.3 billion. Linzess also proved in trials to cause some fairly significant bouts of diarrhea, as discussed in previous write-ups, another reason why investors may be hesitant to jump all-in right now.
The FDA approval does, however, validate the technology and mechanism-of-action behind Linzess, which is shared with Synergy Pharmaceuticals' (SGYP) Plecanatide. Although behind Linzess in terms of 'time to market,' Plecanatide has demonstrated a much superior side effect profile and has yet to be partnered, maybe making SGYP the better play in this arena.
Synergy shares briefly jumped to over five bucks on the Linzess approval.
On a positive note, IRWD did not drop following its key FDA approval. That fact is quite the feat in today's healthcare sector trend where company's receiving approvals tend to see their shares fall, but it's also a testament to the stability provided a smaller company when a much larger player is already on board as a partner.
It'll be worth keeping an eye on IRWD to see how well - and how quickly - the market recognizes Linzess, but with Synergy set to report results of a key Phase IIb/III trial later this year, there's a chance that SGYP could look to make a move towards matching the IRWD market cap - if the results are as positive as they have been previously.
OncoSec Medical Incorporated (ONCS): It was noted during the previous trading week that shares of OncoSec Medical were trading with increased volume, and although the share price has yet to experience other than just a minimal move higher during the volume spike, the trend continued through most of last week, leading some to believe that this may be a period of quiet accumulation between major news updates.
OncoSec has developed the OncoSec Medical System (OMS) as a strategy to provide a less-intrusive and more effective method of delivering cancer-fighting therapies and drugs directly into cancerous cells. The process behind this technology is known as electroporation, in which electric pulses are applied to open pores in cells that allow them (the cells) to absorb a therapeutic agent and 'trap' it inside the cell walls. This action allows for a better absorption rate - which makes a therapy that much more effective - and it also delivers the drug or therapy without harming the surrounding cells.
The two platforms spawned from the OMS technology are ImmunoPulse and NeoPulse and OncoSec currently has three Phase II trials underway investigating the use of ImmunoPulse in treating various forms of skin cancer. Interim results from these trials may pose as a near-term catalyst, while the overall potential of the technology could make a splash in the market of cancer treatment, if the results continue to prove that OMS can deliver drugs and therapies in a less-intrusive and more-effective manner than the current standard of care.
Aside from skin cancer, OMS has been put to the test in other indications, as well. As proven by results from a Phase III trial completed earlier this year testing OMS in the treatment of head and neck cancer, the technology is at least as effective as surgery and has the potential to significantly improve the quality-of-life of head and neck cancer patients. A demonstration of "equivalent disease control and survival" were the official words that accompanied the study results, but there is something to be said for providing an alternative to surgery with "equivalent survival," especially if the treatment is less-intrusive and less-expensive. That said, investors likely want to see signs that the treatment is also be more effective than what's on the market now.
For the speculative investor, OncoSec may provide a nice risk/reward profile while trading for the 'below the radar' market cap of under twenty million. With the noted boost in volume over the past couple of weeks, some investors may be starting to agree.
The company also received notice of a key patent in China last week.
MRI Interventions (MRIC): Speaking of trading along under the radar, shares of MRI Interventions may be doing just that again following an early-July run that quickly sent shares from under the two dollar mark to over five bucks in a snap. Having moved so significantly so quickly, the traders bailed with profits in hand and the MRIC share price retreated, and then a stock offering that filled the company coffers with $6 million stalled any near-term rebound. Still, shares are trading for over double their IPO price of a buck earlier this year.
Although still young in terms of a publicly traded company, MRIC has made great strides in its development this year and investors may want to take note during the lull in news. Boston Scientific Corporation (BSX) - one of the largest medical device makers out there - has already come on board with a $13 million up-front payment in a partnership that could expand. Brainlab, a noted leader in the image-guided surgery field in the US and Europe, has also jumped in for the advancement of the ClearPoint technology, while Siemens AG (SI) has partnered for the development the ClearTrace system.
The ClearPoint and ClearTrace systems use MRI-enhancing technology to provide medical professionals with real-time imagery during complicated procedures, therefore enabling them with the ability to conduct less-invasive and more precise operations on the brain and heart, respectively. By making such procedures less-costly and less-intrusive, the technology plays right into the current trends in the healthcare sector and that could be a prime reason why some big partners have already become involved.
Worth watching right now as MRIC again looks to be skimming the surface waves.
Titan Pharmaceuticals (TTNP): Titan shares were down by nearly four percent on Friday after a week-long price increase spiked shares to eighty cents. TTNP spiked to eighty cents once before this summer before again dropping to the mid-sixties after an earnings report that underwhelmed investors, to say the least. While TTNP has become quite the 'trade play' over the past months, there were some key takeaways in the quarterly report that highlight Titan's potential, should it again materialize.
In October it is expected that the company will file with the FDA for a Probuphine approval, a key catalyst that may revive some life into this company. Probuphine is a treatment for opioid addiction - also being developed to treat chronic pain - and utilizes the subcutaneous ProNeura drug delivery system. The potential of ProNeura - specifically Probuphine - once saved this company from the brink of termination when other pipeline candidates failed and could again make the company relevant, should some pending key milestones develop.
Aside from the NDA filing, it has long been speculated that Titan would land a partner for Probuphine. It has been so long, however, since company officials starting making comments relating to a deal that many investors have either lost faith and bailed or are taking an "I'll believe it when I see it approach."
From the quarterly call, Executive Chairman, Dr. Marc Rubin noted, "Importantly, the Titan Board has been closely monitoring Titan’s partnership discussions and is pleased with the progress being made with negotiations of a licensing agreement with the frontrunner."
Similar comments have been noted quarter after quarter, hence the unconvinced reaction by investors lately. And also in regards to the above quote, I would certainly hope that the board is "closely monitoring" the discussions, it's only the key to launching Titan into relevancy again.
What kind of a statement is that? It's like a President saying "I am closely monitoring the situation in Syria," for example. What exactly does that mean in an actionable sense?
If nothing else TTNP looks like a decent trade between the mid-sixties and eighties, but as the stock proved when it jumped from a penny to over two bucks a couple of years ago, this one can quickly rise from the ashes.
Worth keeping an eye on.
Peregrine Pharmaceuticals (PPHM): Talk about bang for the buck. Peregrine shares jumped by over fifty percent on Friday after the company announced very positive interim results from a Phase II trial testing bavituximab in non-small cell lung cancer. According to the data, bavituximab doubled the overall rate of median survival and sent PPHM shares soaring more than they had in years. Considering shares were trading for under fifty cents just a few months ago, this one has to go down as one of the big winners in the sector for 2012 as the long-watched potential of bavituximab is finally coming to fruition.
With a conference call scheduled for Monday, Peregrine is a player again and will be worth watching during the coming weeks. Should the data remain looking as positive through final results, expect a Phase III trial.
Considering the dramatic gains in a relatively short period of time, expect the swing and momentum traders to spark some volatility in the stock, and as always, investors hanging in there since fifty cents may enjoy a nice European vacation with some of those quick gains.
Explosive Trace Detection (ETD) / Global Defense:
Implant Sciences (IMSC): It's been a volatile ride for Implant over the past few weeks with multiple key catalysts pending and the financial future of the company dramatically improved after a deal last week with its key creditor. As noted last week, Implant negotiated an extended credit agreement with its senior secured lender, DMRJ Group LLC. DMRJ holds over $20 million in Implant debt and much of the debt was coming due at the end of this month. Those concerns are now alleviated as DMRJ agreed to extend the terms until the end of March, 2013, providing a full two quarters of development and progress for Implant before having to worry about debt coming due. Investors welcomed the news and vote of confidence with open arms as shares traded higher by twenty percent this past Wednesday.
Probably the most significant key catalyst in the company's history, however, is still expected to unfold this month - that being the potential TSA approval of the Quantum Sniffer (QS) B220 benchtop explosive trace detection (ETD) device, which has already completed certification readiness testing and moved on into the final phase of the approval process.
Implant is also making strides in its global sales division with an announcement last week that the company will send 25 QS-H150 handheld explosives trace detectors to an unspecified location in Africa for use in defending critical infrastructure. For investors, some of whom had generally considered previous sales announcements to be the "onesie-twosie" types, an order of 25 units is a nice validation of customer confidence in the technology and a sign that Implant is starting to make significant headway in the African market. Sales progress on the European front was also noted over the past couple of weeks and the rush of new orders may relate to a comment an Implant employee made in an early-summer news report that indicated the QS production lines will soon be "bursting at the seams."
Should the TSA approval take place - as many expect it will - then Implant would be positioned to potentially take advantage of the key December 3rd deadline imposed by the TSA stating that all inbound-US air cargo on passenger airliners will be screened for explosive traces. Given that the B220 is currently in the final phases of testing for precisely that indication, it's safe to assume that Implant intends on targeting some key contracts, should the B220 garner the TSA approval, which would also likely have very positive implications on the IMSC share price.
Potentially just a handful of trading days away from TSA news, now is not the time to take your eye off the IMSC ball. Should the approval materialize, then Implant could quickly launch into the mainstream of the homeland defense and air cargo markets, while a denial would likely send shares south. Given its strides on the international front, however, there is evidence that the company could still survive without a TSA approval.
Exciting times ahead.
Healthy Beverage / Diet, Fitness:
Celsius Holdings (CELH): A quick volume spike during the closing days of August may have drawn some modest investor interest the way of Celsius Holdings, but the latest quarterly report that led to the volume spike may still leave some doubt that the company's recovery is in effect. During the first quarter of 2012 Celsius reported sales revenue of $2.5 million, up from $1.8 million the quarter before that, but the revenue number dropped again during the latest quarter for a familiar total of $1.8 million. While still a sign of stability, if nothing else, investors will be looking for more after the announcement of a new PR firm earlier this year and the signing of Fitness Icon Tony Little as the company's 'Fitness Ambassador' shortly thereafter.
It's still relatively early in the new PR campaigns, so it's still too early to judge this one, but investors will be looking for a bounce-back quarter three and evidence that the international market is picking up, as indicated this quarter.
Celsius is also making tactical packaging moves and changing its mantra from emphasizing mainly the calorie-burning effects of the drink to also providing lasting energy.
Still one to watch. Celsius shares once traded from under three pennies to sixty cents in a short period of time, so the proof is there that when this one moves, it can move quickly.
It'll take growing sales numbers to do that now, though.
Roundup: The key market news this week will revolve around the follow-through on the ECB's promise to buy debt from the countries bearing the weakest economies and from the Fed in the United States that has also hinted at additional stimulus for the US economy. Many are starting to predict a market pullback after stocks have enjoyed a sound few months of gains and - in keeping with the theme - the US presidential campaign is likely to start playing a larger role in trading as investors start to speculate on which policies might be in place six months from now.
It should be another exciting week ahead, and on top of everything else - it's NFL season again.
Disclosure: Long AMRN, IMSC, CELH, TTNP, SGYP.
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