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 markets finished last week on a strong note, even if a six week streak of gains was broken thanks to some mid-week downside volatility. Friday's spike was born thanks to encouraging comments from Europe indicating possibilities of additional stimulus to sure-up banks in the weaker economies, such as Spain and Portugal and further commentary from European officials that were aimed at ensuring investors that Greece will certainly remain in the euro zone (EZ). Such statements boosted the confidence of investors who have yet to become whole-heartedly convinced that a solution to the woes of the EZ will exclude the possibility of a Greek exit.
In the United States, meanwhile, mid-week comments from the fed were taken with mixed reaction by investors - which is likely partly to blame for the mid-week volatility - but more encouraging comments by Mr. Bernanke on Friday hinted that the fed may have a few more tricks in the bag to spark the US economy with additional stimulus.
The July housing data was also released mid-week and provided investors a somewhat encouraging take on July's modest reversal. The market reacted ho-hum to the numbers, but next month will be key as investors look for building momentum. Unfortunately the buzz surrounding the numbers release was not supplied by the numbers themselves. The most exciting part of the story appeared when Bloomberg published the data before the expected 10AM show time. The National Association of Realtors inadvertently made the data public earlier than expected, leading a forward-looking reporter to catch them quick, confirm that they were real and get them on the street. With the economic recovery inching along at the pace of New York Met victories, we'll take the buzz any way we can get it, even if it's just an early jump on expected data.
The main economic highlight presented during the coming week may be comments by central bankers on Friday in Jackson Hole, Wyoming. It is there where Bernanke could provide some clarity on last week's hints at additional stimulus measures. That sets us up for another volatile week ahead, with a key catalyst provided for Friday.
As always, there are sure to be plenty of stocks and stories to keep an eye on. Here's just a few of them...
Apple Inc. (AAPL): Maybe the biggest news heading into the weekend was provided by the jury who decided that Samsung infringed on numerous of Apple's patents in creating its own smart phones and tablet devices with Google's (GOOG) Android software. The initial verdict calls for Samsung to pay a billion dollar fine, but the story is far from over as Apple may ask the judge to bump the fine to be more in line with its original number of $2.5 billion. Samsung has also promised to challenge the verdict and demand the judge overturn it. Should the verdict stand, then it could lead to a ban of Samsung products in the US, but headlines are debating how that will effect the consumer market. Some believe choice in variety will be reduced as a result of the ruling, while others predict that competition will actually grow. We're still in the early stages of this story that began with litigation in early 2011, but this will be a development worth keeping an eye on, if only for the potential implications in the consumer market where Apple may, as a result, face less-stiff competition in the US.
Healthcare, Biotech, Pharmaceutical:
Amarin Corporation (AMRN): While the broad markets were rallying on Friday, so were shares of Amarin Corporation. As we already know, AMRN shares quickly dropped following the FDA approval of Vascepa in the treatment of very high triglycerides last month, despite healthy predictions for the drug on the open market and continued positive coverage by analysts. Also given the fact that many big money makers are coming off-label for large pharmaceutical companies these days, it's also highly speculated that Amarin will eventually be bought out. Such rumors sparked a run to nearly twenty dollars in the past and could again reignite a rally should they circulate with force.
Numerous analysts have retained their mid-$20 price targets for AMRN, but investors and big money may be waiting for the outcomes of several side-shows before jumping all-in again with this stock. A decision on Vascepa's status as a new chemical entity (NCE) was already once delayed, and since such a designation would extend the product's exclusivity on market, many are waiting for that determination in order to more accurately value the full potential of Vascepa's. It's likely that investors will hear something on that front sooner rather than later, based on analyst and investor expectations and normal allotted time periods for such decisions. Amarin is also awaiting word on another key patent that could confirm the full value of Vascepa for investors and potential buyers of the company.
Once again, this will be a story to watch during the coming week. Amarin rallied by over six percent on fairly heavy volume Friday, even again breaching the thirteen dollar barrier for a time before closing the day at just below that mark. The run was attributed, at least according to some, to the continued positive analyst coverage and the likelihood of Vascepa receiving finally receiving its NCE status over the near term, as outlined by the financial publication, dealReporter.
Should Amarin receive the desired patent and NCE coverage for Vascepa, then a move back towards the twenty dollar mark could materialize quickly, especially if the news is again fueled by buyout speculation. If it looks like Amarin will forgo selling out to larger company, then a rebound would likely take longer to materialize.
Investors will be standing watch to determine whether or not Friday's move was the beginning of a much more significant move higher for Amarin, keeping this story as one to watch during the coming week.
Synergy Pharmaceuticals (SGYP): Shares of Synergy Pharmaceuticals had already been moving higher for the duration of August after the company announced a merger with Callisto Pharmaceuticals (CLSP) late last month and followed that up with confirmatory news that previously-expected end-of-year milestone events were still on track. Shares rose even higher last Friday, however, after Synergy announced an Asset Purchase Agreement with Bristol-Myers Squibb Company (BMY) that would add another product to the pipeline, FV-100 for the treatment of Shingles. The full financial terms of the deal were not disclosed but it was revealed that Synergy paid an up-front sum of $1 million. SGYP shares spiked by five percent on the news.
Even before any of the merger and acquisition news hit the wires for Synergy, some analysts had already tagged SGYP with price targets at least double the current levels. Such valuations are based on the potential of the company's flagship product, Plecanatide, on the open market in the treatment of chronic idiopathic constipation (CIC), and eventually also constipation-predominant irritable bowel syndrome (IBS-C). Plecanatide may be further behind in development than Ironwood Pharmaceuticals' (IRWD) Linaclotide - which is slated to receive an FDA approval decision for the same indications next month - but a more favorable side effect profile has analysts and investors convinced that any initial momentum gained by Linaclotide on the market could be quickly recaptured by Plecanatide, should it also muster an FDA approval. Phase IIb/III Plecanatide results will be out later this year and investors will have much more of a clue as to just how valid the recent price targets are, but the results are generally expected to come in positive, as the product shares the same origins and mechanisms of action as Linaclotide.
As the path to approval continues for Plecanatide, Synergy looks to be boosting and diversifying the remainder of its pipeline. The Callisto deal brings with it the Phase II cancer treatment Atiprimod, the Phase I L-Annamycin and the pre-clinical Degrasyns. The FV-100 deal diversifies the company's portfolio yet again and right off the bat does three things for the company - boosts the overall value and potential of Synergy Pharmaceuticals in the event of a buyout; provides a backup pipeline in case the lead candidate(s) do(es not make it through approval, and legitimizes the company in its quest to become a much bigger player in the sector.
On the other hand, Bristol-Myers also announced taking a nearly two billion dollar hit on a failed hepatitis-C drug last Friday, too, and Synergy may have just pounced at an opportune time as Bristol looks to soften the blow of a now-considered failed buyout of Inhibitex earlier this year. To further speculate, Synergy could be looking for a Plecanatide partner - or for an outright buyer of the company - so the Bristol relationship is worth monitoring.
Considering all the recent developments for Synergy, and the Friday price spike, SGYP is one to keep an eye on during the coming week, as well.
Advanced Medical Isotope Corporation (ADMD): Having set a new 52-week high just weeks ago after tripling in price since the closing days of May, Advanced Medical Isotope Corporation may be one to keep an eye on. Through a determined strategy of growth that keys in on the production and distribution of medical isotopes and medical isotope technologies, Advanced Medical Isotope has managed to become a relevant name in the rapidly-growing field of nuclear medicine. It was, however, the recent acquisition of a key license to an exclusive technology that may have positioned the company to become the US leader in the field of medical isotopes.
In April, AMIC announced that "it had obtained an exclusive license to eight patents for injectable radiogel technology for use in high-dose radiation therapy." The license, according to the linked press release, was granted by Battelle - possibly the world's largest independent research and development organization and a leader in the field of science and technology - and allows AMIC to commercialize "an injectable, water-based biodegradable polymer that delivers Yttrium-90 microspheres directly into tumor tissues."
Yttrium-90 is an already-established medical isotope with numerous applications in cancer treatment and the radiogel application holds significant advantages over current treatments, notably by maximizing the effects of the radiation dose while minimizing the threat of exposure. The radiogel can also be administered "transdermally or intraoperatively" into solid cancerous tumors when those tumors cannot otherwise be removed from the body, leaving the potential for the product to steal rapid market share from other existing treatment that may not be as effective as attacking the tumor itself with maximum dosage retained, as does the radiogel.
The noted benefits of this technology and acquired license by AMID looks to have boosted investor confidence enough in the company's potential to help them realize the new 52-week high set earlier this month.
Shares slipped from those highs last week after an 8k filed on 17 August announced the granting of three million shares that became fully-vested at the time of issuance. The ensuing share price dip, however, may have opened a more attractive valuation for investors looking to speculate with this potential growth story.
AMIC also boasts a portfolio of radiopharmaceuticals and stable isotopes that are already distributed that - combined with the potential of the radiogel - could enable the company to grow its revenue enough to become the US leader in the field, but at this time investors should still consider this a speculative play.
That said, it's a story worth watching, especially after the quick triple in ADMD share price and ensuing dip last week. Nuclear medicine continues to grow into a billion-dollar industry and AMIC is methodically making itself relevant.
Oncothyreon Inc. (ONTY): After a lull in news and a dip in share price that started earlier in the year after it became apparent that results from an going Phase III trial testing the company's immunotherapeutic treatment for non-small cell lung cancer, Stimuvax, would not be released until early 2013, Oncothyreon is making noise again with a big-volumed move on Friday that positions ONTY as a stock to watch this week, and possibly for the remainder of the year. The push to early 2013 for the results is not too far beyond the original expectations of a late-2012, but investors had entertained the possibility - maybe overly so - that the trial would have been stopped - in a sign of overwhelming success - earlier this year when the results were reviewed by an independent committee. No such event took place, although the committee recommended trial continuation, and investors took that as a negative sign. ONTY shares quickly slipped to below five bucks and have remained there through the spring and summer months.
On Friday, however, new life reinvigorated the share price when Stifel Nicolaus initiated coverage of the company and slapped a price target of ten bucks on its stock. Shares flew to that ten dollar mark in 2011 when hype combined with investor interest in the anticipated trial results and it's likely that a similar run can materialize leading into this next round of anticipation.
The trends in the sector have shares running bigger after positive trial results than after positive FDA decisions, so it could be the right time to eyeball ONTY. Cancer immunotherapy stocks, as evidenced by Dendreon (DNDN) long ago, tend to fly on positive Phase III results, too. What will be worth watching, however, is how much - if any - of an impact Dendreon's failure to capitalize with Provenge on the open market will hinder others in the sector.
Worth watching this week after Friday's move and analyst news.
OncoSec Medical Incorporated (ONCS): OncoSec Medical is another one in the cancer sector that is worth keeping an eye on. ONCS shares are down heavily from their 52-week high, but have leveled off in both volume and price since dropping by about 25% in July following the announcement of Phase III results testing the company's technology in the treatment of head and neck cancer. The reason for the post-results sell-off is likely due to the fact that the trial - while improving quality of life and "functional outcomes" for the patients - did not improve disease control or survival when compared to surgery. While investors were likely counting on data that improved survivability, the company has emphasized the improved quality of life for patients and the safety of the treatment - valid indications when considering the potential benefits of OncoSec's less-intrusive - and therefore less costly - procedures, especially when compared to surgery.
Data from the trial will continue to be monitored for longer-term follow-ups.
While the results from this trial failed to spark the share price run that investors were looking for, the company is also conducting numerous additional Phase II and Phase III trials testing its technology in other cancerous indications, both in the United States and Europe. Given the novelty of the technology, these trials may be worth monitoring.
OncoSec has developed the OncoSec Medical System (OMS) to "dramatically enhance the delivery and uptake of a locally delivered DNA-based immuno-cytokine (OMS ElectroImmunotherapy) or chemotherapeutic agents (OMS ElectroChemotherapy)." This technology keys on a procedure called electroporation, which is the application of electric pulses to open pores in cells and enabling them (the cells) to absorb a therapeutic agent and 'trap' them inside without harming the surrounding healthy cells. This process has thus far proven to be less-costly and less-intrusive than surgery and can also reduce the side effects of standard chemotherapy treatments.
With numerous trials underway, key upcoming milestones include the summarization and release of actual and interim results from each of these trials. The company has returned accurate time frames for trial progression - always a good sign of validation for a speculative company in the sector, although investors will have to keep in mind that this technology is still in the earlier stages of development and dilutive financing can always be a possibility.
That said, given the stability of the share price during the past couple of weeks and the pending trial catalysts, ONCS may be positioned as a nice risk/reward speculative buy right now.
One to keep an eye on.
MRI Interventions (MRIC): MRI Interventions looks to have settled in the low-$2 range following an early-summer financing deal and some key catalysts that ensued soon after. MRIC's technology enhances already-existing MRI suites and - due to the accuracy achieved with its use - falls into the less-intrusive and less-costly category, a huge bonus in today's age where health care costs are heavily in the spotlight. The company has already been gaining traction with investors and medical professionals - a sign of such attention was a triple in share price just months ago - with the advancement of the ClearPoint and ClearTrace, which have thus far enabled surgeons - by providing real-time imagery during complicated procedures - to conduct less-invasive and more precise operations on the brain and heart, respectively.
The technology has proven successful enough in development that Boston Scientific Corporation (BSX) has already invested an up-front payment of $13 million in a partnership with MRIC while Siemens AG (SI) and Brainlab AG have also joined on to advance the technology. Bear in mind the company conducted a financing already this year and its possible that similar deals could follow until revenue - or partnerships - catch up fully with costs. According to some projections, rapid growth is just around the corner for MRIC.
Ironwood Pharmaceuticals (IRWD): As noted above, Ironwood is due a very significant catalyst with the pending FDA approval decision for Linaclotide. Ironwood has partnered with Forest Laboratories, Inc. (FRX) for the product, which could turn into a billion-dollar product in the treatment of chronic idiopathic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C), if approved. An approval could also bode well for Synergy Pharmaceuticals, as its similar product shares origins and the same mechanism of action as Linaclotide and an FDA approval for one would serve as validation for the other, as well. While many companies in the sector have faced sharp declines following FDA approvals, IRWD is worth watching and could be an exception based on its already-existing partnership and valuation in-line with the size of the overall market for indications targeted by Linaclotide.
Explosive Trace Detection (ETD) / Global Defense:
Implant Sciences (IMSC): Like Amarin, it's tough to pull Implant Sciences off the radar screen with so much share price volatility, catalyst speculation and pending news surrounding this story. As described last week, the company updated investors with validated time frames surrounding the expected approval decision by the Transportation Security Administration (TSA) for its Quantum Sniffer (QS) B220 benchtop explosive trace detection (ETD) device.
CEO Glenn Bolduc noted that the next few weeks would be a "quiet period" for the company as product testing winds down, but he also added that QS-B220 had "successfully completed the certification readiness testing" with the Transportation Security Laboratory (TSL), the testing body of the TSA, and that the device was heading into the final stages of approval by "undergoing the final independent validation testing for TSA qualification for air cargo screening."
That last statement in itself could be very telling as the one date that is a certainty is the December 3rd mandate by the TSA that all inbound-US air cargo on passenger airliners will be screened for explosive traces. Given that President and CEO, Glenn D. Bolduc, noted in the Tuesday release that "we remain confident in our system's performance and are hopeful that we will have good news to report to our shareholders by the end of our fiscal first quarter (ended September 30, 2012)," the B220 could receive the necessary approvals in plenty of time to help the TSA achieve its December mandate. Because the device is being streamlined and tested in the final phases specifically for air cargo, indications are that the company has specifically communicated its intentions to the TSA to apply for contracts and/or lobby for sales specifically related to this cargo screening mandate.
In terms of preparation for this key catalyst, Implant has compiled a solid management and advisory team full of officials already linked to government agencies that would likely play significant roles in the process of Implant landing the necessary cargo screening contracts that would make it a relevant player in the field of homeland defense. Some of its new team also defected from competing firms and were quickly enthralled with the potential of Implant's Sniffers in the ETD arena. Darryl Jones, for example, previously served at Morpho Detection and GE Security (GE), but currently acts as Implant's VP of sales and marketing.
Investing solely on catalysts could sometimes prove risky, as shares in companies not receiving expected approval often rapidly decline, but the news that the device has made it to the final phases of approval are a worthy validation of its success thus far and increase the possibilities, in my opinion, that a full approval could take place. Investors are paying attention, too, as IMSC shares bounced all over the place last week and could be counted on to trade with continued volatility until the "big day" hits. While a TSA approval could be considered a "big day," investors will also look for the company to land some immediate contracts in relation to air cargo screening, especially since that is the 'target indication' for the B220. Some investors have also expressed concerns about the terms of previous financing deals, but if anything can put this company on solid ground it would be a TSA approval and a few ideally-sized government contracts. The fact that competing companies have seen their own employees defect to Implant is, if anything, a sign of validation within the community that big growth could be on the way.
Still a developing story is worth watching. Shares dropped by over eight percent on Friday after a spike similar in size the day before, an indication that the company may be in a "quiet period" - but investors certainly are not.
Roundup: Last week turned out to be relatively dull one in terms of major economic news, but this coming Friday's statements by Bernanke could liven up the party a bit. It's also likely that we'll hear some more encouraging news from Europe, now that it looks like everyone across the pond agrees that all measures must be taken to keep Greece within the EZ - even though Italy's current and former Prime Minister are still publicly bickering like little school girls (but hey, don't our candidates do the same)? The Apple story is likely to dominate early-week news, but the real distraction from all these politics could be the wind-down of pre-season NFL and all those new Dodger headaches. On Friday, however, all eyes and ears will be on Bernanke and Wisconsin.
Disclosure: Long AMRN, IMSC, SGYP.
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