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 summer play period is over and even though the coming week will be shortened due to the Labor Day holiday, it'll back to work for the masses come Tuesday morning - meaning investors can look for a sharp uptick in overall trading volume during the next four trading days. Generally susceptible to a summer swoon, the markets held relatively strong during the beach season this year and ended last week on high note after US Fed Chairman Ben Bernanke hinted that additional actions to strengthen the US economy would be undertaken, should it not continue regain continued momentum on its own.
Bernanke's notes from Jackson Hole, Wyoming were highly anticipated last week and added some life to an otherwise ho-hum week of sideways trading. The next Fed minutes will be released mid-September, about the time that investors may expect more definitive comments from Mr. Bernanke.
Meanwhile, the potential economic catalyst for this week could come from Europe, where a Thursday meeting with representatives of the European Central Bank (ECB) could provide definitive steps for easing the debt burdens of those countries most hardest-hit by the economic crisis, such as Spain and Portugal. As has been the trend through the spring and summer months, economic undertaking in Europe can heavily influence global trading trends.
Friday's payroll report in the US could also affect near-term trading, but Bernanke's comments last week already tamed expectations on that front. It's a generally accepted fact that the economy is inching along, so no one is really expecting any surprises - although a true surprise on the data front has the potential to ignite a market rally, should the data be a strong enough surprise to the upside.
While the jobs report and words from the ECB may dominate the headlines this week, there will be plenty of distractions, too. Clint Eastwood may be the biggest distractor of all, and funny enough he's about the most irrelevant figure in politics or economics right now - which just goes to show you how quickly the media and millions of Americans will go chasing the bright, shiny object, when that object really has nothing to do with anything going on today at all.
Don't expect that to last long, though. Once the media and the countless politicians realize they've been duped into following a fuzzy ball of yarn, it'll be back to 'politics as usual' - which means a whole lot of hate, bickering, lies and getting nothing done inside all of those while buildings in Washington.
Another big distractor for the week - and this is a much more pleasant one - will be the opening of the new NFL season, when Big Blue takes on the Dallas Cowgirls this Wednesday night. A fitting opening of the season, I'll say, for the Super Bowl champion NY Giants. With all the serious news likely to make the airwaves this week, and with September historically being a slow month for the markets, many will be looking for an escape.
As always, distracted or not, there are sure to be plenty of stocks and stories to keep an eye on. Here's just a few of them...
Internet / Technology:
Facebook Inc. (FB): The bad just keeps getting worse for Facebook and its share price. After storming the IPO scene earlier this year at $38, shares once again set new lows last week and closed the day Friday down by another five percent after dropping by over a buck on the day. There could be more pain in the work for Facebook shareholders as more shares become available for trading over the next few months when key lock-up periods expire. The first major 'lock-up' expiration came on August 16th, when some traders first became able to trade IPO shares after a pre-determined 'lock-up' period. About 243 million more shares will become available for trading over the next couple of month, with 1.2 billion entering the market on November 14th, according to a Reuters report from last week.
Unless the company has an announcement or two up its sleeve that would prevent these investors from selling, a trip to the mid-teens is likely, in my opinion - with a dip towards the ten dollar mark possible - especially if brokerages continue to slash their price targets on FB shares.
With the key lock-up periods still weighing heavy on the near and mid-term future of the FB share price, it's still a risky proposition to jump in heavy right now. That said, many still believe that this is just a lull in the action and once FB masters its 'going mobile' strategy, then the previously-traded highs could just be a hint of what's to come. Another round of earnings that predict shrinking growth, however, could be immediately damaging, so investors would be wise to watch for signs that the advertising dollars are picking up steam again before gaining and renewed sense of security.
Friday's action and the pending lock-out expirations make Facebook a stock to watch this week, and for the coming weeks as well.
Explosive Trace Detection (ETD) / Global Defense:
Implant Sciences (IMSC): Although Implant has probably the most significant event pending in the company's history this month, IMSC shares dropped by over eight percent on Friday on volume that was well over twice the daily norm. The drop in share price placed the company's market cap under the forty million dollar mark again and had shares trading well off the 52-week highs set during the closing days of June.
Implant's Quantum Sniffer (QS) B220 benchtop explosive trace detection (ETD) device is slated to potentially receive an approval by the US Transportation Security Administration (TSA) at some point in September for use in the screening of air cargo, according to a report issued by the company last month, so Friday's action and this key pending catalyst has IMSC as a stock to watch for the month of September. In regards to the potential approval of the B220, Implant is engaged in a silent period, which means the next news we here concerning the approval should be the final determination by the TSA.
As noted in the previously-linked report, the B220 has already "successfully completed the certification readiness testing" with the Transportation Security Laboratory (TSL) - the testing body of the TSA - and has moved on to the "final independent validation testing for TSA qualification for air cargo screening."
In the meantime, Implant is showing signs that its future does not necessarily solely revolve around this TSA approval. Last week the company received an order from a 'major European airport' for the QS. This deal outlines the potential of the Sniffer technology in Europe, as in late 2011 European authorities banned the use of ETD screening devices that use radioactive particles to do their job. The fact that Implant's Sniffers are radioactive-free provides the company with a leg-up in the region. Proof positive may be a follow-on release on Friday stating that the "QS-H150 handheld explosives trace detector for use at a major public sporting event taking place in London, England."
Implant is not an unknown to major international events, as the QS was chosen to be a part of a layered defense plan earlier this year in Cartagena, Colombia for the Sixth Summit of the Americas - an event attended by many heads of state, including US President Barack Obama.
Although the European deals are notable signs that the company can survive without the TSA approval, investors are looking towards that pivotal catalyst as the event that could send the company into the mainstream of the ETD and homeland defense arenas, especially given the TSA's December 3rd mandate that will require all inbound air cargo on passenger airlines to be screened for explosives. Implant intends to take keen advantage of that date, according to comments made by the company in the above-linked press release, and the landing of a few big deals where the numbers are made public could have very positive implications on the company's share price.
For now, investors will be taking their respective positions leading into the catalyst, which is likely to lead to another couple of weeks of the volatility we've seen over the past month. Friday's downward action on heavy volume is a testament to that volatility, but it could also prove to have been a solid entry point with the TSA catalyst still pending for the near term.
Still a hot one to watch right now.
Healthcare, Biotech, Pharmaceutical:
Amarin Corporation (AMRN): Amarin made it two Fridays in a row of posting solid gains with a five percent spike launching shares closer to the fourteen dollar point. The company did announce last week that additional data from the pivotal MARINE Phase III trial are were published in the Journal of Clinical Lipidology, but investors are still awaiting decisive news - issuance of patents and/or New Chemical Entity (NCE) status - that would better dictate how much market exclusivity can be counted on for Vascepa, recently approved by the FDA for the treatment of very high triglycerides.
Since it is highly-speculated by investors that Amarin will look for a buyout deal before it's all said and done, both the patent and NCE side-stories could prove as crucial factors in determining the final value of any deal. Meanwhile, Amarin is moving ahead with plans for an early-2013 commercial launch. Friday's price action, however, could be an indication that investors believe a buyout deal will be announced before that time.
Numerous analysts have also retained their mid-$20 price targets for AMRN.
Once again, Friday's action makes AMRN a hot stock to watch during the coming week, as NCE news is inching closer. 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.
Sunshine Heart (SSH): Sunshine Heart is proving to be a potential ground-floor buying opportunity based on the potential of its C-Pulse Heart Assist system, which has already been approved in Europe and is being prepared for a pivotal trial in the United States. C-Pulse is an implantable medical device intended to treat patients of Class III and ambulatory Class IV heart failure and is considered a minimally invasive implant, mainly because the device is implanted outside of the blood stream in a patient's heart. The device could also be considered as having no competition in the intended market, given that current treatments for Class III heart failure may at best only stabilize disease progression.
Earlier this summer, Sunshine shares exploded on heavy volume - from three to seventeen dollars - but a pullback in price quickly ensued and a stock offering announced for seven dollars brought shares even further back to earth. Having settled below the offering price, however, and with the share price looking to have stabilized, this is one to keep on the radar.
If results from the upcoming US trial are positive enough, then it's likely that the FDA could approve C-Pulse based on the trial. A North American feasibility trial has already been conducted and - as noted before - data in Europe were solid enough to warrant an approval overseas. The US trial start could coincide with the first commercial sales in Europe. Last week the company applied with the FDA for an Investigational Device Exemption for C-Pulse, a necessary step in regards to the upcoming trial.
Volume has died down again since the early-summer price run, but this is a company - with a European approval already under the belt - primed for growth and could again be slipping beneath the radar.
One to keep an eye on.
Neostem, Inc. (NBS): Neostem is another company in a very lucrative sector that has seen its trading volume tail off a bit as the company's share price has slipped from their summer highs.
NBS began climbing a few months ago on positive pipeline progress and then received a further boost as the company decided to divest its majority stake in a subsidiary, Erye, in order the strengthen its balance sheet. Then, just weeks ago, the company reported that it had received approval from a data monitoring committee to continue moving forward with its Phase II PreSERVE trial, designed to measure the effectiveness of AMR-001 in preventing or treating major cardiac events following heart attacks. Such approvals are positive in the sense that they provide a firm validation of trial progress, which is especially noteworthy in the sector of regenerative medicine where the technology is still relatively unproven. The intended market for AMR-001 - especially considering its potential use in also treating congestive heart failure - stands in the billions.
Like Advanced Cell Technology (ACTC), whose stem cell-based treatments are geared towards treating severe vision loss, Neostem's pipeline is still in the relatively earlier stages of development, but results from the PreSERVE trial are expected to start rolling in during the latter half of 2013, providing some mid-term catalyst events that make any current day pullbacks worth watching.
Additionally, NeoStem completed in early 2011 the acquisition of Progenitor Cell Therapy a large-scale contract manufacturing facility that has the potential to bring in additional revenue to fund its clinical-stage pipeline candidates. Revenue generated by this division has already led to a growth rate of 95% during the past two reporting quarters, according to numbers presented the latest quarterly report.
Regenerative medicine is predicted to become the next big leap in medical technology and its worth taking a look at some developmental companies in the sector to throw into that 'speculative' portfolio. In the case of Neostem, the company has taken measures to sure-up the balance sheet to continue trials and has also looked to diversify its revenue base - both 'solids' on the part of management as the company advances the pipeline.
Worth a look - especially on any dips - and worth watching this week to gauge whether the slow volume of the past couple of months is a sign of waning investor interest, or if it was just the result of the general lack of volume seen during summer trading, historically.
TrovaGene Inc (TROV): TrovaGene's shares have been trending back towards the two dollar mark, but the company has some pending catalysts for the fourth quarter that put this one back on the 'watch list' for the time being. Most notably, 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 key catalyst, results from other ongoing trials are slated for interim review around the same time frame, too. Shares flew to new 52-week highs earlier this year on the announcement of a diagnostic test to determine the presence of high risk Human Papilloma Virus (HPV) subtypes from urine specimens.
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.
Additionally, TrovaGene announced last week the issuance of a new patent covering "detection of nucleophosmin protein (NPM1) mutations in patients with acute myeloid leukemia (AML)." While the patent inherently boosts the value of the company's proprietary technology, it also triggered a milestone payment from Ipsogen S.A., a subsidiary of the QIAGEN group.
TROV's technology is still in the developmental stages, but it's a story to keep an eye on with some catalysts pending. As we've seen in the sector, pending catalysts alone are enough to spark trading opportunities here and there.
MannKind Corp (MNKD): Shares of MannKind were down by over twelve percent during Friday's after-hours trading after news circulated the wires that the company had filed a $500 million mixed-securities shelf. Such a cash-raising event was expected by many investors for months, even as the MNKD share price rebounded from its sub-$2 lows. Now that the news is on the street, it's likely that the MNKD share price could take a beating once again, barring the release of any follow-up news - such as the interest of a major partner - that could keep investors interested leading into the next round of Afrezza testing.
Afrezza will once again be tested as an inhaled insulin alternative to injections for diabetics, but has already been denied by the FDA for approval. It's worth mentioning, however, that the latest FDA denial was more related to the fact that MannKind did not test the device during the latest trial using the 'next-generation' inhaler that it intended to use on the market; the effectiveness of the treatment was not questioned.
MannKind still has quite a bit of potential over the mid to long run and company founder Al Mann has over a billion dollars invested in the company himself, so that's quite an incentive to see Afrezza through to success. That said, volatility is likely to rule the short term, but that could open up some trading opportunities, especially now that the expected bad news is out.
This will be one of the hotter stories to watch this week.
Advanced Medical Isotope Corporation (ADMD): Shares of Advanced Medical Isotope received a mid-week price and volume boost last week after a few trading days of relatively light volume, and Friday's five cent spread - although on light volume again - could put this one on the radar again for the coming week.
Nuclear medicine, specifically the distribution and use of medical isotopes, is still a booming business and AMIC may have positioned itself right in the center of the industry as a US-based distributor and developer of new and innovative technologies utilizing the sector's next-generation technologies. Medical isotopes are used in the identification and treatment of various diseases - including cancer and heart disease - and their use is already a part of a proven multi-billion dollar market. Demand may actually as geo-political factors have the medical community looking to use low-enriched uranium, as opposed to highly-enriched. That's where AMIC, with an already-established distribution network, stands to capitalize.
The company also stands to benefit from an April acquisition that netted the company a license and eight patents relating to an injectable radiogel technology that can deliver Yttrium-90, a well-established isotope with numerous cancer-treating applications, directly into cancerous tissue. The radiogel instantly holds significant advantages over the current market standard, although it is still just a developmental ideal, most notably because the radiogel allows only a minimal amount of radiation to escape, thereby causing little - if any - damage to healthy tissue.
While still trading for a speculative-level market cap, it's worth keeping an eye on AMIC as the company positions itself to become a big player in the next generation of nuclear medicine. It's still a high-risk play, however, but this is a sector where investors often look for some decent risk/reward plays. AMIC might be a good one.
Lpath, Inc. (LPTN): Shares of Lpath were on the move this past Monday as a key catalyst that had been expected to unfold for months finally did. Earlier this year the LPTN share price dropped to below the dollar mark after the company announced that iSONEP trials would be halted due to a non-compliance issue with the FDA by the company's fill/finish contractor. There were no safety or other concerns regarding iSONEP itself, but the potential months-long trial halt created enough uncertainty in the minds of traders to spark enough of an exodus for shares to dip to below seventy cents from January's highs of well over a buck. It also didn't help, however, that a stock offering was announced right around the time of the trail halt. The past is the past, though, and a Monday news release demonstrated that enrollment is back on track. According to the release, Lpath will continue recruiting patients for its Nexus trial, measuring the effectiveness of iSONEP as a potential treatment for wet AMD. The first patient in the re-started trial is expected to be treated in mid-September and the news brought in volume of over double the daily norm.
With Lpath back in the clinical trial game for iSONEP, investors could again start making note of the company's potential as a leader in the field of lipid-based therapeutics. With the ImmuneY2 platform, Lpath's actual and potential pipeline products contain 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 with iSONEP and ASONEP - is first applying its technology to the treatment of Wet AMD and cancer, respectively. Both of these target markets alone hold multi-billion dollar potential.
It is also very noteworthy to investors that the relatively early-stage Lpath has already landed Pfizer (PFE) as a partner. Pfizer is already along for the iSONEP ride and has a 'first right of approval' for ASONEP. This partnership is a key sign of validation of the technology, if not the products.
With last week's catalyst news out, Lpath can return to 'business as normal,' and that means the LPTN share price might start inching towards their pre-halt highs.
Synergy Pharmaceuticals (SGYP): Synergy shares broke through the five dollar mark last week on high volume as Ironwood Pharmaceuticals (IRWD) received FDA approval for Linzess, previously known as Linaclotide. On August 13th, SGYP shares hit an intra-day low of $3.66 before closing the day at $3.74. Now, just two weeks later, shares are back at the five dollar mark, with volume again increasing.
Synergy had initially moved higher during the dog days of summer after a merger with Callisto Pharmaceuticals (CLSP) was announced in late July. The merger put Synergy in a position of strength in its quest to attract a more committed investor because - as a result of the deal - Callisto's previously-held for percent stake in SGYP will be cancelled and distributed evenly amongst Callisto investors. Many large funds and institutions are hesitant to buy into a company already forty percent owned by another entity. The merger agreement alleviated this roadblock.
Synergy then followed up the Callisto news with a confirmation that a much-anticipated, end-of-year trial milestone was still on track. Results from the recently-closed Plecanatide Phase IIb/III trial should be out by the closing weeks of December and investors could then better gauge the company's true potential moving forward. It is expected that these results will be positive, considering Plecanatide's shared origins and same mechanism of action as Linzess, which received approval from the FDA last week.
With Synergy's catalyst trial news due out later this year and Ironwood's approval news last week, SGYP broke five dollar mark for the first time since June and is a hot stock to watch moving into the new trading week. The Ironwood news is just as big for Synergy, as it also provides validation for Plecanatide.
OncoSec Medical Incorporated (ONCS): Volume picked up heavily late last week for OncoSec Medical, making this player in the cancer sector one to watch during the coming week, too - especially for those that believe that volume precedes price. With the OncoSec Medical System (OMS), OncoSec may have devised a method of delivery for therapies and drugs into cancerous cells that not only meets the ideals of the lower-costing and less-intrusive treatments that the medical community is searching for, but could also change the face of how cancer-fighting therapies and drugs are delivered - most notably in regards to skin cancer.
The process behind OMS utilizes one known as electroporation. During this process, 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 serves two purposes. First, it allows for a better absorption rate - which makes a therapy that much more effective - and, secondly, it does so without harming the surrounding healthy cells. Those are both key take-aways to note when gauging the possibilities of the future, but one should also note that the technology is still in the Phase II stages of development and has a way to go before meeting market.
OMS has spawned two application paths for which OncoSec is developing; ImmunoPulse and NeoPulse, and investors may be starting to key in on their unique potential, as noted by last week's volume spurt.
Roundup: Mr. Bernanke provided a modest late-week boost for the markets and this week all eyes will return to Europe for those expected comments by the ECB. Friday's jobs report will also be key, as you know the politicians will spin it however they want - and for those that love politics, this is your season. Every channel; Every day; All the time - it's us against them and the nation becomes that much more divided. The Facebook feeds are on fire and the blogs are running rampant with words of just how ignorant those on the 'other side' are. I think Clint did us all a favor by finally putting the spotlight on someone who didn't matter for a while, allowing the President and Mr. Romney a chance to catch their breath.
A key week begins on Tuesday, as investors are back from summertime gallivanting and we'll get to gauge the September mood this year. As mentioned above, it's historically been a sour one - and with it being an election season, investors could be extra ornery this year. For this guy, who is all "politicked out" already, I'll settle down for some heavy stock watching while looking forward to some good old fashioned football - to include both Premier League action where Liverpool looks like soccer's version of the Mets right now, and the NFL, where Big Blue is looking to repeat. Good action all around.
Disclosure: Long AMRN, IMSC, SGYP, MNKD.
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