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.
Sometimes all it takes is a spark. In the global economic climate, there are still concerns about the viability of the Euro Zone, the price of oil still hinges on the outcome of numerous geopolitical situations in the Middle East and the signs are few that the US economy is healthy enough to move forward without facing the threat of recession again.
An encouraging jobs report, however, showed that US businesses were hiring on a pace quicker than most expected and that was enough to provide the spark that ignited the DOW on a run of over two hundred points and a close above the 13,000 mark again. The rally was helped by encouraging words from the European Central Bank that indicated help is on its way to the ailing economies, specifically the banks.
It was still a volatile week, one where officials were unable to fend off the doubters during its opening days, but the most encouraging news from regulators and officials came in time to save the day and spark Friday's rally. As the week ended on a high note, investors will be looking for more indications that an August swoon is not upon us, as many had previously predicted would be the case.
Moving ahead, the earnings season - which has thus far proved lackluster - will still steal headlines, with big players such as Disney (DIS), Macy's (M) and JC Penny (JCP) set to report, but with shares of many companies trading at attractive prices following some declines of last month, and momentum built from last week jobs report, investors might be banking on a continued run this week.
Here's just a few stocks and stories to keep an eye on:
Pivotal Play For August:
Implant Sciences (IMSC): Implant Sciences has made encouraging strides in the field of explosive trace detection (ETD) and global security against terrorism for the better part of the year, but a key date discussed in numerous company reports over the past few months has indicated that a huge milestone may be coming due this month as the Transportation Security Administration (TSA) is set to decide on whether to approve Implant's Quantum Sniffer (QS) ETD technology for inclusion on the Administration's list of qualified products. Such a move would position this relatively small company to take advantage of a booming market and to potentially land very notable government contracts as an imminent TSA mandate has contractors scrambling to meet the December 3rd deadline of ensuring that 100% of all air cargo destined for the United States be screened for explosives.
Because Implant's QS technology has the ability to detect minute traces of particles used in explosive devices in a time frame far superior to the competition already on the market, it's likely that a positive approval decision by the TSA would position Implant as the new leader in the realm of ETD on a global scale, as many other governments around the world, such as Japan, look towards the TSA for guidance on products approved to land government products.
Given the potential sales and revenue implications that could follow the TSA approval, this event looms for Implant Sciences as significantly as a new drug approval by the FDA for a small biotech or pharmaceutical company.
Clues that Implant is banking on success could be seen by the slew of new hirings over the past few months. Key additions to the team have been announced at numerous junctures already this year, with significant figures being noted as leaving competitors such as GE Security (GE) and Safran's Morpho Detection to join the Implant team. Such validation has boosted investor confidence and led to a general surge in the IMSC share price.
While waiting on the TSA for approval, Implant has also gained ground in other significant markets around the globe, such as providing hotel security in volatile African nations while also defending dignitaries in Colombia earlier this year at the Sixth Summit of the Americas. Additionally, a large move into the security market is China is underway, as the rebellious and protesting nature of Chinese citizens over the past months has been gaining attention. Workers over there are finally starting to fight for higher wages and better working conditions, and combine that with the inherent terrorist threat faced by other factions operating within China's mainland, Implant has found a solid customer base in that country and two recent orders by Chinese government officials for Sniffer units is evidence that governmental entities are becoming believers.
The doors could be ready to swing open in force for Implant Sciences, making this one a pivotal play for to watch this week and for the duration of the month.
Healthcare, Biotech, Pharmaceutical:
Amarin Corporation (AMRN): Shares of Amarin had been on the decline since the FDA approved Vascepa (AMR-101) for the treatment of very high triglycerides during the closing the days of July, but investors will look towards Friday's rally and last week's late action as a potential sign of a reversal that could reignite interest in the stock and send shares rallying back towards the twenty dollar mark. AMRN closed the day Friday up by over three percent at just under the twelve dollar mark.
While current trends in the biotech and small pharmaceutical sectors have seen share prices drop of many companies following positive FDA approval decisions, another factor that contributed to the Amarin drop, however, was the widespread news of significant insider sells. Insider selling is rarely looked at as a net positive by investors, but it's important to remember that insiders are people, too, and these guys position themselves with strategies - just the small investors should - to cash out with profits at opportune times. Insiders do not have the luxury that small investors have in terms of buying and selling shares whenever they want, so they'll often take advantage of the small windows that they are allowed.
My favorite comment in this regards in terms of insider selling is this one, "Well, Mr. Insider, if you are so positive that the share price is going to keep rising, why sell shares now?"
This is a weak argument often used as a cop-out because it defies the rules of investing that say an investor should devise an entrance and exit strategy and stick to it. Yeah, if it looks like a share price will keep rising, then maybe leave some left on the table and ride it out, but switching up trading strategies based on unknowns and emotion often leads to disaster later on down the road, trust me on that, I've tried that strategy. If you're investing based on a specific catalyst, event or price target, then the only sure way to bank profits is to realize the gains, then you can maybe leave some house money on the table to ride the rest out.
No one should be criticized for such a strategy, not even an insider.
Here's another angle to consider - cashing out in July, as would have been the case for investors playing the Vascepa approval catalyst, allows for a well-timed, bank European vacation on the Mediterranean coast in August. That same vacation in October, for instance, after having waiting out for additional news, just doesn't hold the same aura. You want to be on the European beaches during the prime season, and that's worth banking some profits at an opportune time. There will be plenty of time to sit in front of a computer screen waiting for more gains during the long winter months. You only live one time. Sometimes you've got to take advantage of those opportune sells and live.
While New Chemical Entity (NCE) status is likely the short term catalyst driver that investors will watch, they key to Amarin's rebound is held in the buyout talk. Company shares flew to nearly twenty bucks once before when buyout speculation intensified, but quickly came back down to earth when the company looked to have decided to 'go it alone' for the time being.
Any indications that the company will not put itself up for sale will keep the AMRN share price from charging higher, as investors doubt that smaller, less-established companies such as Amarin can bring a blockbuster to market on its own - thanks mainly to the relative failure of Dendreon (DNDN) to bring a potential blockbuster to the forefront of the market without large pharma help.
I still liken these prices for AMRN to Human Genome Sciences (HGSI) when it was around seven. Everyone and their uncle anticipated a buyout by GlaxoSmithKline (GSK) at some point, but the share price kept dropping to seven. When the buyout offer came, however, HGSI shares quickly doubled and the same could occur with Amarin.
If no buyout talk materializes, then it will take a little longer to see the share price spike, as investors will need proof that the company can market Vascepa successfully on its own.
Still one to watch, and still a nice add, in my opinion, as eventually this one should jump higher again.
Sunshine Heart (SSH): Shares of Sunshine Heart have recently pulled back into territory that could be considered a good second chance for investors that may have missed the run from roughly three dollars to over seventeen during the past couple of months. In fact, given that Sunshine now has an approved product in Europe, this one could be considered even more of an intriguing success story than before.
In milestone news last month, it was announced that Sunshine had received CE Mark Approval for its C-Pulse Heart Assist System. C-Pulse, as discussed before, is designed to treat patients with Class III and ambulatory Class IV heart failure. The device has proven so successful thus far that it is believed that the symptoms of hear failure not only subside, but can actually be reversed with the use of C-Pulse. This theory will again be put to the test later this year when plans are in place to initiate a trial in the United States with an eye towards FDA approval.
Recent results from the North American feasibility trial have been encouraging and the new trial could kick off right around the time that Sunshine is banking its first commercial sale in Europe. Sunshine shares have slipped to under nine bucks again as volume has tapered off somewhat, but it's worth keeping this one on the radar as milestone news continues to portray a bright future for this company.
C-Pulse could prove to be a breakthrough in the treatment of heart failure and the current SSH market cap may still not reflect the true value of the technology.
Lpath Inc. (LPTN): Shares of Lpath have continuously moved higher over the past weeks as the expected re-start of halted trials could launch shares back to previously-traded levels. Trials were halted earlier in the year when conflicts surfaced related to the company's finish/fill contractor and had no bearing on the effectiveness of Lpath's treatments. A new finish/fill contractor was quickly identified and the continuation of the trials is expected to take place within the current quarter, providing investors with an imminent catalyst.
Shares have already touched the mid-nineties after trading in the sixties less than two months ago, already returning huge percentage gains in just a short period of time.
Through its ImmuneY2 platform, Lpath has launched itself into the mainstream of lipid-based therapeutic technology and, likewise, the company was able to secure a big-named partner in Pfizer (PFE) early-on in the developmental stages based on the potential of the platform in treating a plethora of modern day ailments and diseases.
ImmuneY2 contains the unique 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. This technology has been put to work in the form of iSONEP in the treatment of retinal pigment epithelium detachment ("RPE detachment" or "PED") and Wet AMD - for which the Pfizer deal could be worth half a billion dollars to Lpath - and ASONEP in the treatment of various cancer indications. Pfizer also holds a 'first right of refusal' for the ASONEP line.
Given the strong relationship between the two companies, it's probably that Pfizer could look to acquire the novel technology advanced by Lpath while the price is still considered relatively cheap.
With the pending trial catalysts taking shape, LPTN is still one to watch.
MRI Interventions (MRIC): MRI Interventions, like Sunshine, is another company in the sector that may be providing investors with a second chance to get in following impressive price runs. MRI ran from the dollar level just months ago to a recent high of five as volume flew into trading based on the company's ClearPoint and ClearTrace technologies which augment a hospital's existing MRI suite to simplify normally highly-intrusive surgeries of the brain and heart, respectively.
The trend in today's medicine is to find less-intrusive - and therefore less-costly - means and methods to conduct expensive procedures, and MRI Interventions is a company whose technology is primed to take advantage of that trend.
In a sign of validation, some big-time partners have already jumped on.
Tocagen announced earlier this year that it would adopt the ClearPoint technology in a clinical trial being conducted against the most aggressive form of brain cancer, recurrent high grade gliomas including glioblastoma multiforme (GBM), a clinical area where MRIC could make significant headway, pending continued positive results.
MRIC has also already partnered with Brainlab, a leader in the image-guided surgery field in the US and Europe, in the development of the ClearPoint technology while Siemens AG (SI) has partnered-up for the development of ClearTrace for use in less-intrusive procedures on the heart. Maybe most significantly, Boston Scientific Corporation (BSX) offered an up-front payment of $13 million to MRIC to look for ways to introduce the ClearPoint technology to BSX's portfolio of cardiac pacemakers and neuromodulation products.
Given the recent retreat in MRIC share price, this one is well worth a look as a 'second chance buy,' especially given the impressive valuations predicted for the company by leading publishing entities covering the sector.
Synergy Pharmaceuticals (SGYP): Synergy Pharmaceuticals is yet another company in the biotech/small pharma sector that has seen its share price sink to once-again very attractive levels. This company has numerous key catalysts pending that could quickly reverse the retreating trend, namely the release of decisive trial results later this year that would give reason to believe that the SGYP market cap could quickly approach that of competitor Ironwood Pharmaceuticals (IRWD), which sits at well over a billion dollars.
Ironwood's product, Linaclotide, is already before the FDA for approval in the treatment of chronic idiopathic constipation (CIC) and could receive the nod next month, barring any additional decision delays. Both Linaclotied, and Synergy's competing product Plecanatide, are also being developed to treat constipation-predominant irritable bowel syndrome (IBS-C).
Plecanatide, however, has already proven in trials to have a favorable side-effects profile than Linaclotide, hence the belief that the product could quickly steal market share, once approved. Data from the pending Phase II/III trial later this year are widely expected to roll in positive, based on previous studies, as well as the noted success of Linaclotide, which shares origins and the same mechanism of action with Plecanatide.
Synergy also has the pending potential of landing a major partner or buyer.
Ironwood has already partnered its product with Forest Laboratories, Inc. (FRX), which makes the company's market cap of already well over a billion dollars roughly half of what the market is valuing Linaclotide, since IRWD is only due to receive a royalty of fifty percent of sales.
Assuming Plecanatide's superior side effect profile and the potential of the product to quickly eat away at IRWD's market share, it's conceivable that SGYP should soon start looking to at least match the cap of Ironwood. One impediment to making that happen was the fact thatCallisto Pharmaceuticals (CLSP) had owned roughly forty percent of SGYP shares. Such a heavy investment by one entity often keeps large funds and new heavy investors from taking a stake in a company that is ultimately largely controlled by another entity. That will no longer be the case since Callisto and Synergy recently announced a merger that would spread Callisto's Synergy holdings through the entire Callisto shareholder base, therefore eliminating the forty percent control by one entity.
This scenario strengthens the case for SGYP to start being looked at as an attractive investment option for investors of all sizes, especially considering the pending catalysts. Also of significant note, the SGYP shares being spread across the Callisto shareholder base will be 'locked up' for eighteen months - unless a "Change of Control" even takes place first - which means the shares will not weigh down the SGYP share price in the meantime.
The "Change of Control" language also raises the already robust buyout speculation surrounding the company, as the Synergy management team may be already looking for suitors. To speculate further, Synergy may have already been advised that the Callisto holdings may be the roadblock to completing such a deal, hence the need for the merger.
Should a buyout become the endgame, don't expect that before the trial results of later this year. If those results come in as encouraging as expected, then it could be, as they say, "all bets are off" and the bidding will begin.
Worth keeping an eye on this one, and also worth taking advantage of the share price dip, in my opinion.
TrovaGene Inc (TROV): Shares of TrovaGene have also retreated of late, although the company's growing portfolio of developing diagnostic tests that would - if previous successes are repeated - prove to be able to detect numerous cancer types and various infectious diseases by identifying specific transrenal DNA and RNA originating from normal and diseased cell death in urine.
In short, TROV's technology may be able to identify cancers and other ailments by identifying “Transrenal” or TR-DNA in a simple urine sample, as opposed to the blood and tissue sample testing of the current standard-of-care. TrovaGene has capitalized on recent breakthroughs in DNA-marking technologies and has positioned itself to lead the next generation of diagnostically identifying numerous infectious diseases, including many forms of cancer.
If these tests are successful in development, as has been the case thus far, then the TROV technology could be positioned to replace the earlier and more intrusive technologies used in current care, as outlined in a recent company presentation.
Also noteworthy is that this technology seemingly not only eases the burden on patients and practitioners in identifying serious ailments, but it does so in a manner that also eases the burden on the health care system as a whole, as the reliance on more intrusive testing would no longer be required.
This year alone the company has added numerous key scientific personnel, a sign of validation from the medical community, and has also recruited numerous clinical study sites for a pending trial that will test the technology in identifying pancreatic cancer. The planned Q4 trial start provides an imminent upcoming catalyst, as does interim data on currently ongoing studies.
Given the recent TROV share price decline and potential for this company to enter into a multi-billion dollar industry, this is going to be a stock to watch as the story develops.
Cytosorbents Corporation (CTSO): Volume was on the rise last week as shares of Cytosorbents inched higher to the fifteen cent mark following positive analyst coverage a few weeks ago that highlighted the company's potential to eat away at market opportunity in treating severe sepsis and other indications where high cytokine counts are present in the bloodstream. The company's CytoSorb was recently approved in Europe for the treatment of such indications and an official commercial launch of the medical device is underway.
Cystosorbents has been known to move quickly when it does and the recent volume surge could be a nice indication that this company is again starting to get noticed.
Aside from the CytoSorb potential in Europe, look for the company to initiate trials geared towards an FDA approval and other avenues of development, such as potential military applications, could also provide revenue streams and further potential.
Again a hot one to watch with the volume and share price boost.
Facebook (FB) and Zynga (ZNGA): Both company's continued their respective downward trends last week following earnings reports that failed to impress during previous week and it's likely - especially if the broad markets suffer - that the new 52-week lows will be breached yet again, with prices dropping even lower.
Sentiment right now is against Facebook as it struggles to demonstrate the ability to capitalize on the mobile market while Zynga faces the realization of lost market share resulting from changes to the way Facebook lists its game choices, not to mention the increased heat that management is taking from class action lawsuits.
There may be a bright future ahead for these two companies - either on their own or as a combined company - but they're both still risky bets, in my opinion, and are still not trading at levels low enough to be considered solid buys.
Their stories are still worth watching, however, as sentiment could turn on a dime.
Healthy Food and Beverage:
Celsius Holdings (CELH): Last week's volume spike makes shares of Celsius Holdings again worthy of the stock watch list. Although still limping along in terms of increasing investor interest, the company has made some strides this year at stabilizing its cash flow and the logical next step would be to capitalize on the renewed PR push while also expanding sales beyond the $2.5 million number registered last quarter. While two days of heavy trading last week hardly marks a trend, those two days eclipsed the total number of shares previously traded for the entire month of July.
With the hot summer months upon us and work-out enthusiasts in full swing, consumers could be looking towards the pre-workout and calorie burning effects of the Celsius beverage and powdered packets.
Worth watching during the coming week, based on last week's volume spike.
Roundup: Last week's jobs data provided a nice catalyst, but the unemployment rate still inched higher to 8.3 percent. That will likely cause some news outlets to play up the negative and potentially drive the market forces lower. Each week the sentiment towards the European crisis shifts, so be prepared for the same media outlets to notch-up the drama a bit and - after a week of issuing peachy reports - maybe give investors a reason to worry again. It's clear, however, that all measures will be undertaken to keep the Euro Zone together, which serves as a huge sign of confidence that another large-scale collapse is unlikely to materialize.
The US and China are neck and neck in the title for most gold and overall medals achieved in London 2012, but Michael Phelps continued to steal the show by setting records for overall medals won and the US swim team proved that the Olympics is not just a job - as it obviously is perceived for some countries out there - but it's a time for fun and laughs, too, as proven by the YouTube video they put out there before the games began.
Regardless of what too many American sports commentators say about the subject, the Olympics is the pinnacle of sports prowess and should be appreciated as such. It's the only time an athlete can truly declare to be the 'best in the world', and not just the best in a national sport.
This event is a World Series that actually involves the world, congrats to all those athletes that made it to the Olympics in the first place, and to those that have the opportunity of draping themselves in gold and wrapping themselves in their home country's flag - cuz that's what it's all about.
Another exciting week in the world of stocks, Olympics and news is coming up - enjoy, and Happy Trading!!!
Disclosure: Long IMSC, AMRN, SGYP, CTSO, CELH.
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