Briefs: VNDA, TTNP, CPST

VNDA: Shares of Vanda Pharmaceuticals closed down by forty one cents on Tuesday after releasing news of a Novartis licensing agreement for schizophrenia drug Fanapt on Monday evening. Questions were raised by many investors as to why the share price would drop after the company released what should be construed as good news.

Part of the reason, in my opinion, is that some investors were probably disappointed that Vanda was not purchased and viewed the licensing agreement as somewhat negative - if only because they would rather have seen the company be purchased so that they could reap the immediate gains of a buyout. Because the licensing agreement consisted of an up-front payment and additional future royalties, many investors looking for significant short term gains probably moved on when VNDA became more of a long term hold.

Additionally, VNDA had 3.85 million shares sold short as of 10 September, according to the Yahoo stats, and those shorts will need to cover at some point. Since it became known that Fanapt will not be commercially launched until January, it allows for more time for short covering.

While I believe that TTNP.pk is still the better play, I do think that the potential sales of Fanapt will eventually catch up with the VNDA stock price and, as time draws closer to the Fanapt launch, I think it will approach $20 at some point next year.

In my opinion, the most interesting aspect of Vanda surviving as a stand alone company is that there really is no pipeline outside of Rest-of-World Fanapt sales and a Phase II sleeping disorder drug, a product candidate for a very saturated market. If Vanda suddenly has a whole lot of cash on hand, and if the company rakes in even more as a result of Novartis 'power-housing' Fanapt onto the market in strong fashion, then you have to wonder if Vanda will make a play to purchase a pipeline, whether it be through purchasing a specific product or two or a smaller company.

Of cousre, this is purely my speculation, but Vanda is going to need to make a move here, in my opinion, and that next move will decide how much upside this stock has.

Disclosure: No position.



TTNP.pk: Shares of Titan Pharmaceuticals traded to the upside on Tuesday after Vanda's Fanapt licensing agreement with Novartis was announced on Monday.

Titan actually performed somewhat better than I expected and I still consider the stock a buy for below two dollars - for the short term - and I think that any buy for below three dollars is going to be a good one for the long term.

I won't rehash my reasons for making those price calls, but read my post from Monday if you're new to the situation.

Long term shareholders should let the profit takers leave - remember, many are still holding sub-five-cent shares - and as the time gets closer to the Fanapt launch, the TTNP stock price should catch up to its potential.

Also keep in mind that this is still a pink sheet stock and that scares away many investors and institutions.

My own personal speculation has me believing that if Titan is NOT looking to make a move to a major exchange as quickly as possible, then they must have reasons to believe that it's just not worth it; in my opinion, the only reason why it wouldn't be worth it right now would be because they know a buyout is close.

It only makes sense to push for the NASDAQ, or at least the AMEX again, if Titan is to remain a stand alone company.

If you're not in this stock yet, I think that you'll be alright buying it for below two dollars. If you're in - especially if you bought for mere pennies - there's nothing wrong with taking a little bit off the table now, but I do believe that this one is headed higher.

Disclosure: VFC is long TTNP.



CPST: Capstone Turbine's California customer base received a bit of good news on Tuesday when it was announced that, as of 2010, Capstone's microturbines will make them eligible for cash rebates from the California Public Utilities Commission's (CPUC) Self-Generation Incentive Program (SGIP).

While the news is good for Capstone's customers, and therefor also for Capstone, how the heck does the leadership of that state think they are going to pay for these cash rebates?

This news, while perceived as positive for the CPST stock, is just another example of how out of touch California is with reality. Californians love, absolutely LOVE to see the state government spend money, but no one wants to figure out how to pay for all that spent money.

Earth to California - your intentions are find, but get back down here to reality with the rest of us. You can't even afford to pay your own employees or for the public programs that are getting out of control, how the heck are ya gonna give cash rebates for a Capstone Microturbine?

Disclsoure: VFC is long CPST.