Stock Watch: NVD, SPPI

NVD: Shares of NovaDel Pharma Inc traded 25% higher during the after hours trading session on Tuesday after the company finally announced news of a partnership for one of its already-approved drugs.

In the deal, Mist Acquisition, LLC will manufacture and commercialize NitroMist, NovaDel's spray treatment for angina pectoris, and pay NovaDel [copied from the press release] "a $1,000,000 licensing fee upon execution of the agreement, milestone payments totaling an additional $1,000,000 over the next twelve months and ongoing performance payments of seventeen percent (17%) of net sales."

As readers of the blog well know, I grew impatient while waiting for NovaDel to come through with a licensing agreement for either NitroMist or Zolpimist and sold a while back, but it looks like those that held on through the quiet time will start seeing some rewards for their patience.

The reason that I had sold was not entirely because of impatience (I know, I usually preach practicing patience), but I also considered the fact that potential partners did not consider the potential of either product to be significant enough to put down the up-front money required to commercialize them.

I was wrong on that point, as it turns out, since NovaDel did eventually find a partner and, with a market cap of just over sixteen million (as of market close Tuesday), it may be safe to consider the fact that NVD is moving closer to becoming a long term growth pick rather than a speculative play.

I'm now intrigued to see how a possible Zolpimist deal works out, and if the stock doesn't jump too much on Wednesday, I may pick up a few shares before any Zolpimist deal is announced. However, I would not be surprised to see dilution through a stock offering following any price spike, but there's room to work with while the market cap is low, in my opinion.

What not long ago I considered dead money, I now see some potential in NovaDel and its stock. I'm not going crazy with NVD, but with a pipeline that is still in tact and a licensing deal announced, I think that a buy for under fifty cents would eventually pay off for investors; if not in the short term, then definitely over the long term - barring any significant set backs.

I'm still a bit sceptical - a licensing deal was a long time in the making - but Tuesday's announcement is a good start and lays a foundation on which to build.

Disclosure: No position.



SPPI: I received a lot of comments and feedback regarding Spectrum Pharmaceuticals earlier this month, and in my response I stated that I was looking for a buy price of under four dollars.

The stock closed Tuesday at $4.12, not yet under four, but worth watching because the lower the stock drops, the more I believe that those investors who are speculating on a rebound will jump back in.

With the stock trading this close to four dollars, I can change course and call it a good "rebound" buying point, but I'd hold back on going in big just yet; maybe pick up a few shares now (maybe a third of what you want to put into the stock) and then try to average down.

That keeps an investor happy if the stock has a premature rebound, but also keeps money on the sidelines if the opportunity arises to average down.

I still don't consider Zevalin a blockbuster - even as a first line treatment - but you'd have to believe that sales will start increasing again instead of decreasing. I'm also looking forward to the company's meeting with the FDA regarding Fusilev. I believe that an additional trial will be required, but the FDA is so unpredictable - especially these days - that the news may not be that dire.

I wouldn't expect too much in terms of short term gains with SPPI, but at the four dollar or below level, I think we've got a decent mid to long term story brewing.

As always, just my own opinion, do your own DD before investing.

Disclosure: No position.