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Friday, May 28, 2010

Readers Respond: Starting a Position in a Stock

From an anonymous comment regarding entry positions:

HELLO VFC: You have mentioned many times to enter a position in small amounts - initially. Let's say I have a hypothetical $10,000 account to purchase BIEL (.03 cents) and CSTO (.11 cents)...how much of the $10,000 account would you spend to initialize positions in BIEL and CSTO? Thanks




VFC's Take: The above comment is correct, I always like starting a position in a stock with only a fraction of the total amount that I intend to put into that stock. My reasoning behind this strategy is that I know I won't miss out on a run if one were to materialize over the short term - I call those 'just in case' shares - but I'm also leaving cash on the sidelines with which to average down if the opportunity arises. Rarely will I go 'all-in' on a stock in one go.

The above comment regarding money allocation, however, is one that I cannot answer. How much money to put in each stock would need to come from the individual investor's own entry plan and would depend on a lot of other factors as well, including what other stocks were in the portfolio and what percentage is dedicated to speculative investments.

It would be my opinion that a whole portfolio should not be made up of two speculative stocks such as BIEL and CTSO - no matter how promising a story looks, the one assumption that you have to make in the speculative market is that your entire investment could be lost.

There's two entry strategies that I'll use:

The first is just plain accumulation. That's when I just throw money at a particular stock every so often regardless of how much it is trading for; the Sharebuilder 'Automatic Investing Plan' is great for this strategy.

The other strategy is price investing; that's when my stock hits my 'Buy' or 'Load the boat' price. More often than not this can be done by leaving a few 'Limit' buy orders in place for the times when I'm not able to sit on a computer and wait for the price to come to me.

As far as how much initially goes in? That depends on the comfort level and entry strategy developed by the investor who is putting the money in.

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Readers Respond: BIEL

From Shep regarding BioElectronics:

I still like the potential in BIEL too. I do think I've reached the end of my being able to stomach averaging down however. Maybe if it hits a penny again I might pick up a few more, but at some point you've gotta look to greener pastures. They seem to be expanding both their product line and their reach which is good. I can envision this thing really taking off in the next couple years. What the pps winds up at is anyones guess. I was hoping we were at .20 or so by now, but it's turning in to a much longer play than I originally anticipated. I'd like to see us back between .05 and .10 cents by years end. Anyway it's all just speculation. I think those that are willing to ride it out will be rewarded...eventually.

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VFC's Take: The BIEL story has taken a little bit longer to play out than most expected, but such is the life of the speculative market. I expect that when BIEL does move, however, it'll be quick and I'm still adding to my position to be fully loaded up when that happens.

Let's look at it relatively, however. Consider how long it took SIRI to drop from its $9 dollar high a few years back before reaching a low of five cents in early 2009, and then it took nearly another year before that stock hit a dollar again - but recover it did and those that loaded the boat at or near the bottom make off with mad cash. The same can be said for TTNP, DNDN and a plethora of other stocks.

Some people waited years to make their money, and there's nothing wrong with that if you're a small investor. It's nice to make money overnight, but realistically that doesn't happen and we shouldn't expect it to. A few good hits makes us greedy for more instant gratification, but we've got to keep it real, play the game and keep our outlooks and expectations in check.

I think that Shep is right, however, when BIEL does pay off again, it could be a nice one. The story is developing and I'm starting to load up on this one like I felt I should load up on TTNP when that stock hit these levels.

Disclosure: Long BIEL.

Readers Respond: BDSI

A comment from Spry regarding BioDelivery Sciences:

My question is why buy BDSI when there are better plays out there with more diverse pipelines? I expect there will be more dilution unless they come up with a partnership soon. Whatever happened to $7-8+ sustained upon Onsolis approval? Just the opposite happened.

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VFC's Take: I'll respond to the opening question in two parts; regarding the "Why buy BDSI" portion, I've indicated before that I believe the risk/reward of BDSI is well worth it considering the potential of Onsolis and future BEMA products. I've described my reasons for buying BDSI on numerous occasions and they can be found by using the Google search bar at the top of this page.

As for the "there are better plays out there" comment, please share them. This is intended to be a forum where the small investor can share ideas, opinions and tips. It's quite a cop-out to state that there are better plays out there and not offer any up - there's a whole lot of stocks out there to choose from, and only a few have the time to find them all.

We like to keep it real around here, cop-out comments don't do anyone any good.

The last question is an answer in itself - many had high expectations for BDSI after the Onsolis approval but the stock dropped on the news. It's been common of late for stocks to enjoy a runup during the pre-approval time frame and then to drop when the news hits - good or bad. The big boys ought to like playing that game because it's a win-win for them, they just go short regardless and when the stock drops they can pick up the cheap shares tossed away by the squeamish investor and cover their positions.

BioDelivery also had a few others factors in place that led to the price decline; there's the REMS disparity, a slower than expected ramp of Onsolis sales in the United States, there was a hedge fund that bailed out and TheStreet.com went positive on BDSI. Not to mention that the short interest in the stock has been on the rise almost continuously.

Additionally, BDSI has a regular - and quite motivated - 'get bash crew' that peruses the message boards on a near constant basis to tell everyone how bad of an investment the stock really is. Common sense would say that people don't spend that amount of time on anything that they have no financial interest attached to, especially not in today's age of greed - so there's most likely an agenda at play that would have that crew dedicate so much time of their lives to feed us 'helpful' information and tell us to sell.

Add all of those factors together you get a whole lot of fishy business and even more volatility.

The small investor isn't here to get rich off of BDSI, we're just here to play the game. The big boys would rather we just close up our brockerage accounts, take our ball and go home so that they can play on the field on their own. That said, it's up to each individual investor to decide how they want to play the game and try to pick up some crumbs that are left behind once the games are played.

Patience is key, however, because when the big boys play with the amount of money that they do, then it takes them a while to build there positions. The small investor can go completely in and out in a few keystrokes on the keyboard - that's why I like to have some trading shares on hand for each stock that I invest in.

But let's get back on track - the lower the BDSI price drops, the more attractive a buy it is - especially knowing that the short interest will have to cover at some point.

And let's keep in mind that this is a forum for sharing ideas and opinions, but let's try not to make blanket statements like "there are better picks out there" without offering an alternative.

It does no one any good and resembles message board fear mongering.

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The next comment comes from an anonymous poster:

Thank you for the update. We have a lot of BDSI in our IRAs. We believe with time, it will pay off - probably when we least expect. Looking forward to hearing what they have to say during their conference in early June. Patience is a virtue.

VFC's Take: As described above, there's a lot at play when investing in the speculative biotech/small pharma sector. Patience is a requirement for each investor to behold because there's a lot going on behind the scenes that can make a story take quite a bit of extra time to play out.

Any bit of negative news (like the BDSI REMS issue) can be played up by the shorts and used to scare off the small investors. There's not really any significant interest in BDSI right now - judging by the volume - which makes it even easier for the shorts to play with the stock - and as I mentioned before, the short interest has been on the rise. So we know for a fact that a (or some) big player(s) want this stock down.

That's fine with VFC because I like picking up shares that I consider to be undervalued based on the future potential of a stock - and BDSI fits the bill. Still.

Each investor should do his or her own DD and base their investment decisions on that DD.

Disclosure: Long BDSI.




Thursday, May 27, 2010

BDSI: Onsolis is Going to South Korea

Shares of BioDelivery Sciences have been trading for under three dollars of late, but a licensing development announced in a press release on Thursday sent shares of BDSI back to over the three dollar mark.

BioDelivery announced that it has entered into a licensing agreement with Kunwha Pharmaceutical Company to develop and commercialize BEMA Fentanyl (Onsolis) in South Korea.

The agreement will bring in a $300,000 up front payment for BioDelivery and potential milestones have the potential to rake in an additional $1.275 million. BioDelivery will also receive a royalty on South Korean sales, although I don't expect the royalty rate to be too much since Kunwha will not only sell and distribute BEMA Fentanyl in South Korea, but the company will also develop and manufacture the product, according to the 8-K filed by BioDelivery with the SEC.

Because Kunwha will have to front quite a bit of money themselves since the company has full responsibility of the product from development to sales and distribution, I don't see the royalty rate for BioDelivery being more than ten percent on sales.

Any new licensing and distribution news is good for this company, but I don't believe that an entry into the South Korean market is the news that will reverse the recent course of the BDSI stock and send it upward. I could be wrong, beause when the big boys are ready to let it roll, then it will roll even on less than blockbuster news, but I don't think anyone interprets the South Korean market as a big one. The news is encouraging, however, especially on the heels of the recent approval in Canada.

For the BDSI stock price to permanently recover, Onsolis sales in the US need to significantly pick up steam, in my opinion, or some partnership/buyout speculation needs to come into play.

I personally belive that with BioDelivery's current pipeline, which includes the BEMA drug-delivery technology, it would be a nice - and relatively cheap - pickup for a larger pharmaceutical company. Of course, that's just my own speculation.

I'm still accumulating BDSI here and there as the stock sits tucked safely away in my IRA.

Disclosure: Long BDSI.


Wednesday, May 26, 2010

Readers Respond: NEXM

An email regarding NexMed Inc.:

VFC

In the past I have asked about NEXM and you made it clear you were not interested in a company who was involved in the ED field and I respect that. However lately NEXM has proved to be much more than that by showing Viatros to be an effective wound healer. On top of this they have given preclinical data showing their NexACT drug delivery system to be very effective in reducing the dosage of treaments. Lastly they have a liver cancer treatment, PrevOnco, that not only got the go ahead to start PII but were encouraged to skip to PIII.

Of course on top of all of this they have a looming deficiency with NASDAQ and have to obtain a $1.00 share price for 10 consecutive days or they may be delisted in mid July (unless they get another extension).

Anyway, didn't know if you were aware the company is much more than they used to be last time I asked you about them and if you had reconsidered your position (because I would love to get your input). Thanks!


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VFC's Take: It is true that I stated that I was not comfortable investing in ED, and although I said that somewhat tongue-in-cheek, I still have reservations about dealing with karma.

That said, I wouldn't let that fear of karma keep me from forming and objective opinion about a potential investment, because the market is all about making money.

As for NexMed, I definitely see the long term potential of the stock because of the NexACT drug delivery technology that the the company has developed in addition to a somewhat full pipeline of potential products. The most glaring issue with the pipeline, however, is that most of the products are in the earlier stages of development.

Additionally, the NexMed website references the potential to combine over $150 billion of brand-name drugs that are coming off patent within the next five years with the NexACT technology, but the combinations would still need to be tested and that will take time and money to accomplish - money that the company would need to raise (possible dilution) in order to stay afloat. Partnerships would be another, probably more preferable option, but partnerships may be a little ways away given the early stages of the pipeline.

I'm still sceptical about jumping in at this point until we know what happens with the Nasdaq listing, but picking up a few shares now to start or add to a position will give you a 'just in case' base of shares to have on board in the event a brief run in price is sparked - perhaps based on news from Canada?

I'd refrain from going all-in just yet. I think that there will be plenty of time and plenty of opportunities over the course of the next year or two to accumulate shares of NEXM for at or below the current prices, so there's no big rush - in my opinion.

If the Nasdaq issue is not worked out, then we'll most likely see a reverse split (a good time to buy would be post-split, in my opinion) or NEXM.ob.

Keep it on the watch list and buy on the dips if you like this one. There's definitely more long term potential than short for this stock, in my opinion.

Disclosure: No position.

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EPCT: Ceplene Making a Move

As shares of Epicept have slid down into the mid-$1 range, the company is finally issuing some encouraging news that has me enticed to jump back in after having sold my entire position about six months ago. At that time, it looked like the next age of the dinosaurs would arrive upon us before Epicept brought Ceplene to market.

However, just a month later, Epicept finally announced a European partner for Ceplene and the product was launched in the UK shortly thereafter.

In an encouraging follow-up to the UK launch, the company last week announced a Ceplene product launch in Germany by partner Meda AB. I got tired of waiting with all the down time between announcing European approval and announcing a partner in Europe, but it looks like Epicept finally has the ball rolling with Ceplene - with the help of Meda, of course.

Epicept released some additional encouraging news on Wednesday announcing that the targeted patient enrollment for the ongoing Phase IIb NP-1 trial has been attained and that top line results would be due by year's end 2010. NP-1 is a NP-1 is a topical cream formulation of two FDA- approved drugsthat is intended to provide long-term relief from the pain of peripheral neuropathies in cancer patients.

Aside from Ceplene and NP-1, Epicept also has Azixa in the pipeline for the treatment of brain cancer and Crolibulin for the treatment of solid tumors.

With the recent drop off from the post-reverse-split prices, the risk/reward for Epicept is starting to look pretty good again, although I'm always a bit hesitant to re-buy into a stock that I left for reasons due - in part - to management not being able to perform.

That said, this one is high on my watch list and I'm just about ready to pick up some shares and start a new long term position of EPCT.

All just my opinion, each investor should do his or her own DD.

Disclosure: No position.

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BIEL: BioElectronics Makes a Move Into the Russian Market

Share of BioElectronics closed trading on Wednesday with an 8% gain, although still under the two cent level.

Shortly after the market opened, the company issued a press release to announce new distribution into Russia, Belarus and Kazakhstan through an agreement with OMEC B.V. of The Netherlands. The agreement will make all of BioElectronics existing products - ActiPatch, Allay and Recovery RX - available in the aforementioned countries.

Increased distribution on the international front as the company deals with the FDA issues in the United States is good news for shareholders, in my opinion, because it means that the potential exists for BioElectronics to recognize significant growth over the next few quarters even while the FDA - in true-to-form government fashion - moves ever so slowly along in granting a final decision on the approval and classification applications for the BioElectronics products.

That said, we can't place all the blame on the FDA - the company itself may have initially offered time frame expectations that were a bit more enthusiastic than the reality of the situation.

At the end of the day, it'll most likely be BIEL's "revolutionary" new product that makes it to the over-the-counter market in the United States as the ActiPatch and Allay gain traction in the overseas markets where the products are distributed.

It's been quite the down year thus far for BIEL and shareholders of the stock, but keep this in mind - the company is real, the products are real and they're available in various markets all around the globe - including here in the US.

I've said it before and I'll say it again - I'm not going to complain about a stock that I like experiencing a slide like the one BIEL has experienced, because it's offered me the opportunity to add to my base position. There's always those trading shares to trade in and out with the volatility, but the possible short, mid and long term potential of BioElectronics makes BIEL an appetizing pick, in my opinion, especially after the slide.

For a price less than what it costs to buy a Bazooka Joe you can have a share of a company that is advancing a real product on a global scale.

That, I like - although I like Bazooka Joe, too.

Patience is key - as is always the case as a small investor.

Each investor should do his or her own DD and invest based on that DD.

Disclosure: Long BIEL.

Stock Watch: SIRI

Shares of Sirius XM Radio Inc. dipped below the ninety cent level during Wednesday's trading session after having reached as high as $1.25 in early May. The most recent run came even after Wunderlich issued a downgrade on the stock a couple of Months ago, just in the midst of the initial run to over a buck. The downgrade was a reverse course for Wunderlich after that entity had initiated coverage barely thirty days earlier with a rating of BUY.

With the short interest up fairly significantly during the early weeks of May and with the stock on the fall, it's time to start looking at buying back into SIRI, in my opinion, although I'm taking a 'wait and see' approach right now as I think that the big boys could take it back down to the fifty or sixty cent level before they decide to cover. That would be a great spot to pick up a few shares, in my opinion, albeit with a few reservations in mind that would have me keep a slow pace of re-accumulation until I see how a few things play out.

Most notably, the possibility still exists that Sirius XM will undertake a reverse stock split, and we all know how stocks drop immediately after reverse splits - most of the time. In the case of SIRI, I think that the stock would recover in a fairly quick fashion if the company's estimate of adding another half million subscriptions this year looks to be on target, but the time to really accumulate shares would be after the reverse split, in my opinion, and not quite right now when it looks like the stock is going to drop a little further due to the large short interest. That said, unless the bottom falls out of the market again, there's little chance SIRI will reach the sub ten-cent levels as they did in early 2009.

Another factor that could effect SIRI for the term is the Howard Stern situation; Stern's contract is due to expire soon, and so far there's been no indication of whether or not he will stay on board with Sirius XM, and if he does remain - just how much will it cost the company?

I look at this situation as a no-win for Sirius because the naysayers - and the shorts - can spin the news negative either way. If Stern remains, they'll tell us how his contract is going to continue to kill the company and if he goes, then they'll tell us how Sirius won't survive without him. I don't believe either scenario would be the case, but that's what they'd tell us to get us to sell our shares into their short covering.

I do believe that another half-billion dollar deal for Stern would be outrageous and I also believe that a large portion of his audience would follow him to wherever he goes next, but Sirius XM has enough content to offer that Stern losses would be somewhat limited, in my opinion.

I wouldn't break the bank to keep him, but that's just me. Give me the Mad Dog Sports Channel and BPM any day and I'll be happy.

The recent slide definitely has tempted investors who sold for over a buck to start looking at buying back in, and I'm in that boat; but as always, I'd say to pick up just a few shares here just in case an unexpected run materializes, but I'd wait until the stock slides further (a likely scenario with all the short interest) to accumulate at a faster pace.

I'd also keep an eye on the reverse split and Stern situations before going 'all-in,' and there's always the debt coming due in 2012 to think about.

If nothing else, the excitement is back with SIRI as the programming keeps getting better and the stock is still a nice - but speculative - long term play. I'll pick up a few shares here and there as the stock slides, but if we see sixty cents or below, then that's where I'll start the real accumulation. Forty cents and below, then I'd load the boat. Anything is possible these days when the shorts take control.

Disclosure: No position.

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All just my opinion. Each investor should do his or her

Tuesday, May 25, 2010

Readers Respond: NEPH, CTSO

From HK regarding Nephros and Cytosorbents:

Hi Vin,

How's it goin? Just would like to know of your thoughts with regards to the following stocks:

1) Nephros

- The recent announcement on the possible sale of securities up to $5,000,000. The only difference now is that they're engaging Dawson James as their placement agent. I believe this would make it more "visible" to the investing community at large such as hedge funds, banks and other outfits.

- I know you have mentioned being a long in Nephros, are you still holding, accumulating or you have sold all?

- Looks like they would have until 3rd Qtr of this year before they run out of $. Any "Feel Good" vibes that the company might somehow obtain an answer (approved/rejection/crl) from the FDA by end June?

- What's your take on the recent announcement by the U.S Govt, for a $1 Billion stimulus for biotech & med device co? Do u think Neph fits the bill? Here's the link:

http://www.denverpost.com/business/ci_15138184?source=rss

2) CytoSorbent

- Dilution. Self explanatory. Good entry point?

- To date, 63 so far has been recruited. Dr. Chan has explained that April being a "tough" month and environment where most hospitals etc in Germany would be on "leave" etc. So far, all plan is still a go.

Your prompt reply is much appreciated. Thanks

HK




VFC's take: Regarding NEPH, yes - I'm still long and each time the stock hits around the sixty cent mark I try to buy; and when it hits over the one dollar mark I may try to sell a few trading shares. This one is tucked away in my IRA, so I've got a long term outlook, although I recognize the short to mid term potential of the stock also.

Regarding any "feel good" vibes regarding the FDA - I NEVER get any "feel good" vibes when the FDA is involved, especially when that organization is dealing with a little player and not a large pharma. It's a waiting game is all and we'll just have to wait it out.

Such is the life of speculative investing in the biotech/small pharma sector.

Regarding the billion dollars that the fed is handing out, Nephros is just as apt to receive some of that money than anyone else - especially since the company already has been awarded a US ONR contract to develop a portable filter for milatary use.

That said, there's going to be a lot of competition for that money, and although longs of NEPH would love some of it to come their way, we're dealing with the government again and we'll just have to wait and see what happens.

I would invest in NEPH based on the specualation regarding the FDA, not on speculation based on being awarded some of that billion dollars.

California Institute of Art and Technology

Regarding Cytsorbents Corporations, I definitely think that the current levels are a great place to add shares, although I'd love to pick up some shares at six cents or below.

The European trial is taking longer than expected, but if successful, there's no doubt that this stock will be trading for a much higher price and the company looks to take their medical device to market.

Funding is a fact of life in this sector, and while investors don't necessarily like to see their stocks drop, I revel in the opportunity to add to my positions of stocks that I think have a nice risk/reward profile - and CTSO definitely fits that description.

I'm thinking that we'll hear results from the trial early next year - for now I'm just happy picking up some sub-ten cent shares.

Thanks for writing, and I emphasize - this is all just my opinion. Each investor should do his or her own DD and invest accordingly.

Disclosure: Long CTSO, NEPH.

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Readers Respond: AEZS

From David regarding Aeterna Zentaris:

Vinny, can I "pick your brain" regarding Aeterna Zenters (sounds like a star out there somewhere)? It's been soaring lately - Seeking Alpha ran a write-up a week or so ago, in which they say that they are the owners of Keryx's molecules but they licensed the N.American sales to Keryx, so that whatever success Keryx sees, so will they. And apparently they have a strong pipeline as well. All sounds good but I don't like to rely on one opinion alone, esp when they are tooting their own horn. Do you have an opinion on this one (AEZS)? ds







VFC's Take: On two previous occassions I have discussed AEterna Zentaris, the first time I called it a decent play because it was not a 'one trick pony' (more in the pipeline than just one product), although I was not convinced that it was a good buy after a pre-results runup.

The second time I discussed AEZS, I was a fan of staying away from it because I felt that, after disappointing Cetrorelix results, the company would need to raise significant cash in order to survive, would probably be without partner Santofe Aventis moving forward and because the rest of the pipeline was a ways away from paying off.

Now, as David mentioned, it looks like the company is trumping its connection to Perifosine in order to remain in the news. In my opinion, this is an attempt by Aeterna Zentaris to advertise itself to any possible suitors out there and I'm not entirely buying it.

I'd be a bit sceptical of this one because the company has reported two significant late-stage setbacks over the past couple of years and will continue to need to raise cash to fund the advancement of the remaining pipeline products. Even if the connection to Keryx does pay off, any revenue from that source is a long ways off.

I also believe that this stock has more of a chance of realizing some significant dips over the short term than spikes, and if anyone wants in - I'd say do it then, if in fact a dip in price does materialize.

As always, if you want in - I'd go in low, meaning leave yourself some money on the sideline so that you're not all-in if the price drops, but you'll also be able to ride the run if one were to occur. I don't, however, believe that anything would lead to any significant run in price aside from buyout/partnership news.

I'd rather see this one on my watch list than in my portfolio, but that's just my opinion - each investor should do his or her own DD and invest accordingly.

Disclosure: No position.

Covestor Investment Management

CELH: More Insider Buying

After Steve and Janice Haley (the CEO and VP of Celsius Holdings, respectively) recently purchased some shares of CELH for themselves, the new CFO and director of the company, Geary W. Cotton, made two purchases last week for a total of over 17,000 shares.

Mr. Cotton's first buy was on May 17th for 8,500 shares at $2.92 per share and his second was on May 20th for 8,800 shares at $2.81, according to public documents.

It's true that the purchases by the Haleys last were encouraging, though not earth-shattering by any accord - as noted by an anonymous poster to this blog - but these buys by the CFO are a bit more convincing, although I'd personally like to see Norelid by back some of the shares he sold last year. Especially since he's back on staff in Del Ray after having left the company for a short period of time with severance.

It'll be a few months of sideways trading for CELH, in my opinion and barring the announcement of any significant developments, and this will be a nice opportunity for the longs to either add shares or average down, if need be.

Last year Steve Haley issued guidance for quarter three that was not met, but the sales increase for the following quarter provided a nice bump. In similar fashion, this past quarter did not meet either the company's guidance or investor expectations, so the next quarter is going to be crucial in judging whether or not the product is catching on as I believe it can with effective marketing; and by effective marketing I mean in the actual sales locations, not just commericals and advertisements by the company.

Celsius does no good sitting on the top shelf in the corner cooler when there is nothing else there to draw a potential customer's attention to the product. That said, I've visited a few 7-Eleven locations that have a "Great Value" flag on the product - that's the kind of stuff that needs to happen for the product to be a success and I think that often goes overlooked.

I still think that the bikini-clad ladies could sell the product better than Mario Lopez also. If they're intent on having Lopez around, at least put him between two San Diego Beach Bunnies and have them each holding a fresh and refreshing can of Celsius.

All just my opinion, let's keep an eye on the ongoing Ultimate Workout Challenge.

Disclosure: Long CELH.

Readers Respond: MCLN

From Shep regarding MedClean Technologies:

Posted on 5/17:

Financials posted today (Monday) for some companies. I'm curious what's your current take on MCLN? I was mildly enthused with their little bit of revenue, and the CEO talks the talk for a rosy future. Are we looking at Xmas time for this one to make us happy or have we crapped out?

Posted on 5/22:

Now I'm really interested in your latest take on MCLN. Price is in full plummet mode right now. My gut tells me investors are panicking over what they perceive was a weak quarterly statement, the new financing deal with Southridge and overall rocky market conditions. Still nobody wants to throw good money after bad. Your thoughts?

optionsXpress

VFC's Take: I'll keep this one fairly brief, sorry for taking a while to answer this one. I still like MCLN as a nice mid term pick and I'm not worried at all about the recent drop in price; there's plenty of stocks that rebound after a free fall, as long as good developments can support a recovery.

MedClean is still a speculative, growing company, but it also has the potential to land additional medical waste contracts which will consequently increase revenue and could lead to a recovery of the stock price. I think that the current sub-penny price is a great buy for MCLN, although I'm waiting to see how low it will go before completely re-loading on this one.

The drop in price is the result of a few factors, in my opinion. I believe that the impatience of investors who were looking for a quick payoff has factored into the drop, as well as dilution and some speculative money leaving the market in these uncertain times.

MedClean is still a speculative play, but a bit of patience here can pay off handsomely further on down the road as the company establishes a bigger foothold in a growing market.

We're also still dealing with a penny stock here, and it's important to keep in mind that most penny stock players are looking for quick returns - a quarter or two at most - and if they don't find what they were looking for in that time frame, they move on. We all carry that mentality at times, but MedClean is one penny stock company that is for real and is growing a business.

Sometimes the good ones take some time. It does seem like I'm saying that a lot lately, but that's the nature of the market that we're in. The patience of 2008 and early 2009 paid off VERY nicely late last year and early this year for those that didn't panic like Jim Cramer and added when everyone was selling.

All just my opinion, each investor should do his or her own DD and invest accordingly.

Disclosure: Long MCLN.




AGEN: Encouraging Results for Oncophage

It's been a long road for Antigenics since announcing that Russia had approved Oncophage for the treatment of kidney cancer in April of 2008 based on a subset of patients from a Phase III trial. Although the trial results were not thought to be encouraging enough to be brought before the US FDA, Antigenics applied for approval in Europe based on the same subset data that convinced Russia to approve, but were denied this time, sending the AGEN stock back to the sub-$1 level after having had an impressive run during 2009.

After trading at those levels for most of 2010, AGEN had a bit of a bounce back of late, hitting as high as just over $1.70, although no significant news had been released to spur such a spike in price.

Last week, however, the company announced encouraging results from a Phase I/II trial at the International Conference on Brain Tumor Research and Therapy, offering new life to Oncophage and drawing new attention to the stock. Any move towards approval is still a long way off, but Oncophage - awarded as the World Vaccine Congress "best therapeutic vaccine" in April, 2009 - could still have an impressive future, based on current developments and past events.

Oncophage is currently in various stages of development to treat a variety of cancer conditions and QS-21, Antigenics' vaccine adjuvant, is being tested in numerous investigational vaccines and the company will receive some future royalty payments if any of those vaccines makes it to market.

It's also possible that Oncophage for kidney cancer is not a complete dud, as I believe that big pharma with big pockets could revive that indication in the event of either a buyout or partnership - a possibility that grows more probable with each passing day, in my opinion. I'm a fan of the future of cancer immunotherapy treatments, and it's still quite possible that Antigenics will play a large role in that future.

That said, AGEN is still a speculative stock and the current volatility should be used to flip a few trading shares, in my opinion, to protect against any future unexpected negative results.

I still like AGEN as a nice long term pick; any short to mid term stock gains would be the result of buyout/partnership talk or a revival of the kidney cancer treatment indication.

All just my opinion, each investor should do his or her own DD.

Disclosure: Long AGEN.

Zap PayDay

Thursday, May 20, 2010

TTNP & VNDA: The Feuerstein Factor

The stock prices of both Vanda and Titan Pharmaceuticals dropped during Wednesday's trading, presumable in response to a posting by TheStreet.com's biotech blogger Adam Feuerstein.

Longs of both stocks should keep a couple of things in mind when deciding whether to add shares or sell into the drop, because as is always the case when a Feuerstein blog post hits the "I pay to have my stuff on Yahoo!" wires, you never get the full story.

First off, Feuerstein has quickly become irrelevant as a source for objective opinion and each one of his blog postings diminishes the credibility of TheStreet.com. The guy doesn't write about a stock until it has either skyrocketed or until he's read about it on BioMedReports or VFC's Stock House. Then, he goes straight negative because a) it's easier (as most biotechs that skyrocket often retrace), b) it attracts more attention to TheStreet.com (although it's mostly angry attention, but attention nonetheless because people love controversy) and c) it's what his puppet-masters tell him to do.

It's my opinion that he's a puppet for at least one or two hedgefund dealing puppet masters out there, as well as for the Cramer cronies, and his credentials as an objective blogger have been greatly compromised by his alleged ulterior motives - even though he tells all the time what a great journalist he really. Just ask him.

Again, all just my opinion based on my own observations.

But, I don't believe he works alone. Each time that he publishes his negative blog postings, a crew of bashers attack the message boards of the stock that he's bashing about in an all-out effort to create a mood of fear, panic and doubt. Often times, little-visited message boards are bombarded by the 'get bash crews' for days until the dust settles and they disappear.

Maybe it's a coincidence, but VFC is not one to believe much in coincidence, especially when TheStreet.com's master puppet - Jim Cramer - is all over the internet describing how easy it is to manipulate markets and play the little guy like a violin.

In the case of VNDA and TTNP, it looks like TheStreet.com's biotech blog is a last ditch effort to push the value of both stocks down - the analyst downgrade of Vanda started the dip, and now TheStreet is trying to finish the job.

The reason I say this - aside from Feuerstein's questionable moves in the past - is because no one with a logical mind could judge the entire future of a drug (in this case Fanapt) on its first quarter on the market - especially when that first quarter was a fairly respectable one. I believe even Feuerstein mentioned in the past that it wouldn't be wise to judge Fanapt on just one quarter.

Now here's the deal - let's not assume that it is the words of Feuerstein that drop the stock, because that is probably not the case - people aren't fooled by his words anymore; more likely it is his puppet masters that are out there doing what they can to lower the price (as Jim Cramer describes) and it's at that point that some weak hands will sell into the drop because they don't know how low it will go.

Keep this in mind, also - this is not a bad thing at all, although some respond to these situations with anger. These drops in price open up some very decent buying opportunities - especially in the case of Titan.

If your DD told you that these stocks were good deals before, then you should almost send TheStreet a thank you card for helping you get in at a lower price. That's the way I see it, at least. I don't support these alleged unscrupulous activities undertaken by these clowns - I don't like seeing the little guy fall prey to the big boy tactics, because when these guys go short they want you out of the way - but I'm also not going to complain too much either because I love TTNP for a buck or under.

Play your own game, and invest based on your own DD, and keep in mind that TheStreet.com and its biotech blog lose a bit of credibility every time something is published over there.

Also keep in mind that these guy pay for the likes of Yahoo! to post their material - you won't find this stuff in the Wall Street Journal or anything, it's all about making money for them - not looking out for the little guy.

You bet I'm buying TTNP for these prices.

Again, I emphasize, this is all just my opinion, each investor should do his or her own DD.

Disclosure: Long TTNP, no position VNDA.

Wednesday, May 19, 2010

Readers' Picks: NYMX

From Kenneth regarding Nymox Pharmaceutical Corporation:

Hi VFC,

NYMX caught my eye some time ago. Today, it's press release mentioned that it's long-term follow up study of BPH drug results will be released within 2 weeks. Do you think this is a worthy investment? I have always appreciated your input. Thank you.

Regards,
Kenneth.




VFC's Take: Kenneth is referring to the long time follow-up study for NX-1207, the company's investigational drug for the treatment of benign prostatic hyperplasia (BPH).

According to a recent press release, the company will announce the results of this study within the next couple of weeks, as already mentioned by Kenneth.

In addition to NX-1207, the company also has various antibacterial agents in earlier stages of development.

Nymox also markets AlzheimAlert, a test intended to help diagnose Alzheimer's disease, and the NicAlert and TobacAlert tests, both of which measure exposure to tobacco and tobacco products. The revenue from those product brought in about $250,000 last quarter, more than double the revenue for the same quarter last year, but it's still an insignificant amount when considering the market cap of the company, currently over $100 million.

If the Phase III results for NX-1207 are positive, as expected, then a significantly higher market cap could be justified later on down the road as over 100 million men worldwide suffer from BPH.

However, I'd be sceptical of going 'all in' on the stock just yet. Because of the chances that the stock could drop after the news is released (whether good news or bad is announced), a better buying opportunity may open up. If a stock drop turns out to be the case - and it's a common occurrence these days in the biotech/small pharma sector to see a stock drop after announcing positive news - then you'll want to have cash on the sidelines to add shares. On the other hand, if the stock drops on bad news (even with the positive press regarding the trial, there's not guarantee that the results will be completely promising), then you'll be glad that you're not 'all in.'

Another concern of mine is the amount of pre-final-results publicity that the company is creating in their press releases; just release the data when it's ready in two weeks, why issue a press release that basically states that the press release with the real information will be issued in two weeks? It makes me a bit sceptical, as if in a warning shot, but that's just me.

So, while NYMX is a promising, longer-term speculative play - in my opinion - I'd only go in right now with a portion of what you intend to invest in the stock over time. That protects you from a drop, but leaves you along for the ride if a run materializes.

Chances are, even if a run does materialize, a financing deal or the sorts could be announced that would cause another dip in price.

Again, this is all just my own opinion and each investor should invest based on his or her own DD, not on the opinions of VFC.

Disclosure: No position.

Refinance.com




Readers Respond: CELH

From Anonymous regarding the CELH insider purchases earlier this week:

Most of the time I agree with you but not this time. There were only 5,275 shares purchased totaling $14,822.75. This is strictly for show. I don't view this as anything more, certainly not worth broadcasting. Add a zero and that would be a different story.







VFC's Take: Anonymous makes a very valid argument, and as I stated in my original post, I wouldn't buy based on these share purchases. I do think that they are worth noting, however insignificant the buys may be perceived, especially since so much has been made of the CFO selling last year.

In that event I couldn't blame the guy for taking some profit and in this instance I can't blame the CEO and VP for buying - whether it's for show or not, the share price will be looked back upon as a great deal if sales pick up at the projected pace (granted that is up in the air at the moment).

However insignificant the buy may be, an insider buy is a whole lot better than an insider sell - look how the riff raff still bring up the Norelid sell. And on that note, I guess a 'Welcome Back' is in order for Jan Norelid, maybe he'll re-purchase the shares he sold on the open market now and chalk up last year's sell and a re-buy at these prices as a good trade.

Each investor should decide for themselves how any event effects his or her investing decision.

Thanks for the comment.

Disclosure: Long CELH.

SIGA: Still Worth the Wait?

Shares of Siga Technologies have approached the eight dollar level of late, rebounding nicely from the low of under five dollars about six months ago. The SIGA stock reached a high of over ten bucks last December in anticipation of a possible awarding of a BARDA contract for the ST-246 smallpox vaccine. The contract did not pan out at the time, although some modifications to the application process in the interest of creating competition were announced around that time.

A $2.8 million contract was awarded to Siga by the Department of Defense in early March, although this one was for ST-669, a broad-spectrum anti-viral.

That's nothing in comparison to the big BARDA contract that investors of the company are waiting for, but it does have the potential to rake in up to ten million dollars for Siga when it's all said and done.

It has been a long wait for the BARDA deal to be awarded, and there is always the possibility that the Obama government does not want to spend that kind of money on a biodefense contract during this time of massive deficit spending, but the threat of a bioterror attack cannot be ignored - especially in light of the recent Times Square incident.

Siga CEO Dr. Eric Rose recently addressed Congress on such a note, as Congress is looking to slash funds that would be used towards the development of biodefense programs by pharmaceutical and biotech companies.

The hesitance by the government to approve money for biodefense in this day and age is contrary to logical thinking, in my opinion, since a bioterror attack - if effective countermeasures and reserves are not already in place - could cripple the very health care system that Washington is trying to 'save'.

It seems like money is the issue right now, regarding the award of the BARDA contract, but if the contract is announced, and Siga is in fact the recipient of the award, then the stock price will be trading for significantly higher prices, in my opinion.

The trading range of between under six dollars and nearly eight has allowed investors to trade in and out with both stocks and options over the past few months (I like to be on 'house money' by the time any news hits), but I'm playing mainly an options game with this one.

As always, there is no sure thing in the stock market, and it may be that this BARDA contract never materializes; but the potential rewards still outweigh the risks, in my opinion - even as our government is more concerned with pork-barrelling bees wax studies in ho-dunk hillbilly land than it is with concentrating on biodefense measures.

Even without BARDA, Siga is still worth a look as a longer term investment and - according to the most recent quarterly report - the company has enough cash on hand to conduct operations for at least the next twelve months.

As a long term investment, I like a 'buy the dips' approach and as a 'BARDA play', I like the late in the year options.

I'm also a fan of protecting your investment and taking some profits off the table when the time arises, so anyone hanging on to sub five dollar shares right now may want to take a bit of profit off the table and take that significant other to dinner, or on vacation.

All just my opinion, each investor should do his or her own DD and invest accordingly.

Disclosure: Long SIGA.

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CELH: The Haley's Pick Up a Few Shares

After announcing first quarter 2010 numbers that did not meet the expectations of many long term CELH investors, the CEO and VP of Celsius Holdings, Steve and Janice Haley, respectively, each conducted an insider purchase of common shares for $2.81.

Steve Haley picked up 3,500 shares while Janice added 1,775 to her position.

The move could be interpreted as an act of support and confidence for the company's revised - but still lofty - sales guidance for the remainder of the year. According to Mr. Haley in the recent conference call, the company will generate between $18-$22 million in sales revenue for the fiscal year 2010, while still aiming to meet the previous expectation of $25 million.

Needless to say, if any of those numbers are met then that would mean the company is growing at huge rate. The lofty sales goals are definitely possible, in my opinion, because I believe that the product will be a winner with effective marketing, but another quarter like the first one would make those expectations improbable.

While the purchase of shares by Mr. and Mrs. Haley is a good sign of support for the company, I don't make it a habit of buying and selling based solely on what the insiders are doing; you'd expect no less than the founder and CEO to show support for the company.

It's still my opinion that over the mid to long term, CELH will be trading significantly higher based on sales growth, which - granted - were not demonstrated in Q1, but let's see what happens down the road with a new marketing campaign and workout challenge.

Disclosure: Long CELH.




eHealthInsurance, Tired, 234 x 60

Readers Respond: SPNG

From Mark regarding SpongeTech Delivery Systems, Inc.:

Vinny,

What is your reaction to the SEC's Spongetech fraud case? With Moskowitz and Meller facing possible prison time, what are your prospects of the company moving forward. The sad thing here is that the product is terrific. At .01 and below, it could be a bargain if the company could survive the fraud. But who can trust the product now? I could even see people not buying the alleged "non-toxic" soap claims for the kids products. These guys appear to possbly be criminals.

Thanks,

Mark




VFC's Take: Along with the ongoing SEC investigation into SpongeTech and the management team, an 8k filed by the company on 13 May announced that the United States Attorney's Office for the Eastern District of New York filed a criminal complaint about a week earlier against the company's CEO, COO and CFO.

The drama continues for SpongeTech, and if there was ever a company beat down by bad news - this one is it.

As for the stock, it should be looked at as purely a 'night on the town' play, as I've mentioned before, but the recent volatility (reaching five cents at one point) and possibility that the company could still release a valid earnings report still makes SPNG.pk an intriguing story to watch.

The way I see it, you've got two options; 1) pick up some one cent shares and throw them on the backburner and wait to see how the 'Days of Our SpongeTech Lives' storyline plays out or 2) try and trade the volatility and action, although you'll need to remain well on the ball and have time to sit in front of the computer all day to try that.

I still get a chuckle out of the fact that the 'Madoff Mess (or Mets)', otherwise known as the The New York Mets, are complaining about bounced checks. How do they think Carlos Beltran is going to feel when his check bounces because Madoff made off with all the Mets' money?

I know we're discussing SpongeTech and not the Mets, but really - The Mets are still paying Bobby Bonilla more than a million bucks per year, money that they thought would come from a Madoff investment, maybe?

Sounds like SpongeTech and the Mets are a perfect match to me.

Anyway, SPNG is a high-risk, very speculative play at the moment, but one that could pay off in either a quick trade or a longer term hold as the story develops - but only should be purchased with Grey Goose money.

There's also the risk that the SEC will suspend trading of the stock altogether.

Disclosure: Long SPNG.

optionsXpress

Tuesday, May 18, 2010

Readers Respond: BIEL, NWTT

From Shep regarding BIEL and NWTT:

Man the wait [regarding BIEL] is getting tiresome. Strictly venting mind you. I realize this is a real company with something to offer and businesses take time to grow. Never the less I'm coming up on a year holding this and am tired of seeing red everyday. For that matter all my penny plays are in the red. Maybe that should tell me something eh?

I've seen NWTT touted on other "pick" sites. Supposedly a run coming--yeah, heard that before. What's your take VFC? BTW you haven't been as active lately. Miss reading your insights. Cheers.


In The Hole Golf

VFC's Take: Regarding BIEL, or any other stock that makes you wait for that matter, it can get pretty old sitting around waiting for a nice run - especially when the run takes a year or two (or even longer). That said, I've gotten burned more often than not in the past by losing patience and moving on to something else instead of waiting it out - once the right news hits and you're not in, then you can end up chasing the stock, and that's always a dangerous game.

I like to be in before a run starts, and because I stagger my investments it's fairly easy for me to keep patient. What I mean by staggering my investments is that when I come up with my entry/exit strategies, I've got various short, mid and long term picks staggered out over time based on expected news. This way I never get bored and I can watch the short term stocks while I'm accumulating my longer term picks. Sometimes you even get surprising hits - PCYC, BVTI, KERX and PPHM all performed nicely over the past few months, although I've either greatly reduced my position in each or sold out completely because they went to far on little or no news, in my opinion.

Sometimes the strategy and time frame changes in a stock, as has been the case with BIEL, but I still prefer hanging on and averaging down (or sometimes up) during the long wait to bailing out an moving on. If I had the time to sit in front of a computer all day and follow hot picks and the such, then I might reconsider that strategy, but the fact is that I've got to play the game more as an investor than a trader.

Tradersroom

As for NWTT, I think this would most definitely be a play based on potential hype from a penny stock promoting site than as an actual investment based on the potential of the company, and in that sense it could pay off, but there's no way to tell for sure.

A brief look at this company tells me that it was created in the telecom/Internet boom of the late nineties and has done what it can to hang on since then. While the goal of the company - as stated on the website - is to become "the leader of voice and data telecom products and services in the Pacific Northwest," there's no indication that the company will ever get there.

Additionally, the current market cap - as listed on the pink sheets website - of under $20,000 is highly suspect and it's likely there have been loads more shares dumped on the market that have not been accounted for yet.

I don't make it a habit of passing much judgement on sub penny stocks, but this one has as good a chance as any to get picked up by a 'pump and dump' or penny stock promotion site, so each investor has to judge the risk/reward for themselves.

As is always the case with the sub pennies - I'd only recommend using 'out on the town' money and I don't suggest getting carried away with stock quanities; a million or so shares sounds nice but it's just chump change in the sub penny world.

Disclosure: Long BIEL, no position NWTT.

California Institute of Art and Technology

CTSO: CytoSorbents Corporation, Formerly Known as MedaSorb Technologies

MedaSorb Technologies issued a press release on May 6th announcing a name change to CytoSorbents Corporation. On May 7th trading resumed for the newly-named company under the ticker CTSO.ob.

Shortly thereafter, CytoSorbents announced a $6 Million purchase agreement with Lincoln Park Capital Fund, LLC, giving the company the means to effectively fund the remainder of the European clinical trial that is testing CytoSorb for the treatment of sepsis.

The trial, as updated in the company's latest quarterly report, has enrolled 63 patients to date and is expected to conclude either in the second half of this year or in the first quarter of 2011.

With the lull in significant news from the company as we await the completion of the trial, the CTSO stock price has dipped back down to the ten cent range, giving the company a market cap of under $9 million (at the close of trading on Tuesday). With no real effective treatment for sepsis on the market, the CTSO stock price stands to significantly appreciate in value, in my opinion, if the CytoSorb trial is a success and the device is ultimately approved for use in Europe.

It's also my opinion that another speculative run in price could materialize later this year as we get closer to the conclusion of the trial. The CTSO (while trading as MSBT at the time) ran to over forty cents during the last speculative run.

An investment here is not without risk, as there is nothing from CytoSorbents on the immediate horizon that can support a decent share price if the CytoSorb trial fails, but the potential rewards that can be had if the trial does succeed and the product makes it to market makes CTSO well worth the risk/reward profile, in my opinion.

It's easy to forget to accumulate a stock when there's a long lull in significant news, but I wouldn't forget about this one; another dip to below ten cents would be a gift, but I'll take the ten cent shares.

Disclosure: Long CTSO.




Readers Respond: BIEL, CELH and Small Startup Companies

From James regarding smaller, startup companies such as Celsius Holdings and BioElectronics:

VFC, I appreciate you taking time to address my price concern re: CELH. Not only haven't I had Ursus Red Vodka, I've never heard of it. But, I would like to get my 2 kids through college and come out the other side without being penniless. So, now you know where I'm coming from...

While we're talking, can you shed some light on this concern as well?

While I understand about patents, it seems to me that "time to market" is everything for companies like CELH and BIEL. In other words, it would seem that time works against them more than a well-established company as the well-established companies (ex. Pepsi, Pfizer) can afford to basically emulate CELH and BIEL products via different means. So, my instinct tends to tell me (maybe incorrectly) that as each day passes without impact, their probability of success diminishes exponentially.


RadioShack

VFC's Take: I agree completely with the statement that "time to market is everything" for the smaller, little-guy companies such as Celsius and BioElectronics. Regardless of how unique a product may be, the big boys can use their cash reserves and political influence to either put a similar product on the market very quickly and/or simply keep the 'little guy's' prodcut from ever reaching store shelves.

We see that quite a bit in the pharmaceutical sector especially, look at all the turmoil, alleged corruption and conflicts of interest that Dendreon (DNDN) dealt with in bringing Provenge to market.

However, if the smaller companies can protect their products from being easily duplicated - in the form of patents or other means - then the risk of being copied is somewhat lessened, although time to market still becomes an issue.

In the case of Celsius, CEO Steve Haley addressed that concern a few times over the past year or so and specifically mentioned that the big push to gain mass distribution channels was somewhat in recognition of the need to gain market share as quickly as possible to establish Celsius as the leader of the calorie-burners before too many more could make it to market.

Additionally, as mentioned in numerous conference calls, the company chose not to patent the MetaPlus formula to keep the exact mix a secret from competitors who could use such information to their advantage.

BioElectronics has also taken measures to protect their products; recent comments from the BIEL CEO Andrew Whelan have indicated that the company is taking specific measures in regards to the FDA filing process specifically to better protect their product from potential competitor copycats.

The concern is definitely there for these smaller companies, and while the 'time to market' is an extremely important variable when assessing the potential success of a company, I wouldn't say that the chances of success are reduced "exponentially" with each passing day, that's a bit extreme - in my opinion.

Regarding Celsius, I think the main problem right now is that the product is still being lumped in with energy drinks.

With BIEL, the problem is with FDA classification right now - and being a small company, it's likely that the FDA has neither the extra time nor the inclination to make a big effort to get their product to market.

Another point to consider, is that while it's a lot more risky taking up positions in the stock of small, start-up companies, the potential upside is a lot higher - that's why we speculate. An investment in Pfizer doesn't interest me because I'll be changing my own nappy by the time that stock realizes the gains that a potential BIEL run could bring, if successful.

That said - when we're playing with education money and the such, I'm not a fan of the more speculative stocks. The highly speculative plays should only be used with 'out on the town' money, in my opinion; money that if lost, all you've really lost was a night out or two and a bad hangover. If some of the speculative plays do pay off, however, then you can throw it in the 'education' pot. That's just my opinion.

Disclosure: Long CELH, long BIEL.



CELH: Celsius Plans June Launch for the Ultimate Workout Challenge

A press release originated from Celsius Holdings on Monday morning announcing a June launch of the Ultimate Workout Challenge summer fitness campaign. The Challenge, already mentioned by the company a few times in the past, will utilize the star power of Mario Lopez while encouraging Americans to live a healthy lifestyle. In conjunction with the UWC, Lopez will promote his new 'healthy recipe' book while pumping the Celsius product. Select Lopez recipes will be uploaded onto the UWC website and participants in the challenge will also have the opportunity to upload short video clips of their success stories and workout plans.

As is the case with any other promotion, the success of the Ultimate Workout Challenge depends on the marketing, in my opinion. If Lopez is truly the celebrity spokesperson for the company, then a lot will fall on him to promote the challenge - something he may be inclined to do since he can also pitch his book at the same time. Aside from a few 'tweets' and a couple of ad spots, Lopez hasn't done much in terms of promoting the product.

The summer kickoff of the UWC conicides nicely with the recent launch of a new marketing campaign, which looks to re-define Celsius in the market place as a 'partner' to a healthy lifestyle, rather than being lumped in with other energy drinks - most of which contain high amounts of sugars and carbs.

As I've mentioned before, it's my opinion that the success of the Celsius brand depends on the consumer recognizing the unique properties of the product, and it'll take effective marketing and awareness to make that happen. The first quarter 2010 numbers would indicate that Celsius still has a ways to go in that respect, although the company is putting a lot of faith in the fact that many loyal customers are being created with all the freebies and coupons being handed out.

I still ultimately believe that the Celsius product has what it takes to gain a foothold in the market, and if the Ultimate Workout Challenge can gain some publicity on a large stage (big talk show or other mass media), then quarter one may turn out to be just a blip on the radar screen and the current share prices could be just a great buying opportunity.

It's crunch time for Celsius, huge growth needs to be demonstrated for the company's projected 2010 sales goals to be reached.

Let's see just how much awareness the Ultimate Workout Challenge brings.

Disclosure: Long CELH.

Friday, May 14, 2010

Readers Respond: CELH

From James West regarding Celsius Holdings:

First, love the site and information.

Next, what continues to concern me about CELH is that I bought a bunch at a pre 20:1 reverse split price of .50 which, at the time, seemed a deal relative to its upside potential. Since then, I continued to buy the dips. But now, at pre-split prices, it's trading at .138 and the series of new lows are equating to a 1-yr long downward trend. Worse, I don't know when a dip is a dip or the start of the bottom falling out.


PeachPit (Pearson Education)

VFC's Take: I'll start off by saying that there's still a pretty good chance, in my opinion, that you'll end up making a decent return on your investment over the course of the next few quarters, especially if you've been able to average down from the fifty cent level.

While the quarter one 2010 sales numbers - which came in less than the previous quarter - definitely raised some concern among long term shareholders, I still think that the Celsius product will be a big winner over the long run because it's a unique product in a market saturated with sugar-laden beverages.

That said, consumers need to be made aware of what they have in hand with Celsius, and maybe the new marketing campaign will bring it home.

As far as when a "dip is a dip or the start of the bottom falling out," what we can do as the little guy is protect ourselves the best we can while waiting for a speculative story to play out; for instance, I've always stated that when I buy into a stock for the first time, I only buy in with a percentage of the total amount that I'm willing to put into that stock - that way I'm already in 'just in case' some market-moving news comes out and the stock starts to run.

On the other hand, I'm not already fully invested if the stock starts to drop and I've left myself open to the option of averaging down. Part of an entry strategy should be coming up with a plan that details how much buying you'll do at various price levels.

For instance, my first buy in the Celsius stock (when it was CSUH) was for sixty cents or so, but I only bought in for very little. I picked up a few shares here and there as the stock continued to slide downward, but I absolutely loaded up when the stock traded for under five cents.

The same can be said for TTNP - the amount of shares picked up for under five cents well offset the shares purchased for above a buck. I never recommend going 'all-in' at the start of an investment in a particular stock, no matter how good things are looking, but I do like averaging down if the stock of what I consider to be a good risk/reward company drops.

With CELH right now, I had to pick up some shares on Thursday in the $2.75-$2.80 range, but I wouldn't be surprised if the stock dropped even lower in the coming weeks unless the company releases some market moving news. We already know that Mario Lopez's mug plastered in Times Square isn't going to cut it, so we need something else.

Without a doubt, the big players in the stock (Pentwater Capital) have a lot more say in the short term direction of the stock than you or I, and it's up to us to decide whether the risk of further investment is worth the possible rewards down the road - one quarter does not conclude the Celsius story.

My years of blowing through cash on anything from Ursus Red Vodka to Grey Goose in various countries around the globe has my patience well in line with speculative investments, so it's nothing to me to sit there and buy a dropping stock if I think the story could still be a good one. The insomniac clowns of a particular stock's 'Get Bash Crews' will say "I told you so" over the short term, but they said that when DNDN traded for three bucks, when TTNP traded for three pennies and when SIRI was six cents (I can go on and on here).

The point is, it's up to each individual investor to come up with his or her own tolerance for risk and only that investor knows how much he or she is willing to lose if things go south.

I will say this about CELH, since that's the stock that is the subject of James' comment - I'm pretty surprised that sales went backwards this quarter, even with all the freebies being handed out. I'm also sceptical of the fact that with all the new distribution and advertising that it still took impressive month-over-month growth just to catch up with the quarter four 2009 numbers. By no means am I in the marketing business, but it's my impression that if it takes a freebie to get someone to try the product in the midst of a fairly significant marketing campaign, then the marketing is not getting the message to the consumer. The sales locations also can't decide whether the product is an energy drink or a diet aid, according to the placement in the dozens of locations that I've visited where the Celsius product is sold.

I think it's crunch time now for Celsius. The company went out on a limb and declared bold guidance for this year, and it's going to take huge growth over the next few quarters to reach even the low end of that guidance. If converting freebies into sales is the plan, then we need to see evidence that the plan is working; maybe the Celsius team is right on the ball with that one, only time will tell. But another quarter of reverse sales number won't cut it, no matter how good the 'cases sold' or 'coupons used' numbers look.

For now, however, after buying a few shares on the post-earnings drop, I'll wait and see if the stock is taken down even lower, at which point I'll load up because I'm still confident that this company and the product has a bright future ahead.

I will be honest, though. I'd much rather see the likes of the Swedish Bikini Team on a billboard with a can of Celsius than Lopez. Let's be honest, I don't know what Mario was paid, but for the cost of a Mario Lopez, you can probaly pay a few hundred San Diego beach bunnies to appear in TV ads, plaster billboards and grace the pages of Maxim AND US Weekly.

Beach bunnies appeal to both sexes because they draw a guy's attention to the product and they make the girls want to hit the gym. Combine that with a can of Celsius and now we're talking.

As always, this is all just my opinion. Each investor should do his or her own DD and invest according to their own plan and tolerance for risk.

Disclosure: Long CELH.

Thursday, May 13, 2010

DDSS: Don't Forget About Labopharm

As I mentioned on Wednesday regarding the BIEL stock, it's easy to forget about a stock that hasn't made significant news of late and is trading down from where your entry point may have been, but taking advantage of the price drops and accumulating shares when it looks like others are selling is the best way for the small investor to stay ahead of the game and benefit from any potential large percentage swings to the upside that may materialize.

This does not hold true for every price drop, of course, but if your DD tells you that the risk of an investment in a particular stock is worth the possible rewards, then a drop in price that you deem to be temporary should be used as an opportunity, not a deterrence - especially when a drop in price comes at a time when it looks like things are moving along smoothly for the company in which you invested.

It's my opinion that Labopharm fits right into this profile, a stock that has dropped at a time when positive events are unfolding for the company. This scenario is not an uncommon one in today's world of biotech stock investing, and patient shareholders stand to benefit if they can wait out the storm created by the fear and panic of a dropping stock.

Let's take a gander at what we have with DDSS, a stock that is currently trading for about a buck and a quarter with a market cap of under $100 million:

The FDA approved OLEPTRO in early February to treat Major Depressive Disorder (MDD) and Labopharm recently announced a joint venture with Gruppo Angelini to commercialize the product in the United States. OLEPTRO is a once-daily formulation of Trazodone utilizing the company's CONTRAMID delivery technology and is entering the huge anti-depressant market, estimated to be higher than $10 billion annually.

While the competition will be tough from drugs already on the market, it's not out of the question to expect that OLEPTRO could bring in annual sales north of the current DDSS market cap within a year or two.

The product is expected to launch in the United States later this year.

Labopharm also has a once-daily version of Tramadol to treat moderate to severe pain already on the market globally and the potential for sales growth for that product is fairly significant being that it is available in nineteen countries.

A twice-daily combination version of Tramadol and acetaminophen is also being prepared for regulatory filings in Europe, Canada and the United States while a twice-daily version of acetaminophen alone is in earlier stages of development.

For Labopharm to be deemed a future success, OLEPTRO needs to make a dent in the anti-depressant market and revenue from the once-daily Trramadol products need to increase as the pipeline develops, but while the stock is trading with a market cap of under one hundred million, I'd say that the risk is worth the possible rewards with this one.

I would also like to add, that these levels look good to add some trading shares - shares that could be on hand to sell into any future spikes to recognize some profits while the 'base' shares sit for the longer term.

As always, this is all just my opinion and each investor should do his or her own DD before investing.

Disclosure: Long DDSS.






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