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Saturday, November 13, 2010

Weekly Stock Watch: HGSI, BDSI, DNDN

HGSI:  Shares of Human Genome Sciences fell by over ten percent on Friday after the FDA issued a preliminary review of Benlysta, HGSI's lupus drug being developed with GlaxoSmithKline.  In the review, the FDA questioned whether the benefits of the drug outweighed the safety concerns, leading many to wonder whether Benlysta is heading for an ultimate FDA rejection.

As a result, the FDA has asked an advisory panel to convene this coming Tuesday (November 16th) to review the drug's safety and efficacy and to then offer a recommendation on approval.  A final approval decision should be made by December 9th, and if approved, it is projected that Benlysta could bring in over two billion in annual sales by 2014. 

It's still perceived that the product stands a good chance at approval, if for no other reason than the FDA considers lupus an unmet medical need and has not approved a treatment for the condition since 1958.

Because of Friday's drop in price on over five times the normal trading volume, and with the FDA advisory panel convening on Tuesday, HGSI will be a stock to watch for the coming week. 

Disclosure:  No position.

BDSI:  After a volatile week that saw shares of BioDelivery Sciences drop to under three dollars, only to bounce back over that mark during Friday's trading, BDSI will be a stock to watch for the upcoming week.

A conference call is scheduled for Monday morning to address investor questions regarding the most recent quarterly report, and it's expected that an update on the Phase III BEMA Buprenorphine clinical program will be forthcoming, as well as updates on ONSOLIS manufacturing and REMS issues. 

BioDelivery and commercial partner Meda announced a positive meeting with the FDA regarding the REMS issue recently, and any positive developments on that front could push the share price higher as expectations will rise for Onsolis sales once the REMS is sorted. 

Always a decent long term pick, in my opinion, the short term could also prove to be profitable for investors if the right announcements hit the news wires.  For now, investor attention will be on Monday's conference call.

Disclosure:  Long BDSI.

DNDN:   Dendreon also had a volatile week of trading, as the company announced that it had completed the submission of the post-approval supplement to the Provenge Biologics License Application (BLA) for the Morris Plains, New Jersey manufacturing facility.

Additionally, the Centers for Medicare and Medicaid Services will be holding a National Coverage Determination meeting during the upcoming week, which will draw extra attention to the DNDN stock and the Provenge immunotherapy treatment for prostate cancer.  The announcement of the pending meeting had previously caused DNDN to spike as it was perceived as a positive sign that the Medicare agency was not dragging its feet in reviewing possible coverage for Provenge.

While the agency may be considering whether or not to cover Provenge at all, it's more likely that discussions will be based around the off-label use of the treatment, which runs northward of $90,000 for treatment.  The agency has previously stated that money will not be the determining factor when decided whether or not Provenge and its high price tag will be covered by Medicaire.

It's likely that the off-label use will be restricted.


Any positive announcements from the meeting could lead to renewed investor confidence in the stock, and DNDN will be worth watching this week.  

Any dips to around thirty bucks again would be a decent buy, in my opinion.

Disclosure:  Long DNDN.

CELH: Conference Call Offers Nothing New

The Celsius Holdings third quarter conference call offered nothing new that wasn't already said when the quarterly numbers were released on Wednesday.

The biggest notes to take away were the pending launch of the 'Celsius Shot' later in November, right around the time frame that the new, Stevia-flavored all-natural 'Apple Orchard Blend' will hit the market.  The new products, in addition to two new flavors that have recently gone on sale, certainly make the Celsius brand more dynamic, but the company needs to translate it all into positive sales numbers, needless to say, to regain credibility.

Because the estimated 2010 numbers were so far off from actuality, it'll be a long road back to credibility for the company.  It's one thing to miss, but to miss by so much that you barely come in at half the estimated number looks like a number was pulled out of a hat and not based on any trends or realistic expectations.

It also doesn't help that it looks like cash flow positive will be delayed another year and dilution could be in the works as soon as next quarter, if a strategice partner does not materialize who is willing to front some cash. 

There's still the potential for significant news to be released as Celsius looks to build the brand in the health and fitness channels, but for the most part, it's a waiting game until the next quarterly numbers.

The plan for the needed financing will also loom large over the next few months.

There could still be quite a bit of potential with CELH, but these guys are finding it difficult to put together two solid consecutive quarters.

On the distribution front, Celsius announced on Friday new relationships with Select Nutrition Distributors, a division of UNFI, and Natrol to further expand its distribution to health and nutrition retailers.

The sub-$1 levels could turn out being a great buy for both the short and long term, but as I said the other day, I think there is still some downside potential, especially with possible dilution looming. 

Let's see how it plays out.

Disclosure: Long CELH.

Friday, November 12, 2010

Briefs: GERN, CELH, MCLN, BDSI

GERN:  Shares of Geron closed nearly five percent higher on Thursday after the company announced that its Phase II drug candidate imetelstat targets cancer stem cells from multiple myeloma, pancreatic and breast cancers.  The move higher was backed up by strong volume.

Geron continues to be a leader in the field of stem cell research and earlier this year the became the first to receive Food and Drug Administration approval to conduct early-stage clinical trials on a stem-cell based therapy aimed at treating severe spinal cord injuries.

The company has a high market cap, in my opinion, for one with nothing past Phase II trials, although the market potential for the pipeline is huge, so the high market cap may be somewhat justified. 

GERN has been known to dip down to five dollars at time, and that's where I like it as a buy. 

Long term, this one could be huge.

Disclosure:  No position.

CELH:  I'll throw some more opinions out there regarding the latest quarterly report after I've had a chance to catch up on the conference call.

The 'bloodbath' of selling on Thursday was not as bad as I thought it would be considering that management lost most, if not all, remaining credibility by being so far off on estimates and expectations.

There may be some remaining downside to the price, although there could be potential to trade the short term movements. 

I don't believe that this is the death knell for Celsius, but there's no doubt that the CEO and company need to dig themselves out of the hole of lost credibility that they've dug for themselves. 

Remember, original guidance for 2010 was over $20 million, they barely hit half that.

Disclosure:  Long CELH.

MCLN:  MedClean Technologies announced another long term deal with Gamma HealthCare, Inc./Danner Medical Waste Management Services, for the purchase of a MedClean 4500 fixed-based sterilization system.


MedClean continues to build on a solid foundation of distributorship and contracts, although the share price has been trading sub-penny again for some time.
 
Still highly risky and highly speculative - as are all penny stocks - I still like the long term outlook of the company in a growing sector. 
 
I've recently doubled my trading position at below .005 and hold a base of shares for the long term.
 
Worth watching.
 
Disclosure:  Long MCLN.
 
JAZZ:  Jazz Pharmaceuticals continues to inch higher on strong results.  The company has raised full year guidance and shares hit a nine year high. 

The company also announced that Bruce Cozadd, the company's chairman and CEO, will be presenting at the Lazard Capital Markets Healthcare Conference in New York November 17.

Already a huge success story for longer term investors, JAZZ is well worth watching - and/or accumulating - with an eye towards the long term.

Disclosure:  No position.

BDSI:  BioDelivery Sciences broke the three dollar mark and closed trading on Thursday at $2.93.  The quarterly report was a bit shabby, to say the least, and it was reported that some issues at a manufacturing plant will delay the Canadian launch of Onsolis. 

The company also reported that Dr. Mark A. Sirgo, President and Chief Executive Officer, will present at two upcoming investor conferences - the Lazard and Piper Jaffray Investor Conferences - where he will focus on BDSI’s product pipeline, including BEMA Buprenorphine for pain and opioid dependence, and BEMA Granisetron for the prevention of chemotherapy induced nausea and vomiting.


BioDelivery is still a solid long term pick, in my opinion, based on the potential of the BEMA drug delivery technology - which delivers drugs through the inner lining of the cheek from a patch. 


Disclosure:  Long BDSI.

Thursday, November 11, 2010

Briefs: DNDN, SNSS, GNBT, BIEL

DNDN:  Dendreon announced that the company had completed the submission of the post-approval supplement to the Provenge Biologics License Application (BLA) for the Morris Plains, New Jersey manufacturing facility.  Currently, the facility is working at 25% capacity.

Dendreon has somewhat struggled at meeting the demand for the first FDA approved prostate cancer immunotherapeutic treatment, mainly due to the still-ramping up of manufacturing capability. 

It could be up to four months before the company hears back from the FDA, but an earlier decision might be possible due to the high profile of Provenge right now.

Still trading with significant volatility, DNDN still looks like an attractive long term buy, in my opinion, if it drops back towards the thirty dollar mark.

Disclosure:  Long DNDN.

SNSS:  Sunesis Pharmaceuticals issued a press release on Wednesday announcing positive updated Phase II results for vosaroxin, the company's lead product being tested in combination with chemotherapy to treat in relapsed/refractory acute myeloid leukemia (AML).

Shares closed two cents higher on the news, at thirty three cents, on big volume.

Sunesis still looks like a decent enough, longer term speculative pick as a Phase III vosaroxin trial is slated to commence later this year.

Disclosure:  No position.

GNBT:  Generex announced on Wednesday that the company had received nearly half a million dollars from the Therapeutic Discovery Project, grants awarded to just about every small biotech that applied for them, by the looks of it.

The grants were awarded for the breast cancer and prostate cancer programs being advanced by subsidiary Antigen Express.

Every little bit of extra cash helps these smaller, developmental companies, but the amount is far from enough to advance the products through the clinical phases of development.

The real news for Generex, will come when we hear an update on the Oral-lyn Phase III trial.

Disclosure:  Long GNBT.

BIEL:  BioElectronics announced this week in a press release that the company had been awarded a grant from the Therapeutic Discovery Project program, a bit of news already known to investors but had to be acknowledged by the company.

Of note from the press release, the company stated that this grant will "complete funding" for the third molar extraction program.

BioElectronics is working in coordination with the Tufts University School of Dental Medicine, one of the nation's leading dental research centers, to bring this product through the testing stages.

This is a solid, positive development for BIEL, but we're still waiting on the FDA regarding the ActiPatch and Allay classifications - that's where investor attention should be focused, as well as toward the international growth.

Disclosure:  Long BIEL.

CELH: The Third Quarter Numbers

Here's a quick rundown on the Celsius Holdings Third Quarter Numbers:

The Good:  As much as I tried to find a positive angle in the 'spin', I couldn't.

The Bad:  The paltry $1.8 million in revenue was even lower than the first quarter, which also saw revenues decline from the prvevious quarter.

The Ugly:  Still need deep discounts to move the product, but more importantly, nothing that the company has stated in terms of forward looking expectations has come close to being accurate, leading me to believe that these guys were just pulling numbers out of a hat.

The full year 2010 guidance has been reduced - again - this time to $11 million and the cash flow break even guidance has been pushed back.

Additionally, the company will need to raise more funds heading into the next year.

I don't believe the Celsius story is over, but there's definitely some trouble in paradise.  Something's got to give, you can't spit out expectations and not even come close to delivering.

No one out there - even the naysayers - expected this quarter's numbers to come as bad as they did.

It'll be interesting to hear how the company spins a tangled web out of this one during the conference call...

Disclosure:  Long CELH. 

Tuesday, November 9, 2010

SIGA: Second Chances on the 'Small Business Dip?'




Like the recent dip in price for shares of Dendreon - which I consider to be temporary - SIGA's drop in price this week may have also offered up a nice buying opportunity, especially for those who might have mised out on the runup this year - including a near double on the day a big government contract was awarded to produce a small pox vaccine.
 
The reason for SIGA's dip in price earlier in the week was an announcement that the Small Business Administration had determined that SIGA is not a small business, a requirement called for by the small pox contract.  This development could render SIGA ineligible for the contract, and that possibility is what likely convinced investors to bank profits while they could on Monday. 
 
According to recent information, SIGA has 55 full time employees, still a 'small business' by common sense standards, but we all know how little common sense exists in Washington where decisions like this one are made.  A chief rival of SIGA, Chimerix, played the sore loser after the contract was announceed and filed a protest leading to the announced decision.
 
I don't believe it's likely that the contract will be revoked - modified, maybe - and it's my opinion that if the general investing community felt like SIGA was due to lose the award then the price would have dropped to far lower prices than where the stock now trades.  As I said previously, the drop-off is more indicative of profit taking on a situation of increased uncertainty than it was a full-blown sell-off.
 
It's also comical that some headlines read 'SIGA Shares Plummet' as a result of the news, because a 22% drop could hardly be considered a "plummet" in the speculative and volatile biotech sector.
 
Follow the developments, but I think this will end up being a temporary dip for SIGA as the need for a small box vaccine will not be diminished because feelings where hurt at Chimerix. 
 
The contract is a big one, worth up to $2.8 billion, and the share price had barely reached its potential before this setback was announced.  There's still a lot of upside left, especially if this thing drops back down to the ten dollar level.
 
Disclosure:  No position.
 



CELH: The New, All-Natural Calorie-Burning Beverage

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For those who have long been waiting for Celsius to make a move into the health and specialty food & beverage market, the wait will be over in just weeks.  Two days before announcing results for the 2010 third quarter, Celsius Holdings issued a press release introducting consumers and investors to the latest non-carbonated flavor of the growing-in-popularity calorie-burning, pre-workout beverage,  Apple Orchard Blend.  This is the first flavor sweetened with the all-natural sweetner Stevia and gives Celsius the 'in' to the health food channels.

This is part of a new look for the company, which just introduced two additional new flavors less than a month ago, Lemon Iced Tea and Strawberry Kiwi.  Also adding to the new, modern image of the product, Apple Orchard Blend will be offered in white, sleek 12 oz cans. 

Already growing in distribution, the all-natural title opens the door to a whole new market.

In other news, the Celsius Ultimate Workout Challenge has come to an end, with Lu Atchley, hailing from Tennessee, being announced the grand prize winner.  The Lucky Lu will receive a trip for two to Los Angeles, California to meet Mario Lopez backstage on the set of "Extra". 

Personally, i'd rather have received the prize that six other challenge participants received, a year's supply of Celsius.  Nothing against Mario, I just don't think that the guy has anything to offer.  Few love themselves as much as this guy does and he hosts a show about girlie gossip.  Not exactly my cup of tea, but to each his own.  Regardless, it'll be good publicity for Celsius, and that's what it's all about right now for the company - good publicity.

News of the new, all-natural flavor had CELH busting through the average daily trading volume only a few hours after the opening bell on Tuesday, although that may have more to do with positions being taken for Thursday's report than Tuesday's news release. 

The CELHW warrants were active again also, although to nowhere near the extent of this past Friday when nearly 40,000 of the usually very lightly traded warrants switched hands.

It's been a pretty dull year for Celsius investors to this point, but the story is being reinvigorated with every new release.  It does cost money to launch new products, so we'll have to bear that in mind leading into Thursday's results, but it looks like this company is well on track.

Stay tuned.

Disclosure:  Long CELH.

Penny Play - MCET: Three Programs Receive Federal Money

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Shares of the highly speculative penny play, Multicell Technologies, have continued to slip to the downside of late, but the trading history of the stock and its penchant for relevant - if somewhat sporadic - news releases keeps this one on my short term trading and long term accumulation radars. 

The most advanced product in the pipeline is Phase II product MCT-125, a therapeutic candidate for the treatment of fatigue in MS patients.  MCT-125 has already demonstrated efficacy in a 138-patient Phase IIa clinical trial.

Multicell was awarded over $730,000 from the Qualifying Therapeutic Discovery Project Grants for the advancement of MCT-125 and two other preclinical stage cancer treatments, MCT-465 and MCT-475.
This amounts to a significant higher monetary award than most other companies received, although since it covers three programs, the grant is in line with the norms that were dished out from the program.

Always an attractive speculative pick regardless, with MCET now trading for below the .005 mark and with some additional cash in the coffers, it could be worth loading up on some shares with 'night on the town' money to take advantage of any speculative moves from the stock.  Past moves have lead to easy doubles - if not more - but usually result in a quick sell-off since there's never been any news substantial enough to justify a sustained run.

In other news from Multicell, it was recently announced that majority owned subsidiary, Xenogenics Corporation, purchased all Ideal BioStent assets from investment funds managed by Western Technology Investment and Silicon Valley Bank.   Additionally, Xenogenics entered into a worldwide exclusive license with Rutgers University for rights to certain intellectual property related to the Ideal™ BioStent.

Should Xenogenics advance the Ideal BioStent to commercialization, the company would be taking advantage of a multi-billion dollar market that could prove to be highly lucrative over the long run.

A highly speculative sub-penny play, but maybe worth eyeballing.

Disclosure:  Long MCET.

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Penny Play - MHAN: Back on Track?

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A few weeks ago I mentioned Manhattan Pharmaceuticals as an extremely speculative penny play that could return some huge percentage gains if the company were to advance either of its top two pipeline candidates to market. 

The two most advanced candidates are Hedrin, a non-insecticide treatment for head lice already on the market in Europe, and AST-726 for the treatment of vitamin B12 deficiency.  Manhattan is in a battle royale with Joint Venture partner Nordic over shares and Hedrin's advancement in the United States may be on hold until that issue is resolved, but a press release issued Monday sparked some attention the AST-726.

The announcment in the PR stated that Manhattan had been awarded $244,279 from the Qualifying Therapeutic Discovery Project Credit Program, not a hugely significant amount by any means, but enough to draw some interest to the lightly traded stock as over 100,000 shares traded hands on the news.  The PR printing press at Manhattan's headquarters had been dormant for most of the year, but with the recent PrecisionIR webcast and the most recent press release, it looks like Manhattan may finally be coming around to - if nothing else - acting like a legitimate company.

A Phase III trial is planned for AST-726 early in 2011 and - if successful - the path to commercial launch should be fairly quick.  While the amount of the grant may have many shrugging their shoulders, for a company as small as Manhattan, even the $244,279 awarded by the feds will significantly help in the push towards approval. 


The Manhattan story has been slow to develop, but the highly volatile stock (in terms of percentages) could double or triple on speculation alone.  If any relevant news were to come from the pipeline progression, then a nice trip to the upside could materialize.

Still highly speculative, but well worth watching, if not accumulating with the 'night on the town' money.

Disclosure:  Long MHAN.
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Sunday, November 7, 2010

Weekly Stock Watch: CELH, BIEL, MNKD, DNDN

CELH:  With Celsius Holdings set to announced results for the third quarter on Tuesday, CELH will be a stock to watch for the coming week.

Investors will be looking for a continued growth trend that replicates, or comes close to the solid numbers reported for the second quarter which saw year-over-year numbers increase by 252% and quarter-over-quarter numbers increase to $4.1 million from just $2.3 million the quarter before.  The company's full year estimates, although having been modified lower a couple of times, call for $15-$18 million in total 2010 sales.  Third and fourth quarter numbers in the range of five to five and a half million per would put Celsius in line to reach those expectations.

However, with reinvigorated growth into relevant sectors and two new flavors now on the market, expectations may be higher by year's end.  The most recent news releases regarding growth and distribution potential will not be realized until we see numbers for the fourth quarter, but there's been enough progress made into the military exchange market and bulk distribution channels to support steady third quarter growth, in my opinion, especially if re-orders from existing outlets continue to increase at the rate demonstrated throughout the year thus far.

Volume for the CELH stock has been on a steady increase over the past couple of weeks, and aside from a nearly comical 500-share day, it could be argued that some increased interest and/or short covering has been taking place in preparation for the upcoming earnings release. 

Also of extreme interest, the ticker symbol for the Celsius warrants (CELHW) traded nearly forty thousand shares on Friday, a huge number for the normally very lightly traded warrants.  A 37% increase accompanied the CELHW volume spike, on the heels of another day earlier in the week that saw 3,333 warrant shares trade hands

Any results that come in below expectations could allow the shorts another ample opportunity to push the stock downward, but the increase in warrant volume could also indicate that those with a long time negative view of this company may be feeling the need to take up a protective long position on the other side of the fence just in case the numbers indicate strength - hence the large purchase of CELHW, which took place below the radar.

For those that are the long term believers in the potential of the Celsius calorie-burning product, the prices below $1.50 have offered up a solid buying opportunity.  The naysayers that believe Celsius is competing against other energy drinks and not functional, healthy beverages, will still believe that this stock has a lot of potential downside.

Tuesday will be a day of insight, to see if the product is catching on and whether or not we're to believe that cash-flow-positive is just around the quarter, as has been alluded to by CEO Steve Haley at numerous points throughout the year.

Keep an eye towards Tuesday - increased volume and quarterly results make CELH a stock to watch.

Disclosure:  Long CELH.



BIEL:  The BioElectronics brand popped up on the IRS list of companies who are to receive federal money through the Qualifying Therapeutic Discovery Project Grants, although the money was geared towards funding a program titled 'Third Molar Extraction Pain'.

The company had previously announced the intent to move into the dental pain market, but as far as everyday BIEL investors are concerned, this is a new program that has yet to be made public.  Interest will be there to see if BioElectronics is going to back up the stealthy announcement with a news release.

In the meantime, the BIEL share price has broken down awfully close to the pivotal one cent mark, leaving some investors weary that a move to just below a penny could trigger a huge selloff.  While the possibility does exist and cannot be ignored, quarterly numbers are close enough and, if positive, could possibly negate any more potential downward pressure on the stock. 

On the other side of the coin, numbers that are not-so-impressive could make BIEL a sub-penny stock once again as long termers lose patience and traders play their games.

It's also worth noting the large increase in presence of the BIEL bashers in cyberspace.  Something could be in the works behind the scenes that has these guys looking for you to sell your shares, or positions could be being taken in anticipation of the pendings quarterly earning report.

One thing should be taken for certainty regarding BIEL - the volatility is far from over with this stock, especially with FDA over-the-counter clearance in the United States still an unresolved issue.   

The recently awarded grant money to fund the molar pain program will help the bottom line, but it is far from a significant enough amount to keep the company - or the share price - afloat if the quarterly results are not up to par. 

Because the last trading week ended with BIEL hovering so close to the penny price, it'll be a stock to watch for the upcoming week.

Disclosure:  Long BIEL.




MNKD:  Mannkind announced some possibly troubling news late last week, when it became known that a former employee had filed suit against the company, alleging that some negative results from the Phase III Afrezza trial were kept from the FDA.  The suit also alleges wrongful termination, as the said employee claims he was fired for bringing the cover-up to light.

There's no telling if this is a disgruntled employee looking to damage the company as it attempts to bring the first insulin-spray product to market, but none-the-less the lawsuit puts Mannkind in the spotlight and will undoubtedly attract additional scrutiny to the Afrezza, Mannkind and its stock.

A ten percent sell-off in price on Thursday was backed by significant volume, but MNKD was able to hold its price on Friday on normal volume, possibly indicating that investors are satisfied to take a 'wait and see' approach regarding the lawsuit.

FDA decision day for Afrezza is due for later this year, so it's yet to be seen whether these allegations will effect the review at all, since much of the trial data has already been reviewed during the course of the approval process

For those that view the lawsuit as a frivolous one based on the unsubstantiated allegations of a former employee, then MNKD may look like an attractive buy after the drop - especially if it dips towards five bucks again as it did during intra-day trading on Thursday.

However, I'm leaning towards the side that says it's too risky a proposition right now, with the uncertainty surrounding Afrezza and the fact that the stock has a lot of potential downside while trading for the current market cap of over 600 million.

Definitely one to watch, but I'd do just that - watch.

Disclosure:  No position.





 
DNDN:   Dendreon reported sales results for the third quarter last Thursday afternoon, and the 'miss' in earnings compared to estimates causes a minor selloff on Friday, although the four percent drop was not backed by significant volume.
 
Revenue from Provenge, the first approved cancer immunotherapy treatment, was reported as $20.2 million, although analyst estimates had predicted sales closer to $23 million with losses less than the nearly $80 million reported - mostly due to the increase in infrastructure spending.
 
Provenge sales are growing, as demonstrated by the month-over-month increases, although the company is still struggling to keep up with demand as the manufacturing capability is expanded.  That is a temporary challenge, and once the company is at full capacity, then the difficulties supplying the increasing demand will disappear. 
 
It'll be worth watching to see if DNDN continues to trade down on this news, and it's my belief that any downtrend should be used as a buying opportunity, because the dips in price will only be temporary, barring any unforeseen negative developments. 
 
Provenge is predicted by many to rake in as much as a billion dollars a year in as quick as few years down the road - if the production capacity takes place at an expected rapid rate - with sales upwards of $300-$400 million for next year alone likely.  With potential like that, it's hard to see impatient investors bailing out of DNDN after these quarterly results, but such is the game of investing.
 
Dendreon has traded with volatility over the months since approval, but all indicators are that Provenge will become a blockbuster product, regardless of the slow ramp-up of production.  Any trading to the downside - especially if it breaks thirty bucks again - should be looked at as buy time.
 
One of the better long term holds out there in the realm of cancer immunotherapy stocks, in my opinion, especially if it goes on sale again. 
 
Remember, DNDN is no longer speculative - this is a big player with a big product.
 
Disclosure:  Long DNDN.

Trade with Confidence.

Saturday, November 6, 2010

Readers Respond: GNBT, MNKD

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From Jerrold regarding my latest MNKD/GNBT posting:

I too have a question on your GNBT article: "...the general consensus out there in the investing world, if the GNBT share price is to be an indicator, is that Oral-lyn may have some issues of its own." How is the share price any more indicative of a 'problem' than any other unproven speculative stock until final results are in? There are countless stocks that were ignored until final Phase III results were released and then skyrocketed. By then the horse was out of the barn. The dormancy was the perfect time to load the boat before the pros had their turn; e.g. TTNP, DNDN, etc. GNBT Oral-Lyn was already approved by the FDA for the Treatment Investigational New Drug (IND) program to treat people who have no other alternatives and are facing life threatening situations. This is the ONLY time a diabetes drug was included in the program and 100% of all drugs previously in this program were approved for the general population. Obviously this doesn't mean future drugs will enjoy the same approval rate, but it does indicate the FDA's extraordinary confidence in the drugs based upon initial review of efficacy and safety. Unlike Mannkind's product, Oral-Lyn doesn't use a reformulated insulin, it's the delivery system that is different, not the drug. MNKD has to pass on both the system AND the drug.

The main issue GNBT has like all stocks in the microcap biotechnology space is 'Does it work?'. Any preliminary review released to the public indicating this will make the issue soar, especially if the other side of the house also has positive news on the cancer vaccines.

Best,

Jerrold

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VFC's Take:  In stating "...the general consensus out there in the investing world, if the GNBT share price is to be an indicator, is that Oral-lyn may have some issues of its own" was in no way intended to take away the inherent speculative nature of Generex and its stock.  It's true, that if the ongoing Phase III Oral-lyn trial provides proof that the product works as advertised, then that will provide the fuel to boost GNBT significantly higher than where it has traded over the past months.

However, for both Oral-lyn and Afrezza, I'm not so sure that the Wall Street analysts and some in the medical profession feel that insulin can be effectively delivered through a spray, whether the spray uses the lungs for absorption, as does Afrezza, or the inner lining of the cheek, as does Oral-lyn. 

That's the point I was trying to make. 

Not that the analysts are always on the ball with their assessments - and more often than not I think that these guys operate with an agenda that does not have the small investor in mind - but from the coverage that Generex has received from the investing media, many consider it a long shot for approval.  I don't necessarily agree with that assessment, as I've stated here many times before - and hence my growing position in the company - but I do think that the FDA is going to need some pretty overwhelming evidence that this works before approving.

It can be argued that - for the most part - there's a large group of investors who don't feel that the evidence will be overwhelming enough to support an approval the first time around, based on published articles, blog postings and reports.

I do agree with Jerrold that you have to be in a stock well before the big news hits - sometimes a year or two before - in order to appreciate an entire ride up from the true bottom on good news, and that is why I believe that GNBT is a great risk/reward play right now.

However, we've got to at least entertain the notion that Oral-lyn might not come out up-to-snuff when the Phase III trial is complete.

So, I do believe that there is a big element out there in the investing world that doesn't believe in the potential of Oral-lyn, but I do believe that this has opened up a good buying opportunity for the speculative small investors who want to place their risk/reward positions on the long side of the coin. 

I also wanted to emphasize in my MNKD/GNBT post that while bad news for Mannkind could inherently be considered good news for Generex, investors shouldn't get too excited with the news of the lawsuit, because it really has little to do with Generex - unless Afrezza is held from market and Oral-lyn has a chance to dominate market share for the insulin spray upon commercialization, should the product make it that far.

Hope this clarified my words somewhat.

Disclosure:  Long GNBT, no position MNKD.



BIEL: Third Molar Extraction Worth the Awarding of Grant Money



The Qualifying Therapeutic Discovery Project Grants program is well underway, with a billion dollars worth of grants being announced over the past week, and regardless of whether one believes that the program will become an effective measure to create jobs or not, it has drawn attention to some yet-to-be-known companies, programs and products. 

It's also drawn attention to companies that we already know about, and follow.

The IRS posted the full list of recipients for the QTDPG grants last week, and it came as a surprise to shareholders of BioElectronics Corporation to not only see the company named on that list as an awardee - but to see that the nearly $130,000 awarded was for the Project Name titled 'Third Molar Extraction Pain'. 

To date, BioElectronics has pushed the ActiPatch, Allay, RecoveryRX and HealFast (for pets) products, but there's been no mention of a product targeting pain from molar extraction.  Since this program was 'announceed' as a result of the IRS listing, it's safe to assume that its development was on hold as the company concentrated on advancing the flagship products before branching off again. 

However, the awarding of the grant could push the dental product back on the path to development.




Since the cat's out of the bag now, it's likely we'll see an investor update about the new product before long. 
 
In the meantime, investors will be keeping an eye out for third quarter numbers.  The second quarter results showed significant growth on the international market, and it's expected that the growth trend also continued through the third quarter.  That said, the recent product launch of Allay in the UK will not be factored into any third quarter growth since the launch took place during the current quarter, but UK sales could hold some nice potential for fourth quarter numbers.
 
Another possibly significant distribution event came from YesDTC last week, when Joe Noel's company declared on November 3rd that its distribution contract for medical devices in Japan had been terminated.  YesDTC's press release did not mention BioElectronics by name, but there's little doubt that the contract in question was, in fact, the one to distribute BIEL products in Japan, including the distribution of the ActiPatch, Allay and the new back pain belt.
 
YesDTC claims that it terminated the Japanese deal in order to pursue more lucrative endeavors elsewhere, which has led to speculation by many investors as to what really went on behind the scenes between YesDTC and BioElectronics that has yet to become public. 
 
Regardless of who kicked who to the curb, I think that this signifies the final nail-in-the-coffin for the Joe Noel-BioElectronics relationship - which I consider to be great news for BioElectronics.  We'll have to wait for an announcement of a plan laying out the new course of action in Japan, if there is to be one, but for BIEL, this is addition by subtraction, in my opinion, as the company will look more legitimate without having Joe Noel tagging along for the ride.  Let YesDTC concentrate on the MediPendant (which offers nothing more than a cell phone does, in my opinion) and the Alex Trebek product, while BioElectronics concentrates on the international, and possible domestic growth - if the FDA ever renders a decision on classification.
 
Another possibly noteworthy development is the very significant increase in the BIEL 'get bash crew' in cyberspace and on the stock message boards; these guys don't show up out of the goodness of their hearts - they're there for a reason, and that reason is to create an environment of fear, panic and doubt around the company and its stock. 
 
The reasons for seeing this increase in bashing activity could be many - it could be that news is pending and some big players want as many of your shares as you'll give up, or it could be that they want to take the stock even lower, or it could be that some short shares - naked or not - need to be covered and the lower the price the better. 
 
The fact is, each investor has to stand by his or her own DD and investment strategy through the storm of bad press.  I take all significant dips in this stock as a buying opportunity because I believe in the international prospects for growth, and I also believe it's only a matter of time before the FDA acts.  Had it not been for the fact that BioElectronics is a little player in a big, dog-eat-dog market, then these products would have been approved for over-the-counter sales in the US long ago.
 
As for the subject at hand, however, it shouldn't be long before we learn what the program for 'Third Molar Extraction Pain' has to offer.
 
Keep an eye on BIEL, as always, it's been a long ride, but the story is still developing.
 
Disclosure:  Long BIEL.
 

Qualifying Therapeutic Discovery Project Grants, Effective or Just More 'Spread the Wealth?'

In following up on the stories of companies that were awarded grants from the The Patient Protection and Affordable Care Act of 2010, it's worth pointing out that there's nothing significant about named as an awardee on this list, and the receiving of federal money should not be taken as an indication that the pipeline products of one company have any better a chance at making to market than another. 

The intent of the feds, according to Secretary Kathleen Sebelius from the department of Health & Human Services, is to see the small companies who received these funds to "be able to hire more staff, improve facilities and move forward with research projects that might otherwise have been put on hold."  As is usually the case with initiatives that originate from Washington, the intent is there, but the execution is poor. 

A billion dollars is a lot of money, especially when it's the taxpayer's money, but when you take a look at the list of who received these grants, you have to wonder if there was any screening process whatsoever involved;  it's hard not to assume that all you had to do to receive the cash was apply.

Don't get me wrong, I think the grant money is a good thing for the receiving companies, because any little bit helps keep the loansharks at bay, but in the sense of creating jobs and improving facilities - as Ms. Sebelius mentioned - a couple hundred thousand dollars doesn't go very far.  Because so many companies received money, and because no real screening process was put in place to find the best of the bunch, the one billion dollars that was supposed to be used to create jobs has been diluted enough that the money will be most likely be used for general administrative purposes, which doesn't spell job postings. 

Free money is free money, so you can't argue that any little bit helps these small companies, but I'll be very surprised if any significant hiring gets done as a result of these grants.  As I said before, the intent was there, but the execution was piss poor.

Any screening process should have found the programs that had the better chances at success and more money should have been dished out to those programs - that would have allowed for more money to be put towards creating jobs and significantly enhancing the pipelined programs.  The 'spread the wealth' mentality that was actually implemented has left a little bit of money for just about everyone, but no one has enough to do anything with.

If my tax dollars are going to go anywhere, I'd rather them go to a program such as this one than into some of the more bogus pork-barrel projects that come from the Capitol, but because of the massive dilution of the billion dollars that we started with, I think the execution of this program is going to be proven ineffective, although it'll make for some good sound bites.




Friday, November 5, 2010

MNKD, GNBT: Afrezza Spells Trouble, Lawsuit Alleges Fraud; Positive News for Oral-lyn?

After opening at $6.17, shares of Mannkind dropped to as low as $5.07 during trading on Thursday before closing down ten percent at $5.51.  Volume behind the drop was more than six times the daily norm.

The news behind the drop was a lawsuit filed by a former employee who alleges that the company had covered-up negative data from the clinical trials for Afrezza, the company's developmental insulin-spray product that delivers insulin to diabetics via absorption through the lungs.  Mr. John Arditi, a former Mannkind employee in the regulatory affairs department, also alleges wrongful termination for raising concerns about the data from the trials. 

In response to the claims, Mannkind insists that an independant investigation has already been conducted after Mr. Arditi brought his claims to light and that no cover-up, withholding of information or irregularity was noted with the trial results.  Furthermore, the company intends to vigorously defend against what it considers to be a bogus lawsuit.

Mannkind has had a rough go-of-it during the year in its attempt to bring Afrezza to market and gain a solid market edge to Generex's competing developmental product, Oral-lyn - which is in the final stages of Phase III, and this lawsuit is yet another setback that could stall the development of the Mannkind pipeline.

That said, it might be jumping the gun to automatically assume that the lawsuit is valid.  Investors of Generex would hope that it is, while investors of Mannkind, of course, hope that it isn't.  The truth is, it's so easy to file lawsuits in America - in fact, many would claim that filing suit truly is Amerca's National Pastime - and Mr. Arditi may very well be just another disgruntled employee who was fired for some reason or another.

However, if there is any validity to Arditi's arguments, then this could spell the end of Mannkind's attempt to bring Afrezza to market, thereby eliminating any competition for Oral-lyn should that product now make it to commercial launch first.

It's my opinion, however, that competition between the two is none anyway, since Oral-lyn's method of deliverying insulin through the inner lining of the cheek is widely considered a far safer form of delivery than absorption through the lungs.

The FDA is due to issue an approval decision for Afrezza later this year, and the lawsuit will assuredly bring extra scrutiny to the decision, if not from the FDA itself, from the media outlets that may be covering the events. 

Additionally, since many consider Oral-lyn to be a similar product because it delivers insulin through a spray, it may also receive extra scrutiny from the FDA and media outlets. 

Shareholders of Genrex may consider this development a positive development, but problems for competitors don't always stregnthen the case for your team; this will be a story worth following because the general consensus out there in the investing world, if the GNBT share price is to be an indicator, is that Oral-lyn may have some issues of its own. 

Where this could evolve into a major victory for Generex, is if the lawsuit is deemed valid, Afrezza never makes it to market, and Oral-lyn has a free shot at complete market share for the insulin-spray market; but we've also got to entertain the assumptions that the lawsuit is bogus, Afrezza just may make it to market and Oral-lyn - if it makes it that far - is going to be working from behind once approved.

MNKD is a risky proposition right now, and not nearly the risk/reward buy (with a market cap over 600 million) that GNBT is, but this story is going to be one to keep an eye on leading into the final days of 2010 when the FDA is due to issue its decision.

Disclosure:  Long GNBT, no position MNKD.

Wednesday, November 3, 2010

ACTC: Another Recipient of Federal Grant Money



Another beneficiary of the The Patient Protection and Affordable Care Act of 2010 is Advanced Cell Technology, Inc., as it was announced on Tuesday that nearly one million dollars was awarded to this developmental stage company working on stem-cell therapies and regenerative medicines.

The awarding of the grant to ACT was for four of the Company’s ongoing developmental-staged projects, including the Blastomere Program, the Myoblast Program, the RPE Program for Stargardt’s Disease, and the iPS Program. 

Each of the above programs offers very significant market potential, should they ever make it past late stage trials, but ACT has also accumulated or filed for a potentially very valuable pipeline of patents to go along with the clinical-staged products. 

As I mentioned in my previous postings regarding the issuance of grant money over the past few days, the monetary amounts of the grants may not seem all that significant, but to small companies like ACT who are generally at the mercy of loanshark and dilutive financing, any little bit helps.  A million bucks could go a long way for a developing biotech, although the intent of the grant was for each one of the four above-mentioned programs to receive one-fourth of the $977,917 total.

Shares of ACTC continue to hover right around the five cent mark, and I like this one as a long term stem cell pick, based on the packed pipeline and patent potential. 

With that in mind, it should be expected that this company will need to raise additional funds or bank a big partner to advance that pipeline, which could mean that dilution will become a factor at some point in the near to mid-term future. 

This is one of those companies that should have the slogan, "It's just a matter of time" stamped on its homepage; at least, that's my opinion.  Each investor should do his or her own DD and invest accordingly.

Disclosure:  VFC is long ACTC.

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CTSO: Awarded Nearly $500,000 in Grant Money

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On Tuesday I discussed a recent grant awarded to Cel-Sci Corp to the tune of three quarters of a million dollars from the The Patient Protection and Affordable Care Act of 2010.  Cel-Sci received the grant money to fund, in part, the research and develpment of Multikine, an experimental first line treatment for head and neck cancer.

Cytosorbents Corporation announced on Tuesday that a similar grant had been awarded to the company under the same program for two pipeline products, including the lead product candidate CytoSorb, a medical device currently undergoing trials in Europe for the treatment of severe sepsis. 

As I mentioned regarding the Cel-Sci grant, the amount of money that these companies are receiving is by no means enough to fund late stage trials, but with companies this small, any amount helps and makes a difference. 

Patient enrollment for the CytoSorb trial in Europe is nearing completion, and it's possible that results could be released in the first half of 2011.  If the trial is a success, CytoSorb could have a smoothe path towards regulatory approval, and an even quicker road to commercialization since there are no treatments on the market right now to effectively treat sever sepsis.

Volume for CTSO has been volatile over the past couple of months, although the price has remained relatively stable as investors and traders take their positions leading into the final laps of the race to trial completion.

The awarding of the grant did not effect the share price, nor should it.  The European trial nearing completion and speculation leading into those results hold the only real price-moving potential, in my opinion.

Free money, however, no matter what the source or how much, is always good news.

Disclosure:  Long CTSO.

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Tuesday, November 2, 2010

AVNR: Approval Update

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After scoring a sweet double on huge volume during the first trading day after Avanir announced the approval of Nuedexta, AVNR on Tuesday continued the downtrend started on Monday after the initial pop.  Some investors may consider this trading suspect, but the truth is that the recent trend in the biotech/small pharma sector has shares of many companies trading to the downside after receiving good news. 

The fact that there is still quite a bit of time between an FDA approval and market launch gives the big boys ample time to play their games before revenue starts rolling in, and short shares can be covered and then flipped for long ones just in the knick of time.

Additionally, as I mentioned over the weekend, there's always the chance that a company will use a price spike to raise some capital, and not that Avanir will definitely take that course - but the possibility is there, hence the traders and profit-takers jumping at the chance to cash out after a double; or more than a double if they bought in during the dip to $1.31 on Friday.

Truth is, this helps out the small investor quite a bit as well, because now an investor is getting a decent deal for a stock that is now a long term growth story instead of a trade-the-news, speculative one. 

The long term investor should not be shaken or stirred by this trading action, but should consider it more towards the norm; the battle of long and short was won on Friday when the approval was announced.  Any trading between now and revenue streams is only temporary, and could be used to accumulate shares for those that like the long story. 

There's no doubt that Avanir will eventually rebound - and maybe soone since Nuedexta is a one-of-a-kind for the time being, but the volatility and the downward tick could continue for a little while longer.

Makes it fun, doesn't it?

Disclosure:  No position (for now).

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CVM: The Grant Money Starts Rolling In

Cel-Sci Corp. announced on Monday afternoon that the company had received a $733,437 grant under the patient protection and affordable care program.  Included in the grant is money for the world wide Multikine Phase III trial that is gearing up for commencement to test the product as a first line treatment for head and neck cancer.

The Patient Protection and Affordable Care Act of 2010 is a part of the big health care push earlier this year, and - according to public reports - is intended to provide small and mid-sized biotech, pharmaceutical and medical device companies with up to a 50% tax credit for investments in qualified therapeutic discoveries for tax years 2009 and 2010, or a grant for the same amount tax-free.

The grant money dished out as a result of this act could be very beneficial for these small companies, as it frees them up to fund portions of the pivotal trials necessary for FDA approval and it could go a long way to keep these companies from falling victim to the loanshark financing and big time stock offerings that ultimately cripple many small companies.

This program is designed to support research & development for qualified “therapeutic discovery projects," which, according to Monday's PR and public information is, "One designed to either treat or prevent diseases or conditions by conducting preclinical studies or clinical trials or carrying out research protocols for the purpose of securing approval from the Food and Drug Administration; or diagnose diseases or conditions or to determine molecular factors relating to diseases or conditions by developing molecular diagnostics to guide therapeutic decisions. Qualifying companies must not have more than 250 employees in all businesses of the taxpayer (e.g., a small biotech project at a large pharmaceutical company would not qualify). These tax credits/grants are available to pass-through entities, such as partnerships or S corporations, as well as traditional C corporations.


In the coming days I'll highlight a few small biotechs, pharmaceutical and medical device companies that have and could benefit from this program.

The amount of the Cel-Sci grant may see insignificant in the grande scheme of things with such a large Phase III trial pending, but to these small companies - anything helps. 

Finally, the taxpayer might be able to say that their tax dollars could be going to something more beneficial than a porkbarrel project or a hotel suite for a stripper-hungry politician.

Look out, investors, some grant money could be coming to a company near you.

Disclosure:  Long CVM.

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Worth Watching: CELH




Shares of Celsius Holdings may be worth keeping an eye on right now, just a week before the company is set to release results for the third quarter of 2010.
 
Monday's trading session saw 29,000 shares of CELH trade hands, not a significant number by any means in terms of volume, although somewhat peculiar in the fact that it's not often you see a stock end a day on such an even number.
 
For those that like numbers, how about 3,333?  That was the trading volume for CELHW on Monday, the trading symbol for the Celsius warrants.  That number is a bit more significant than the 29,000 share volume for CELH because it's rare that the warrants see any action at all, let alone volume in the thousands with all four digits being the number three.
 
Some may consider the large volume dump of the warrants as a sell-off, but I think that the percentage to the downside would have been much more than the 15% we saw, considering that the 52-week low for those warrants is just a couple of pennies.
 
On the stock front, the trading volume for CELH shares on Tuesday was significant.  With a few hours left to trade, volume was already double the daily average. 
 
Since the quarterly results are due out next week - November 9th - it might be a safe assumption that investors are taking up positions in anticipation of those results, and possibly some of the shares short are being covered.
 
Positive growth in sales could lead to another long-awatited uptrend for Celsius.  Because distribution is growing in all the right places, I think we'll see growth similar to what we saw in quarter two, although the fourth quarter is where we could start seeing the results of the push into the gyms and fitness clubs. 
 
On the other hand, lower-than-expected growth could give the CELH 'get-bash crew' the opportunity to play the stock to the downside even more.
 
Long term followers of Celsius already know where they stand in relation to the company and the stock, but the recent announcements of distribution could bring in a new slew of interest if it looks like Celsius is making a dent in the healthy-beverage market.
 
The numbers from the last two trading days have been fairly significant, but the ones that matter will be released next week.
 
CELH - again worth watching.
 
Disclosure:  Long CELH.
 
Disclosure: Long CELH.


Monday, November 1, 2010

AVNR: A Clean Double on Huge Volume

After a weekend filled with anticipation following Friday evening's announcement that Avanir Pharmaceuticals treatment for treatment for pseudobulbar affect (PBA) had been approved by the FDA, shares of AVNR cruised to a clean double in price after reaching as high as $5.80 shortly after trading began.  Volume for the day was a whopping 55 million, more than half the number of  outstanding shares.

As AVNR shook the trading world on Monday, the stock is still one to keep an eye, even for those that have already missed the boat for the approval run. After opening at $5.67, AVNR shares trickled down throughout the day - for the most part - as traders and profit takers exited their positions.  There shouldn't be any doubt that existing shorts did all they could to keep a lid on the rocketing stock during the trading day, and some may have even added to those short positions believing that the hype will die down for the remainder of the week allowing for an opportunity to cover. 

I don't believe that TheStreet.com and its biotech blogger will be on the negative anymore; now's about the time that Feuerstein re-writes history and acts like he was along for the AVNR ride the whole time - just like he did with Dendreon after that stock rocketed on the heels of his negative blog posts.

However, whether TheStreet's cronies were involved with the shadiness or not, Friday's last hour of trading also cannot be ignored.

The bogus drop down to $1.31 tells everyone all they need to know about the motives of the big players involved in the stock, and it's not safe to say that there won't be another pullback in price before AVNR trades up again; although some real buying pressure for the duration of the week could keep that from occuring over the immediate term. 

Nuedexta is still months away from market, and even further from real revenue, so there's quite a bit of time for consolidation and re-positioning to take place.  Any pullback would definitely be the time to add, in my opinioin, as Avanir has instantly been transformed into a growth stock and a possible buyout candidate with Friday's approval.  Even a buy for close to five dollars should end up looking like a good deal over the long run as Nuedexta starts reaching its true market potential, but I think we'll see prices below that mark again before the final runup takes place. 

Another reason why there may be a pullback is that Avanir may want to take advantage of the price spike and add some money to the war chest, and this could come as a result of a dilutive cash raising event.  All just possibilities, but worth paying attention to for those who may be holding for further gains or waiting for a good entry point now that this company has an approved product close to market.

I'm always a fan of selling some shares into significant spikes, and Monday's spike was most definitely a significant one.

Enjoy AVNR longs, take a vacation, buy the wifey a new Coach bag and throw a little at your favorite charity for good measure.

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