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Sunday, October 28, 2012

Stock In The Spotlight: Sunshine Heart

Sunshine (SSH) shares were moving higher on Monday, trading up by five percent after having dropped to near the six dollar mark late last week following the airing of funding concerns on the Seeking Alpha website by an individual investor who held no position in the stock.  The concerns, as it turns out, may have been a tad bit overblown as they did not address the fact that the C-Pulse Heart Assist system had already received a CE Mark approval in Europe and is on track to start registering commercial sales as soon as within the current quarter.  Additional concerns were raised - and then debunked - regarding competition from other heart-assist devices on the market, specifically those marketed by Heartware International (HTWR) and Thoratec (THOR), for example, given that the C-Pulse is implanted outside of a patient's bloodstream, a huge advantage over any purported competition.

Investors digesting this news may have led the SSH rebound charge, but Sunshine is also receiving attention this week by presenting at the 24th annual Transcatheter Cardiovascular Therapeutics (TCT) scientific symposium in Miami, Florida.  Data from the already-completed feasibility study will be presented, including a 12-month follow-up of patients utilizing the C-Pulse.

Also of note, Sunshine received Frost & Sullivan's '2012 North American Heart Failure Treatment New Product Innovation Award' for C-Pulse this week, another potential factor in Monday's share price rise. 
C-Pulse, in addition to other supporting factors, received the award due to the device's "novel" qualities of being implanted outside of the bloodstream.  Venkat Rajan, Industry Manager for Medical Devices at Frost & Sullivan, noted in the associated release:

"Capable of delivering treatment without contact of blood, the implantable C-Pulse Heart Assist system represents a truly novel approach into the treatment paradigm for heart failure patient."

C-Pulse also recently received an Investigational Device Exemption (IDE) by the FDA that clears the way for development in the US.  A pivotal trial in the United States is also expected to commence within the current quarter with an eye towards FDA approval.   On a funding note, a recent round of financing has positioned the company on sound footing until the mid-way point of this trial, at which time a potential partner could come in and make a move. The idea of a partner coming on board - or the company being outright purchased - may not be so far-fetched, considering that the recent financing deal included a multi-million dollar up-front payment by a "strategic investor" who will also send a member to Sunshine's board.

Such moves strongly hint at partnership or buyout interest.

Volume was light during Monday's run, but SSH will be receiving additional attention this week, given the presentations in Florida and the innovation award.

Disclosure:  Long SSH.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

Originally published at: http://vfcsstockhouse.com

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Saturday, October 27, 2012

Synergy Pharma: Monday's Announcement Strengthens Company At Its Core

A little over a month ago Synergy Pharmaceuticals (SGYP) announced that it had filed an Investigational New Drug (IND) with the FDA for a second GI pipeline candidate, SP-333, an announcement that piqued investor interest in this company's ability to potential become a big player in the GI field later on down the road.  Until that time Synergy had mainly attracted investor interest for the potential of its lead drug candidate, Plecanatide, which is currently being investigated in a Phase IIb/III trial for the treatment of chronic idiopathic constipation (CIC), with further trials planned for Plecanatide in the treatment of constipation-predominant irritable bowel syndrome (IBS-C), too.  Shares ran to the seven dollar mark earlier this year as the potential of Plecanatide became appreciated by the speculative investors of the sector and another push over five materialized following the approval of Ironwood Pharmaceuticals' (IRWD) Linzess early last month.  Linzess, as previously discussed, shares the same origins and mechanism-of-action as Plecanatide and analysts believe that the two will perform comparably on the market, with a potential edge going to Plecanatide for a more favorable side effect profile.

What had been missing from the Synergy story, however, was a pipeline beyond Plecanatide that investors could bank on for the future; no one likes a 'one trick pony' in this sector.  Synergy took care of some of those concerns through a merger with Callisto Pharmaceuticals (CLSP) that - once the deal is finalized - will net the company three pipeline candidates while an an Asset Purchase Agreement with Bristol-Myers Squibb Company (BMY) will also add the a shingles drug into the mix.  Although these products will expand Synergy's pipeline and offer the company exposure into various treatment areas, they will not strengthen the company at its core as a second GI product candidate could. 

That's where SP-333 comes in.

Early on Monday morning the company announced that it had "initiated oral dosing of healthy adult volunteers" in a Phase I clinical trial for SP-333 in the treatment of ulcerative colitis (UC).  The trial is slated as a placebo-controlled, dose-escalating, single-dose study and a multi-dose, dose-escalation trial is also slated to begin in early 2013.  As is generally the case for Phase I studies, the trial is designed primarily to measure the safety of SP-333, but efficacy will also be duly noted.

It's often hard for investors to get excited about the initiation of a Phase I trial, but what this does is validate Synergy's potential as a significant player in the GI market.  The CIC and IBS-C markets targeted by Plecanatide are multi-billion dollar markets combined, while the UC market - in its own right - is growing exponentially and is estimated to approach three billion dollars annually by 2020.  Those numbers position Synergy to land in the heart of a booming industry, when the pipeline potential is mature, while also assuming positive clinical trials.  The fact that SP-333 is officially in development also adds additional valuation to Synergy in the event of a buyout. 

Synergy shares were rolling lower late last week as the overall market dropped, which may have opened up a decent buying opportunity for investors looking to play the potential of Plecanatide and the late-year trial catalyst.  The Phase IIb/III trial has completed enrollment and results are due by the end of the year.  Positive results could spark a rally in share price, especially if the data looks strong enough to rival Linzess, whose previous successes have Ironwood's market cap sitting at well over a billion dollars. 

With a pending trial catalyst due over the near-term and the unfolding of an SP-333 trial, Synergy is one to keep on the radar for the duration of 2012.  Worth a look, especially if a broad market dip has this one slipping any lower.

Disclosure:  Long SGYP.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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Tuesday, October 23, 2012

Weekly Stock Watch, Week Of 22 October: GOOG, IBM, INTC, MSFT, MCD, YUM, AAPL, AMRN, SGYP, CLSP, IRWD, FRX, NBS, ACTC, GERN, SSH, HTWR, THOR, MNKD, DNDN, AET, ONCS, SIRI, JPM

At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.

Always an innovator and market-place leader, Google (GOOG) once again managed to do something that no other company had yet been able to do.  The current earnings season was long-expected to be a disappointing one, but as report after lackluster report rolled in - along with some revised guidance to the downside - the markets traded relatively unscathed, remaining above the disappointing fray and leaving many with the impression that the few earnings surprises that did emerge provided enough juice so that the season would come and go without any major market shift transpiring...until Google reported.

In a report that hit the street on Thursday hours earlier than planned - causing the company to halt the trading of its stock - Google missed the mark enough to spark a dramatic downturn in the broad markets, culminating a loss of over twenty billion dollars from the GOOG market cap and a 200-point drop by the DOW on Friday.  The results of some other tech giants that reported last week, such as Microsoft (MSFT), IBM (IBM), and Intel Corporation (INTC) were also quite dismal, but those were relatively expected disappointments, whereas Google's miss caught many off guard. 

Not to place the blame for last week's market dive solely on Google, it's also fair to point out that McDonald's (MCD) also missed analyst expectations on Friday, contributing the overall market drop.  The fast food giant faced slowing US sales and reported an income drop of well over three percent on a year-over-year basis, somewhat of a surprise since Yum Brands (YUM) kicked off the earnings season with a fairly encouraging report a few weeks ago.  Following the YUM report, many investors believed that that MCD, too, could fare well amid the global economic uncertainty.

Investors will likely take more of a precautionary approach to the markets during the coming trading week as it's now obvious now that the expectancy of a weak earnings season will not soften the blow when the big boys come in weaker than expected, even with sporadic surprises along the way.  Moving into the last half of the season, stability could be lost.  This week, Apple (AAPL) will headline the reports - and the fact that AAPL declined by nearly four percent on Friday could be a sign that investors are may be preparing for any eventuality because just about everybody looks vulnerable right now. 

Moving onto other economic indicators, the Federal Reserve has a policy meeting on Tuesday and Wednesday that will draw its fair share of attention.  Stocks traded stronger following the Fed meeting last month - when additional measures of stimulus were promised - but the mood is a bit more tense these days with a slew of earnings misses and the political climate at a boiling point. 

New home sales data will also be released at mid-week, but the true spotlight will be on earnings.

It'll be a busy week for sure...here's a few stocks and stories to keep an eye on... 

Healthcare, Biotech, Pharmaceutical:

Amarin Corporation (AMRN):  All attention is on Amarin again.  Some late-week price and volume action is demonstrative of the itchy trigger fingers held by Amarin investors these days with all the hype surrounding a potential buyout and a New Chemical Entity (NCE) status for Vascepa.  When a stock is being heavily-watched for imminent expectations of market-moving news, volume will rush in at the slightest hint that "the news" is actually hitting the wires - and that's what happened to AMRN last Thursday when a 'peer-reviewed' journal published a statement indicating that the FDA in fact viewed Vascepa as a new chemical entity.  The link made the National Institutes of Health website and AMRN shares immediately flew higher by over a dollar, only to retrace once it was realized that 'the news' was not actually the news that everyone was waiting for, rather just a head fake.  The market as a whole then went south on Friday and AMRN closed down by another four percent, leaving investors to - once again - wait for next week.

If anyone doubted that investors were taking this NCE news seriously, Thursday's movement is proof positive that they are.  Some would argue that Amarin's patent protection alone is enough to justify a buyout at a very significant premium - and they may be right, given Vascepa's expected blockbuster status - but others give huge credence to the full five years of definitive market exclusivity provided by NCE status and believe that potential buyers would, too. 

Most would agree that a deal is going to get done here, it's just a matter of price - and that's where NCE comes in.  Amarin probably doesn't want to under-cut itself early only to receive the designation later, but with each FDA delay, investors are accepting the fact that NCE could be a no-go, which may deflate the value of any deal.  While a buyout could lead to an instant double in share price - similar to the move experienced by HGSI right after GlaxoSmithKline's (GSK) initial offer for that company - but the share price may be slower to recover if AMRN decides to go-it-alone.

Once again a hot one to watch this week.

Synergy Pharmaceuticals (SGYP):  Synergy shares also took a hit last Friday as the market as a whole tanked, but the news was not all bad as the company reaffirmed its efforts to position its stock as a potentially attractive target of institutional dollars or - as hinted by the merger with Callisto Pharmaceuticals (CLSP) a while back - maybe even a buyout.  Under the terms of the Callisto deal, as announced in July, Callisto shareholders would be granted 0.17 shares of Synergy common stock for each outstanding share of Callisto common stock.  Those new shares would then be 'locked up' for a total of eighteen months, barring a 'Change of Control' event.  Wording such as that hints that a company is positioning itself to become the target of a larger merger or acquisition and the lock-up period offers an ample amount of time to get something done. 

Some of the terms changed last week, however, as the company entered into 'Amendment No. 1' of the deal.  The share exchange would not take place at a rate of .1799 shares of SGYP for every one of Callisto's and the lock-up period would be pushed back to twenty four months and the merger is expected to come to fruition within the current quarter - although last week's 8k also warned that it might not take place in the time frame expected, or at all.  It is fair to note that such language is routine for the sake of legalities.

The Callisto deal strengthens Synergy's position since Callisto held over forty percent of Synergy pre-merger.  Such a large position by one entity could often be viewed as a road-block to attracting institutions or funds, but that will no longer be the case once this deal is consummated.  More noteworthy, however, is the pending trial catalyst that is expected to materialize within the current quarter.  Given the August completion of enrollment for Synergy's Phase IIb/III clinical trial measuring the effectiveness of Plecanatide in treating chronic idiopathic constipation (CIC), previous expectations that results will be released by year-end 2012 look to be in tact.  Positive results from this trial could lead to SGYP being compared to Ironwood Pharmaceuticals' (IRWD), for valuation's sake, given that company's recent FDA approval for Linzess - a product previously known as Linaclotide that shares origins and a similar mechanism-of-action with Plecanatide.  Plecanatide has proven to have less of a side-effect profile than Linzess during trials, according to publicly-available information, and Synergy still stands to benefit from a potential partnership deal; IRWD has already partnered with Forest Laboratories (FRX) in a profit-sharing deal, yet still has a valuation of well over a billion bucks.

Given the pending trial catalyst and the possibilities options opened up as the result of the recent M&A activity, SGYP will be a hot one to watch for the duration of the quarter.  A couple of analysts have also issued very enthusiastic reports on the company over the past few months and Friday's price retreat may have provided a decent buying opportunity for investors banking on Plecanatide success and fair valuation of SGYP as compared to IRWD.

With Friday's seven percent move lower, SGYP will be one to watch this week.

NeoStem, Inc. (NBS):  Two pieces of milestone pipeline news and increased interest in the regenerative medicine sector over the past couple of months have attracted a fair amount of investor interest to the NeoStem stock, although volume tapered off late last week as the broad market drop and some flailing blue chip companies drew attention away from the developmental and speculative plays.  With a new week upon us, NBS will be one to watch.

Earlier this month, data confirming the ability of the company's VSEL technology to assist in bone-growing in pre-clinical studies in mice made its rounds, while earlier in the summer NeoStem received approval from a data monitoring committee to continue moving forward with its Phase II PreSERVE trial.  PreSERVE puts the company's AMR-001 stem cell technology to work in repairing damaged heart tissue following a heart attack.  Both news items cement NeoStem's place in the stem cell space and have contributed to the company's market cap settling at above the one hundred million market, after trading for a significantly lower cap earlier in the year.  Given the billion-dollar-plus market targeted by AMR-001, more remarkable gains may yet materialize with the progression of trials.

Speculative companies can be much more susceptible to bouts of volatility during periods of market turmoil, but opportunity can prevail in those circumstances where the market drops and investors look to put speculative money back on the sidelines for a while.  NBS has thus far proven immune to this phenomena, at least over the recent past, indicating that a solid base of longs has formed as 'true believers.'  Also of significance, and unlike other developmental companies, NeoStem already has a revenue stream.  Through its Progenitor Cell Therapy division, NBS has contracted out its services and grew revenue at a rate of 95% during the past two quarters, according to numbers presented in the latest quarterly report

For a time Advanced Cell Technology (ACTC) and Geron (GERN) were stealing all the stem cell  spotlight, but NBS has quickly take a prime position at center stage as a potential leader in the field.  Given the company's pipeline progress and moves to strengthen the financial position this year, NBS is one to watch in the stem cell sector - and one to watch this week for the fluctuating volume patterns.

Sunshine Heart (SSH):  Sunshine shares dipped to lows not seen in months last week and could be positioned for a rebound, considering the pending catalysts of commercialization in Europe during the current quarter and the initiation of a pivotal trial in the United States for C-Pulse that will be geared towards and FDA approval.  The C-Pulse Heart Assist system, for those new to Sunshine, is a device that has thus far proven in trials in both in North America and Europe to halt - and even reverse -  the progression of heart failure in patients with Class III and ambulatory Class IV heart failure.  Milestones have been a-plenty this year, with an approval in Europe for C-Pulse and an Investigational Device Exemption (IDE) by the FDA that clears the way for development in the US. 
Given the timing of these developments, Sunshine is positioned to register its first commercial sales at right about the same time as the initiation of the US trial, marking two significant milestones within the current quarter. 

There were some investor concerns aired last week on the Seeking Alpha website, however, that may have led to the drop in the SSH share price.  Highlighting those concerns were the purported lack of funds the company has - or will have - to advance C-Pulse to market in the United States.  Other concerns were raised that competition from Heartware International (HTWR) and Thoratec (THOR) essentially render the C-Pulse as irrelevant in the market for heart-care devices.  While any investor concern should be entertained for the sake of solid DD, these particular concerns - at the face value in which they were presented - are misleading.

Sunshine may again need to raise funds at some point in development, a given for all still-developmental companies - but one cannot ignore the fact, too, that C-Pulse can start pulling in revenue from European sales at any time now.  It shouldn't be expected that immediate returns will alleviate any future financing needs, but should the product gain swift share on the European market, it could drastically reduce such threats.  Additionally, a recent round of financing has positioned the company on sound footing until the mid-way point of the US trial, at which point a potential partner could come in and make a move.  The idea of a partner coming in may not be so far-fetched, considering that the recent financing deal included a multi-million dollar up-front payment by a "strategic investor" who will also send a member to Sunshine's board.  Such moves strongly hint at partnership or buyout interest.

In regards to competition on the market, C-Pulse is implanted outside of the bloodstream, in direct contrast to the standards of care currently on the market for heart-assist devices.  Because of this fact, the implantation procedure is considered 'minimally invasive' and greatly reduces the potential of contamination that could result from introducing foreign bodies into the bloodstream.  Additionally, current treatments for Class III heart failure including limiting a patients activity and normal routine, where patients treated with the C-Pulse have noted an overall improvement of physical activity, according to the early studies that formed the basis of the European approval.

Given the swift share price decline last week and the largely misleading investor concerns, Sunshine Heart will be one to watch during the coming week.

Mannkind Corp (MNKD):  Those that have followed the up-and-down year of trading for shares of Mannkind largely expected that a late-year round of financing would unfold as the company looked to fund the remained of Afrezza's development to market as a potential inhaled insulin alternative to the needle for diabetics.  The news finally came last week as MNKD shares plunged to below the two dollar mark when it was revealed that the public offering consisted of 40 million shares and 30 million warrants to buy another 0.75 share, all priced at $2.  In conjunction with the financing, CEO Al Mann relieved the company of over two hundred million in debt in return for more shares.  This deal will fill Mannkind's coffers with $80 million and allow for the final stages of Afrezza development before the product again goes before the FDA.  Dilution was massive - again - for shareholders who held through the recent turmoil and the offering, but last week's dip - that will likely carry into the new trading week - could again attract investors willing to take a position on the potential of Afrezza.  Data from the last Phase III trial was encouraging, although the trial was not conducted with the same inhaler that the company planned to market.  The latest trials will test Afrezza with the next-generation inhaler.  With financing out of the way and given the sharp drop in share price last week, MNKD will be one to watch this week. 

Dendreon (DNDN):  The market dropped big to close out the week last week, but the beaten-down Dendreon held steadfast and closed Friday modestly in the green.  After a Reuters report earlier in the month sent DNDN shares realing, the stock has inched higher and investors are now concentrating on the October 30th earnings release that could offer indications to how much the cost-cutting measures are helping and as to whether or not Provenge is making headway on the market.  Some have predicted a decline in Provenge sales to the mid-$70 million range, but a surprise to the upside could reinvigorate life into the slumping DNDN shares.  Moving beyond the current quarter, investors could look to the expanded insurance coverage announced by Aetna (AET) earlier in the month as a key to the future. 

OncoSec Medical Incorporated (ONCS):  OncoSec Medical continued its move higher last week, returning more than a double in just over a month.  Last week's drive resulted from a European CE Mark certification for the company's proprietary OMS electroporation device, which uses electroporation to deliver treatments and therapies directly into targeted cells using electrical pulses. This strategy has proven to be an effective delivery method, as the electric stimulus spurs the cells to contain a drug or treatment more effectively within the cell wall than standard methods of delivery without damaging the surrounding tissue.  CE Mark approval allows a company to commercialize a product in Europe and this event marks a very significant milestone for OncoSec. Investors responded accordingly and ONCS shares held up well during Friday's downturn.  Given the quick run in price, ONCS is still one to watch.

Technology, Products, Services:

Sirius XM Radio Inc. (SIRI):  SiriusXM is pushing three bucks with conviction.  The stock that traded for a mere nickel just a few years ago received another boost last week when it was announced that it was added to Bank of America Merrill Lynch’s U.S. 1 List based on growth in the auto market and its 'Buy' rating that is accompanied with a four dollar price target.  Sirius is not slated to release quarterly results until the end of this month, but an enthusiastic update was offered by CEO Mel Karmazin at Liberty Media's (LMCA) analyst meeting a few weeks ago, supporting the push to three.  The buzz is all positive around this company and patient shareholders have been rewarded.  With auto sales up, Sirius is primed to benefit and the unique content of SatRad is unparalleled by the competition.  The only downside to potentially keep in mind is that the runup has been fairly quick and some profit-taking could kick in at some point, especially if the broad markets continue to dive - although shares held strong during Friday's dip.

Technology/Internet:

Microsoft:  Earnings this quarter may not have exactly rallied the troops, if Friday's three percent dip is an indication, but expectations should be put on the upcoming future catalysts rather than the recent past.  Windows 8 is slated for an imminent release, as is the 'Surface' - Microsoft's head-first dive into the tablet market.  Both mark milestones in the company's recent history and could potentially justify a purchase of MSFT shares that closed last week well over four dollars lower than the 52-week high.  A week earnings season has killed tech stocks and the market downturn threatens to crush them even further, but the dividend-yielding MSFT could again be worth a look for those that believe Windows 8 and Surface could revive this company's past reputation as a next-generation innovator.  MSFT already holds a strong foothold in the gaming market and is sitting on tens of billions in cash.  A dip to the mid-twenties would mark an ideal buy, in my opinion.

Google:  It was only weeks ago that GOOG was slapped with a price tag of $850 by an analyst at JPMorgan Chase (JPM), making last week's drop to well below the seven hundred dollar mark either bad timing by the JPM analyst or a rash overreaction by jittery investors who now look ready to bail at the slightest hint of trouble.  Solid earnings by Apple this week could help to rebound the tech sector as a whole, but if the market continues to tumble, there could be some continued buying opportunities to be had.  Like Microsoft, Google has the cash on hand that could lead to continued innovation and although GOOG's numbers missed, the company still registered growth overall.  Worth watching this week.

Roundup:  For months now we've seen what was expected to become volatile turns to the downside turn right back into modest moves higher, so there's a chance that Friday's action could be much ado about nothing.  That said, investors did look to have said "We've seen enough" of the quarterly disappointments and decides to pull away a bit.  Economic indicators continue to be as mixed as a politicians promises from day-to-day offering no solace that stability is on the horizon.  Trading opportunities are likely to appear and disappear from day to day, keeping investors not only interested, but that much more twitchy as it takes an extra few cups of coffee and maybe a Celsius to stay alert.  As the markets roll on the last presidential debate will provide fireworks on Monday night, but at this point the redundant statements of our politicians is about as entertaining as a Mets game in September.  Enough is enough already.  Let's get it over with so Facebookers can get back to their normal "TGIF!!!" and "Happy Hump Day!" posts instead of the incessant bickering about who said what when.  That said, everyone should get out and vote - it's one of the great benefits of freedom that too often goes unappreciated by those who take it for granted

Happy Trading!!!

Disclosure:  Long AMRN, SGYP, SSH.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

Originally published at: http://vfcsstockhouse.com

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Monday, October 22, 2012

Sunshine Heart (SSH) Positioned To Rebound On Unjustified Drop

Shares of Sunshine Heart (SSH) were hit fairly hard this week, dropping to lows over the mid-week period that had not been seen for months.  Given that the share price dip was sparked by investor concerns that may be quite unjustified, the potential for a rebound exists for the near term, and maybe even more so for the long term.  Leading the charge to the downside may have been investor questions that surfaced this week regarding the company's cash position and potential competition that Sunshine's C-Pulse Heart Assist system, a device that has thus far proven to not only halt the progression of heart failure in patients with Class III and ambulatory Class IV heart failure, may face on the open market.  Additional concerns were raised at the fact that C-Pulse would not even be slated to reach market in the United States until 2015, before which time the company could be susceptible to multiple rounds of financing that could result in severe dilution for retail investors.

While any concern by any investor is valid, given that skepticism and caution should be considered a normal part of any investor's due diligence, these particular concerns may be unjustified, given that they only address half of the story. 

As the late Paul Harvey used to say with such delight, "And now for the rest of the story..."

Sunshine's C-Pulse system has relatively little - if any - competition on the market.  What gives the C-Pulse a huge advantage over products marketed by Heartware International (HTWR) and Thoratec (THOR), for example, is that it is implanted outside of the bloodstream.  That fact makes a C-Pulse implant relatively minimally invasive, when compared to other implants or procedures that entail the introduction of foreign bodies into the bloodstream.  Maintenance and follow-ups are also much more routine and less-invasive for patients on the C-Pulse than those being treated by in-the-bloodstream devices.  As the global healthcare community trends towards less-invasive and more effective treatments for commonly expensive ailments - such as heart failure - Sunshine may be positioned to take well advantage, given the early successes of the C-Pulse, which includes a North American feasibility trial that provides the basis for the upcoming US pivotal trial.

Additionally, Sunshine received a milestone approval earlier this year for the C-Pulse in Europe, so the precedent is already set that the device has delivered results positive enough to warrant an outright approval by medical authorities.  It's also worth noting that some consider the market for heart failure to be even more robust in Europe than it is in the US and Sunshine is expected to register its first commercial sales for the device across the pond within the current quarter.  While no product should be expected to become an instant blockbuster, any sales registered early in Europe would help alleviate investor concerns of massive dilution later on down the road.  It's also expected that the upcoming commercial launch of the C-Pulse in Europe could coincide with the launch of the US trial, providing two milestone catalysts for the company over the near-term.

On the financing front, some investors have expressed over the past week that Sunshine is primed to fall victim of multiple rounds of dilutive financing as the US trial progresses over the next few years.  These are valid concerns for any developmental company in the healthcare sector, as such companies generally always need money, but in this case the potential for sales in Europe should also be taken into consideration, as mentioned in the preceding paragraph. 

Sunshine also recently conducted a financing deal that gave the company a solid cash position that will last until the midway-point of the upcoming US trial.  This is a key item to consider because an amended S-1 filed by the company at the time of the said offering hinted that a large strategic investor has come on board to assist in developmental funding, a sign that the mid-way trial point could be used by the company and/or the strategic partner to make a move towards a partnership or - to speculate further - even a buyout.  If a potential partner were to make a decision to jump in at the first signs of success during a major trial, the mid-way point would be a logical time to do so, and Sunshine may have had this in mind when assessing how much cash to raise with the most recent offering.

After a two percent drop on Thursday, Sunshine shares are trading in the low six dollar range again, well below the seven dollar price of the offering this summer.  With the trial and potential sales catalysts still pending over the near-term, Sunshine could continue to attract investor interest through the winter months, while investors will also be watching to see how the C-Pulse gains traction on the European market over the coming quarters. 

Also of note, Sunshine representatives will be presenting positive data from the already-completed North American feasibility study at the 24th annual Transcatheter Cardiovascular Therapeutics scientific symposium in Miami, Florida next week, providing another opportunity for new investors to be drawn to the company and its potential.

The heart failure market is a multi-billion dollar market and with a next-generation device that is implanted outside of the bloodstream, Sunshine could be positioned for success.  The path to the US market for C-Pulse may still be years away, but as emphasized above, there are enough catalysts pending to keep investors interested early.

All investor concerns should always be duly noted in this sector, but both risk and potential need to be entertained in order to make a sound investment decision.  There are risks involved, but Sunshine also has the potential to return some rewards to investors over the short and long term.

One to watch.

Disclosure:  Long SSH.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

Originally published at: http://vfcsstockhouse.com

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Saturday, October 20, 2012

Stocks on the Move: C, FCEL, DNDN, SSH, ONCS

Just as easily as the markets drop, they too can rebound - as proven this week with the DOW's recovery back to the 13,500 mark on not-so-disappointing earnings reports by some key players in multiple sectors and continued encouraging economic indicators, including a boost in housing starts to four-year highs that reinvigorates enthusiasm in the sector that has arguably taken the worst hit since economic crisis of a few years ago.  The positive mood spread globally as Asian and European shares also enjoyed early-week market stability.

Back in the US, a huge shakeup in the banking sector overshadowed the earnings talk as Citigroup Inc (C) CEO Vikram Pandit surprisingly stepped down, automatically leading investors to concentrate more on the future direction of that company than on the present day earnings.  Bank of America Corp (BAC) emerged from its own earnings report relatively unscathed, beating estimates on one account, but missing on another.  The mixed report detracted little from what's looks to be rebounding housing and earnings numbers and financial headlines following the report indicated that the sector could be in for an overall upswing, with eyes again towards the future.

There were some big disappointments, too, although none that were unexpected.  IBM (IBM), for example, was hammered by five percent on Wednesday as the earnings report and guidance validated previous comments indicating that earnings could take a major hit as the company struggles to battle the growing trends of smartphones and tablets. 

While the earnings season continues to play out, the markets remain fairly steady, for the time being, as there have yet to be any major disappointment stories play out - at least none that were unexpected.  There has, however, been a touch of volatility on a week-to-week basis that creates some trading and buyign opportunities.

With that being said, there are - and will be - plenty of stocks on the move to keep on the radar - here's just a few of them...

Banking:

Citigroup Inc:  Shares of Citi have been on the move since the announcement of the big change at the top.  Volume has been up significantly, too, and the share price set a new 52-week high on Wednesday.  Earnings were relatively in line with expectations, but investors were more interested in the future of the company with Pandit out - and judging by the quick spike in share price, the street has welcomed the news.  Some expectations have shares of Citi continuing the surge through the forty dollar level and beyond, but as is always the case with quick price spikes, the threat of profit taking also looms - especially given the fact that banking concerns in Europe always threaten to hamper the markets back home.  Additionally, while the signs are there - along with economic indicators to support - that the economic recovery is in full swing, the market has assumed as much before, only to be handed another swift correction.  The mood is high, though, for Citi shareholders.  Many have called for Pandit's ouster long ago and now that the surprising development has in fact unfolded, a new wave of interest could flow into the stock, 52-week high or not. 

One to watch as a new and refreshing direction for Citi unfolds.

Industry/Clean Energy :

FuelCell Energy (FCEL):  Shares of FuelCell Energy have been on the move higher this week, rising by ten percent back to the dollar mark after a flurry of new announcements and a report by Bloomberg may have renewed investor interest and confidence in the company.  FuelCell, which develops and produces fuel cells for commercial, industrial, government and utility customers, had run to nearly two bucks earlier in the year after news of a large cash infusion from a South Korean partner coincided with bullish coverage by both Forbes and Bloomberg to create the perfect storm for a share price run.  A stock offering killed the rally, however, and shares have yet to recover. 

This week's news could help to reverse that trend, as demonstrated by the recent run.  Bloomberg noted on Tuesday that the company has entered into the second phase of a $3 million award from the U.S. Energy Department for the advancement of a carbon capture project geared towards reducing dangerous emissions and the FCEL also announced key milestones regarding its fuel cell power plants both domestically and abroad.  These updates underline the potential of this company to play a key role in fueling the future with clean energy fuel cells and associated components and investors may be regaining confidence to that effect if the run back to a buck is any indication.  Some will still be skeptical, however, until profitability is reached.

Still, FCEL is a stock on the move for the week.

Healthcare, Biotech, Pharmaceutical:

Dendreon (DNDN):  Already identified as a stock to watch this week due to a Reuters report that questioned the interpretation and presentation of Provenge Phase III data, Dendreon was quick to rebound this week, although only modestly, and jumped by three percent during Wednesday's trading session.  The mid-week rebound may not be an overall indication that investors have regained full confidence in the company's ability to register rapid gains in Provenge revenue, but the October 30th earnings date stands as a milestone day for investors to entertain those possibilities while also gauging how effective the cost-cutting measures of the past year have become.  Analyst estimates for the quarter are not far off from what the company registered during the last quarter, but any surprise to the upside could spark a further rally than the three percent seen this week.  Moving forward, the expanded coverage by Aetna (AET) should help on the revenue front, although some are still concerned about potential competition from Medivation's (MDVN) recently-approve Xtandi and Johnson & Johnson's (JNJ) Zytiga.  Regardless, DNDN is revisiting levels that could make it an attractive rebound and/or growth play again.  Already, the modest gains realized since the recent lows have demonstrated that this stock could return decent trading gains while waiting for the full story to play out.

Sunshine Heart (SSH):  Shares of Sunshine Heart have also been on the move this week, although to the downside, and lows were set on Wednesday that had not been previously seen for months.  Leading the charge to the downside may have been some investors questioning the ability of the company to maintain its cash position while moving forward with a pivotal US trial for the C-Pulse Heart Assist system, a device that has thus far proven to not only halt the progression of heart failure in patients with Class III and ambulatory Class IV heart failure, but potentially reverse it as well.  Additional concerns were raised that competition from Heartware International (HTWR) and Thoratec (THOR) would hamper the company's ability to move C-Pulse into the mainstream anyway, even if the trial results in the US turned out positive.  Yet additional concerns have been raised regarding the company's 2015 forecast for market of its medical device.

While it is always a wise idea to entertain a story from every angle, there are also other facts and developments regarding Sunshine to consider that may not be surrounded by all doom and gloom.  Earlier this year Sunshine received a milestone approval for its device in Europe, which some consider as a much larger market than even the US for treating Class III and ambulatory Class IV heart failure.  The company expects to register its first European sales during the current quarter, providing another potential catalyst to coincide with the US trial launch.  Investors keying in solely on the US sales potential will concentrate solely on the probability of the US trial to last multiple years, but those with Europe in their peripheral vision may be enticed by the potential for the product to grow over there. 

One major advantage that C-Pulse may have over other 'heart assist' products already on the market - and said to be in direct "competition" with Sunshine's product - is that C-Pulse is implanted outside of the bloodstream, making the implantation procedure minimally invasive, when compared to overall heart surgeries and other procedures that introduce foreign bodies directly into the blood flow.  With that in mind, C-Pulse is not competing with products from HTWR and THOR, for example.

Regarding financing, there are always concerns that a developmental company will need to raise additional funds at some point in time.  Sunshine recently conducted a financing deal that gives the company a solid cash position until the mid-point of the US trial.  Additionally, an amended S-1 filed by the company at the time of the offering indicated that a large strategic investor has come on board to assist in developmental funding.  Such a relationship could also come in handy later on down the road, should Sunshine find the need to raise money again, and speculation could also be given to the fact that a partnership or buyout could materialize as a result.  The mid-way point in a major trial is a good time to judge overall potential success, and the strategic investor may have had that in mind when Sunshine funded itself through the trial mid-way point.

With shares dropping this week and with the company positioned to register its first sales in near-term time, Sunshine is one to keep an eye on.

OncoSec Medical Incorporated (ONCS):  OncoSec Medical makes the list of quick-movers again this week after a twenty percent rise on Wednesday that left the stock sitting at better than a double since the opening days of October.  This week's drive resulted from a European CE Mark certification for the OMS electroporation device, the baseline technology for the company's pipeline of products.  Electroporation consists of delivery treatments directly into targeted cells using electrical pulses.  This strategy has proven to be an highly effective delivery method, given that the electric stimulus spurs the cells to contain a drug or treatment more effectively than standard delivery without damaging the surrounding tissue.  A CE Mark approval allows a company to commercialize a product in Europe and this event marks a very significant milestone for the company.  Investors would tend to agree, given the twenty percent spike following the news. 

From the OMS platform, OncoSec has created two technological pipeline paths, ImmunoPulse and NeoPulse. ImmunoPulse uses the electroporation process to spark a patient's immune system to target cancerous cells itself while NeoPulse uses the OMS technology to destroy cancer cells using less harmful doses of bleomycin, a highly effective but also highly toxic anti-cancer drug.  Both have proven effective in early studies and the company has stated it intends to look for potential partnerships and strategic agreements to bring the technology to market.  The CE Mark news provides another piece of the puzzle for the company to achieve those goals.

Roundup:  The market mood is merry this week, and investors who have played the recent drop and spike accordingly have done well.  Economic indicators also look encouraging this week and the disappointments on the earnings front look to have only effected specific stocks and companies, not the market as a whole - as was the worry.  The tide could change, though, with earnings season still in full swing and many key player still set to support, so investors should be prepared for any action.  European economies are making news again, especially Spain's, and investors should also watch for trends across the pond that may effect trading over here.  The remainder of the week could be exciting for the companies listed above and for the markets as a whole, so...as always...Happy Trading!!!

Disclosure:  Long FCEL, DNDN.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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Friday, October 19, 2012

Dendreon (DNDN) Down, But Not Out

Investors may be wondering if Dendreon (DNDN) can ever catch a break.  A few years ago positive Phase III results for the company's immunotherapeutic prostate cancer treatment defied the critics and set the stage for an historic approval by the FDA in May, 2010, which sent shares soaring towards the forty dollar mark, but since that time the company has been plagued by slumping Provenge sales, questionable reporting practices, and continued attacks from what some would consider the 'peanut gallery.' 

In the instances where big media becomes involved, the timing of negative Dendreon reports often leaves investors wondering whether or not such reports are mere coincidence or more aptly-timed to take advantage of pending milestones or trading opportunities.  As noted in the above-linked CNBC report of a couple of years ago, the financial news giant made an 'honest mistake' and published information that it later in the day declared inaccurate, but the damage was already done as DNDN shares dropped significantly on the original report.  Those who took advantage of that dip, however, were proven winners later on down the road as the share price rebounded - albeit only temporary, as retrospect shows us that the original report, while still untrue at the time, was proven to be right over the longer haul.

A similar event has recently unfolded that may have Dendreon shareholders positioned to take advantage of another share price dip that could result in an eventual DNDN rebound. 

In an "exclusive" report, Reuters cited information stating that the benefits of Provenge may have been "artificially inflated" as the result of how the data was eventually analyzed, further arguing that researchers analyzed some of the Phase III data "differently from how the company told U.S. regulators they would."
The report contained information and a viewpoint that may be familiar for some, as detailed in another Seeking Alpha article published earlier in the week, but the ensuing price action nonetheless resulted in a drop to the four dollar mark from prices closer to five.  The report again raised suspicious questions from investors as to the timing and relevancy of such an article, given that Provenge has now been long-approved and - although sales are still not even close to meeting previous expectations - has a foothold in the market. 

Additionally, the argument made is essentially a reprocessed one and begs the question from investors, "Why beat a dog while it's already down?"

At this point, however, the damage is done to the DNDN share price and investors will be looking at the potential of the stock as a rebound and/or growth play from this point forward.  While the share price could rebound on pure speculation alone, it will take increasing sales numbers for DNDN to register as a potential growth play with investors.  That puts a significant amount of eyes on the company's next quarterly report, which is slated for the end of this month.  Revenue missed the mark for the second quarter, with only $80 million in Provenge sales coming in versus the expected $86 million, and some investors note that the going will not get any easier for the company in gaining market share, given expected competition from Medivation's (MDVN) recently-approve Xtandi and Johnson & Johnson's (JNJ) Zytiga.

On the other hand, the arguement can be made - and has been made in earlier statements from the company - that Provenge sales have suffered from unfamiliarity by patients and doctors regarding reimbursement and broad-based coverage by insurance companies.  Dendreon and officials have addressed the former concern through "education" members by its sales force while the latter concerns are also slowly being addressed.
Some headway on the insurance front was made earlier this month with a key announcement of expanded coverage of Provenge by Aetna (AET), the third-largest health insurer in the United States.  Aetna had already covered Provenge under stricter conditions. 

Investors will also watch this month's earnings report for signs that recent measures of restructuring are having a positive effect on the bottom line.  After las summer's crash the company announced numerous plans to cut costs and just recently laid off over one hundred workers from its Seattle facilities.  These measures reflect a more realistic view of the company's challenges and could have an immediate effect on the company's recovery.

It's also worth noting that the depleted share price that is only a fraction of what it once was could attract the attention of a larger company looking to scoop up Dendreon, if only for its technology, pipeline and potential for the global expansion of Provenge.  The lower the share price goes, and the longer it stays there, makes such a scenario more likely, in my opinion, although that is based on pure speculation on my part.  Although the future of immunotherapeutic treatments is shifting to technologies involving cheaper and more convenient logistical considerations, including 'off the shelf' immunotherapeutic treatments, Provenge is still recognized as the grand-daddy of cancer immunotherapies, is already approved, and my eventually pick up some steam on the market as the sales and marketing force regains its footing. 

While a dip into the threes is a possibility, DNDN could again be considered a potential rebound play after having again been beaten down by the presses --- when the stock was already beaten down anyway.

Disclosure:  Long DNDN.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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Wednesday, October 17, 2012

Weekly Stock Watch, Week Of 15 October: BAC, C, GS, MS, JPM, WFC, AA, CVX, SIRI, GE, CPST, MSFT, GOOG, IBM, DNDN, AEZS, KERX, ONCS, INO, BDSI

At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.

Weeks of speculation regarding an earnings season market meltdown started to play out to form last week as each of the first four trading days resulted in significant drops before a luke-warm Friday halted the skid and prevented an all-out panic.  September's multi-year highs could soon be forgotten moving into the new trading week as investors remain unconvinced that there are enough earnings surprises in store to support a continued move higher, or even to fend off a further drop.  Some companies are out there 'beating the street,' per say, and guiding higher - Sirius XM Radio Inc. (SIRI) upped its subscriber forecast for the year last week, for example - while both JPMorgan Chase (JPM) and Wells Fargo (WFC) beat profit expectations this past Friday.  Stark warnings from both Alcoa (AA) and Chevron (CVX), however, significantly impacted mid-week trading and even while the somewhat encouraging aspects of the JPM and WFC impressed on one account, slowing revenue numbers from the two banking giants concerned investors enough to leave shares of each company trading in the red for the day.

Market direction this week is likely to be influenced heavily by the earnings reports of some more banking giants, and then by the earnings reports of a few other major player players in various sectors.  Given the downturn last week, we could see more of the same this week, but it's just as likely that bouts of volatility will be ever more present as we see the good, the bad and the ugly roll in from the earnings season.  There still exists the threat of major news from Europe putting a damper on an already bearish mood as governments across the pond still figure out how to cut costs while trying to spark growth along continent. 

It's too bad the European Union's Nobel Peace Prize doesn't spit out golden bricks.

Also beware of worsening geopolitical situations overseas.  The Syrian/Turkish border region is quickly becoming a major flash point while Libya is again in the news, adding to geopolitical instability that can, if it becomes a bigger deal, play havoc on the economic markets.  And then there's always the rapidly-altering mood from Washington, where opinions on the strength of the country's economic condition vary daily depending on which news network you're watching or which politician is talking.  Expect that action to carry on until the elections are over, at which point we may actually see an approved federal budget.

Other news items to note this week will be September's retail sales on Monday and Friday's existing home sales.  Both are decent measures of consumer spending and overall confidence.

It'll be an earnings-heavy week, with national politics and international news bytes mixed in, but there's still a few distinct stocks and stories to keep an eye on.  Here's just a few of them...

Banking:  Following the Friday reports from JPM and WFC, this week we'll hear from Bank of America Corp (BAC), Citigroup Inc (C), Goldman Sachs Group Inc (GS) and Morgan Stanley (MS).  That's a powerhouse offering of big banks and any disappointing trends could spark a broad market sell-off, especially if evidence lingers that the economic recovery is not, in fact, as remarkable as some are making it out to be.  On the other hand, some reports have it that these big boys could surprise.  Should that be the case, then the sector as a whole - if not the whole market - could see a resulting boost, although investors would find it hard to ignore negative outlooks elsewhere.  That means, as has been the case for a few years now, that some volatile trading opportunities could open up.

Tech/Internet:  Microsoft (MSFT) and Google (GOOG) are both slated to report this week, as is IBM (IBM).  Google may hold the strength of the trio, as JPM just slapped an $850 per share valuation on the stock and other analysts have also renewed their positive outlooks on the company.  Microsoft's report, on the other hand, will concentrate more on future potential than on earnings of the past quarter.  The Windows 8 road show and mass advertising campaign is in full effect while the XBox music service will be offered as ideal evidence pointing to future earnings success.  IBM has guided lower moving forward as competition from a booming smartphone and tablet market quickly eats away at the market share of PCs.

Industry:

General Electric (GE):  General Electric will be a stock to watch this coming Friday as the company is slated to report earnings.  The company modestly beat the street last quarter and numerous analysts have either raised their ratings and price targets on the stock or reaffirmed existing opinions, according to information contained on the Jags Report website.  GE is an American behemoth that spans multiple sectors, when all of its business interests are considered, and encouraging indicators from this company are often used to gauge the strength of the US markets as well as providing hints at the near-term ability of US companies to register overseas growth, too.  Numerous agreements and product or service orders have been registered for the company both domestically and overseas, providing a solid foundation for the encouraging outlooks of numerous analysts.  A hot earnings story to watch this week.

Capstone Turbine (CPST):  Capstone shares continue to trade at the dollar mark as investors maintain a 'wait and see' approach to the company's short to mid term prospects of reaching profitability.  The orders and re-orders continue to roll in, as evidenced by two last week, one of which included the purchase of 39 diesel-fueled microturbines destined to provide power to a Mexican government facility.  Shares responded modestly to the news of the new orders, after having previously slipped to below the dollar mark, but a move based on conviction has not materialized since last year's push to two bucks.  Capstone's green energy potential is worth monitoring as global energy trends towards cleaner power sources, but until profitability is reached, investors may have their doubts.  Historically speaking, purchases of CPST for a dollar have often been rewarded with eventual runs to $1.50 or higher, making it an intriguing trade as well as a long term hold.  Anytime the clean energy sector receives some attention, CPST tends to benefit.

Healthcare, Biotech, Pharmaceutical:

Dendreon (DNDN):  Dendreon spiked earlier this month following a key announcement of expanded coverage for the company's immontherapeutic prostate cancer treatment, Provenge, but a report last week that questioned the interpretation of the data leading to Provenge's historic approval years ago had shares again beaten down to near their pre-approval prices.  Since hitting post-approval highs of well over forty dollars, DNDN closed last week at a mere tenth of those prices and the Reuters "exclusive," which cites that the benefits of Provenge may have been artificially inflated as the result of how the data was eventually analyzed, has hammered the stock just in the midst of a modest recovery to over five bucks.  The Reuters report may not provide any new insights for some who have long-followed the stock, but it will no doubt shake a few more of the 'long and steadies' that may still be remaining from the tree. 

On the other hand, at just above the four dollar mark, others may see the drastic dip as a decent buying opportunity - even if for just a potential rebound trade.  The expanded coverage announced earlier this month could provide the needed confidence that some needed to believe that sales could gain steam, while others may certainly consider this latest report as another 'well-timed' hack job on Dendreon that may be largely irrelevant to the matters at hand - after all, Provenge is an FDA approved treatment and has been for over two years now.  Given that CNBC, too, at one point issued and then retracted a negative story about Provenge shortly after its approval, the 'hack job' theorists may have a leg to stand on, although to be fair, CNBC's report that looked highly misleading at the time turned out to be correct, over the long run.

Dendreon is again a hot one to watch, given these recent developments.  Shares are beat down to levels that many thought unimaginable until last summer's crash, but may also be nearing a bottom for those counting on either a potential Provenge sales rebound or on the potential Dendreon as a buyout play.  It should at least be recognized that the Dendreon pipeline and technology could now be had for a mere fraction of its previous valuation, an idea that may sit well with a potential acquirer.  Although the future of immunotherapeutic treatments is shifting to technologies involving cheaper and more convenient logistical considerations, including 'off the shelf' treatments, Provenge is still recognized as the grand-daddy of cancer immunotherapies, is already approved, and my eventually pick up some steam on the market as the sales and marketing force regains its footing. 

Such speculation could surround DNDN trading over the coming week.

AEterna Zentaris (AEZS):  Living up to the funding concerns of some investors following the quick implementation of a reverse split (RS) earlier this month, AEterna shares were hit hard last week following the annoucement of a stock offering that will raise over fifteen million for the company.  According the terms of the deal, the company will issue "6.6 million units, with each unit consisting of one common share and 0.45 of a warrant to purchase one common share, at a purchase price of US$2.50 per unit. Each warrant will be exercisable for a period of five years following the issuance thereof at an exercise price of US$3.45 per share."  Shares had already dropped heavily immediately following the six-for-one RS and the offering hammered them even more. 

On the positive note, however, investors that are looking at the company's deep and developing pipeline - which provided the basis for two encouraging analyst reports over the past month - may now consider AEZS as a 'bad news is out of the way' play.  Prior to the initiation of the RS, concerns lingered about the company's ability to maintain its Nasdaq listing with a sub-$1 share price, and the short to mid term funding concerns are also alleviated by last week's offering.  Those events now position the company and its investors to concentrate on the near term catalysts that could assist in a share price recovery.

AEZS-130, for example, is being prepared for an NDA filing with the FDA early next year as a diagnostic test for Adult Growth Hormone Deficiency and AEZS-108, an anti-cancer agent that has already proven successful in multiple Phase II trials, is being prepared for a near-term launch of a Phase III endometrial cancer trial. Additionally, interim data from an ongoing Perifisone in the treatment of multiple myelomashould be soon forthcoming.  Any positive results there could reinvigorate investor enthusiasm for the product, following the early-year failure of the metastatic colorectal cancer trial that was conducted in conjunction with Keryx Biopharmaceuticals (KERX), with whom AEterna shares rights at the time.

AEterna is far from being considered a non-speculative play, but considering that much of the bad news possibilities that surround these developmental companies is in the rear view mirror, at least for the time being, and also considering the positive analyst reports, AEZS shares will be worth keeping an eye on during the coming week.

OncoSec Medical Incorporated (ONCS):  OncoSec Medical was a heavy mid-week mover last week as strong volume boosted a dramatic push higher even as the broad markets dropped.  Such moves in the developmental healthcare sector are often followed by pull-backs, so investors will be watching this week to gauge whether or not last week's move was based on pending yet-to-be released news or as the result of increasing attention to OncoSec and its technology - some of which (electroporation) it shares with Inovio Pharmaceuticals (INO) - that will result from presentations at major investor/medical conferences this month and next.  Electroporation uses electrical pulses to more effectively inject a treatment directly into targeted cells without damaging the surrounding tissue and both OncoSec and Inovio have registered successes in utilizing the technology thus far in development.  Because of last week's move and the pending presentations, ONCS remains one to watch this week.

Inovio Pharmaceuticals:  Inovio also begins the new week as one to watch due to its own share price run last week based on positive trial results and the publication of data in a peer-reviewed journal, but also because the company is making moves via its majority-owned subsidiary, VGX Animal Health.  In an early-Monday report the company announced that it had received approval in New Zealand (NZ) to market LifeTide, which increases overall meat production by increasing the rate of live births for treated pigs.  LifeTide is the first such-approved hormone, is already approved in Australia and has a direct impact on increased profits and production in the pork industry.  Also of significance, NZ does not allow genetically modified products (GMO) in its market, providing firm validation that the LifeTide technology can gain acclaim as a non-GMO DNA based therapy that works as producers and governments looked to de-facto move away from genetically modified products.

Monday's news provides an alternative insight to the company and is worth noting, but Inovio is best known for its SynCon technology, which produces synthetic vaccines to treat various infectious diseases and cancer types.  The company has multiple Phase II trials underway and six others still in the earlier stages of development, including a universal flu shot that would potentially treat multiple strands of influenza, rather than just focusing on one, as is the standard for the treatments of today.

BioDelivery Sciences (BDSI):  It's been a kind year for long-patient shareholders of BioDelivery Sciences, and the new week opened on a solid note, too, as the company announced that it has launched BREAKYL in Europe, which sparks a final milestone payment from partner Meda from $2.5 million.  BREAKYL is known as ONSOLIS by its United States trade name and treats breakthrough pain in cancer patients utilizing the company's proprietary BEMA drug delivery technology, which enables a patient to absorb a medication through the inner lining of the cheek.  For years Onsolis has been hindered on the US markets due to ongoing REMS issues with the FDA, but since those issues moved towards resolution early this year - at right about the same time the company Endo Pharmaceuticals (ENDP) came on board as a partner - BDSI shares have been on the move and are trading as nearly a ten-bagger from the 52-week lows.  Monday's announcement of a commercial launch in Europe strengthens BioDelivery's position as a solid rebound/growth play, in my opinion, although the potential still exists for a pullback or two until product revenues gain significant traction on the market for a few quarters running.  Shares opened the year at eighty cents, so this one is a proven winner for 2012 and there still may be more to come. 

Roundup:  Another bunch of major companies - other than those already noted - will be reporting this week, including McDonald's (MCD), Coca Cola (KO), Johnson & Johnson (JNJ) and Ebay (EBAY), emphasizing the influence that this one week alone can have on dictating the trading trends for the duration of the year.  It's also becoming crunch time for the presidential race and the markets could also react accordingly to whichever party and/or candidates are predicted to take up residence in DC for the next four years.  The consistent wild card is still international events where economic troubles in Europe can scare investors on the American mainland overnight and threats of spreading war and violence in key economic zones can also keep investors jittery.  With that much uncertainty, I like the strategy of having some spare cash on the sidelines in preparations for any all-around market dip, but at the same time stocks have proven resilient enough through the late summer months that some are still predicting that new highs will still be reached.  Such varying views tends to lead to continued volatility, which makes this still a trader's market.

Happy Trading!!!

Disclosure:  Long CPST.

Contact VFC's Stock House: vfc@vfcsstockhouse.com

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