The trading week brings with it heavy anticipation. The DOW has been setting new record highs left and right these days and the S&P may be positioned to do just the same. The momentum built into last week's close favors a continued uptrend this week, although there are multiple major news stories still developing that could quickly come into the picture and create the uncertainty needed to lead to the volatile trading that has been relatively non-existent during the DOW's record run. Leading the way in terms of headlines is Cyprus, where indications over the weekend were that a 'Plan B' bailout deal was on the verge of being reached and early headlines on Monday confirmed that fact.
Many are concerned that the fiscal fiasco still evolving on the island-nation could spill over onto mainland Europe, but many investors now consider the ordeal as an isolated incident relevant more to Russia than to Europe as a whole. Early Monday headlines indicated that a plan was in place, pending a little bit of cash-raising from Europe to cover the bailout package. While the situation will still be monitored with caution, relative calm should prevail and Cyprus could disappear from the headlines just as quickly as the Yankees' playoff chances - and the Greek debt crisis, which we haven't heard from in a while.
Another key story to watch, and largely more relevant to the U.S. markets, will be the budget negotiations in Washington. The Senate and House have both issued their own respective proposed budget plans and - as announced last week - March 27, is the next deadline that our elected officials need to meet in order to stave off the effects of everyone's favorite word these days - "sequestration." A continued delay in negotiations that results in mass cutbacks may weigh on the still-recovering economy as it means a harsh round of furloughs will be imposed upon government agencies and their employees. As a result, a fairly significant amount of spending money will leave the economy and that's not necessarily a good thing during a recovery period - especially when there are billions tied to questionable programs, projects, per diem and travel expenses that could be cut, rather than sending working people home without pay.
On the other hand, if DC does come through with an approved budget that lasts for the rest of the fiscal year, then we could be in for a bit of a 'feel good' rally, as approved budgets are something Americans aren't used to these days.
Another item to watch this week will be the final look at the GDP numbers from the fourth calendar quarter of last year. Estimates of a stark retraction were revised somewhat later on, but this week investors will have a better idea of just how much defense cutbacks during that quarter impacted growth - and then use those numbers to estimate the impacts of sequestration.
Primed for a busy week, some other economic indicators could also effect broad-market trading. Data for pending homes sales and durable goods are slated for release mid-week and general sentiment has it that those numbers will look encouraging yet again. If that's the case, then we could see an enthusiastic close to the first quarter of 2013, especially if we get a budget deal, too, but the continued woes of Cyprus and Europe will also hum just close enough to the radar screen that volatility should, too, be expected.
As these noted news items continue to develop, there are still plenty of individual stocks and stories to keep an eye on. Here are just a few of them for the week of March 25, 2013...
Titan Moving Higher On Positive Panel Recommendation
Titan Pharmaceuticals (OTCQB:TTNP) took the biotech sector by storm last week and is one to keep on the radar screen this week, too, as massive volume and large price fluctuations have this one centered on the biotech map. When it was all said and done on Friday afternoon, shares had spiked by 36 percent on volume of over six times the daily norm. Sparking such action was a late-Thursday decision by an FDA advisory panel to recommended approval for Probuphine, a subcutaneous, continuous-action treatment for opioid addiction that could validate Titan's ProNeura drug-delivery technology on the commercial market, if ultimately approved. Investor interest in this advisory event was elevated as the FDA had posted comments to its website earlier in the week questioning whether or not Probuphine's dosage was adequate for market. The panel thought so, and now Titan will be one of the more heavily-watched stories in the sector this week as investors position ahead of the full-on FDA approval decision, which is expected late next month.
The rapid price swings seen last week could continue into the new week as positions are consolidated after multiple trading sessions of extreme volatility. The overall trend should continue higher, though, as sentiment behind an outright approval next month will grow based on the panel vote. It also should help that multiple analysts have now jumped on board with price targets of up to triple the current prices.
Tempering some expectations, however, will be the dosing concerns expressed by the FDA - which could mean another trial if the FDA does not approve - while the naysayers will also point to Titan's Risk Evaluation and Mitigation Strategy (REMS), which was deemed inadequate by some on the panel. REMS issues have the potential to keep small companies down for extended periods of time, as evidenced by the seemingly years-long struggle of BioDelivery Sciences (BDSI) to gain approval for an Onsolis REMS, and can greatly impede revenue growth from the start. The probabilities of Titan being heavily effected by these items may be slim, though, as the panel leaned heavily towards approval and Titan is already addressing its REMS issues.
The road towards approval looks pretty solid right now, providing a huge milestone in Titan's long trek towards relevance, and it's likely that shares will trade in kind leading into April's FDA decision day. Should Probuphine receive an approval, then the company would receive a milestone payment to the tune of fifty million dollars as per the terms of a partnership deal signed late last year with Braeburn Pharmaceuticals Sprl. Additional milestone payments would be due upon other sales milestones, while Titan would also be due a royalty on Probuphine sales.
Not a bad string of events for a company that traded for a mere penny just a few years ago. Well worth watching this week and the registered volatility of late hints that there may be a pullback or two still in the works as positions consolidate, making TTNP a potentially nice 'add the dips' play. Even so, a move higher leading into the FDA date is likely to materialize anyway, as Probuphine is primed to enter a growing target market with a treatment more difficult to use and abuse than the current competition.
BlackBerry Earnings And U.S. Launch Thrust Shares In The Spotlight
Undoubtedly one of the hotter stories to watch in the stock market over the past few quarters, BlackBerry (BBRY) is set to steal center stage once again this week with an earnings report due on Thursday and the U.S. launch of the Z10 in full effect. Enthusiasm may be low leading into the report, however, given Friday's 8 percent share price drop and a weekend full of negative headlines, but since the U.S. launch is only days old, any negative estimates there should be taken with a grain of salt, but guidance moving forward will be key. Additionally, investors will be looking for a continuation in the trend that was set last quarter, when BlackBerry demonstrated that it had stopped the bleeding and actually posted a profit for the quarter, although a very modest one. Proof that the cost-cutting measures put in place last year are still paying dividends could set a healthy foundation for the stock to react from developments relating solely to the launch.
Although much of the press over the weekend relating to BlackBerry was negative, Morgan Stanley (MS) took a different approach last week and raised its price target of BBRY shares from $10 to $22. Positive strides on the cash flow front provided the basis of the upgrade, while the potential of the BB10 platform was also noted. Having come somewhat late to the recovery game, analysts may continue to jockey for positions on the stock over the coming weeks, especially as early sales numbers start rolling in both domestically and internationally.
Moving forward, Friday's late afternoon drop should not cause too much concern for longs still playing the comeback story. The dip may have been more attributed to some profit taking after a nice, quick run, but some investors may have also taken a 'sell the news' approach, since the U.S. launch was officially under way. It'll be a whole new ball game this week, however, as the launch picks up steam leading into Thursday's earnings report, but there is no reason to believe that volatility will leave BBRY trading any time soon. As long as the hype remains high and the BB10 launch is in the headlines, this one will likely continue to move with the volatility seen in SiriusXM (SIRI) shares when that company traded along with maximum hype and headline wars. Traders could take advantage of these fluctuation while those banking on a longer-term recovery could accumulate on any dips that may materialize.
Healthcare, Biotech, Pharmaceutical:
SanuWave Positions Before Trial Start
Having fallen from highs achieved during a slick volume spurt earlier this month, SanuWave Health (OTCQB:SNWV) will be worth watching this week as March draws to a close and we enter into the a new trading quarter, when it is expected that the company will begin enrolling patients in a Phase III trial for its flagship product, dermaPACE, in the treatment of diabetic foot ulcers. SanuWave received the green light from the FDA a couple of weeks ago to move forward with the trial and shares responded accordingly by jumping higher, but a modest retreat following the spike has materialized after some investors likely played the 'sell the news' game in order to bank some short-term profits. Those now looking to play the coming catalysts, such as trial enrollment and then interim and actual results, may use the pullback as an opportunity to accumulate and reload for the future.
As always, the best strategy with still-developing speculative plays in the sector such as this one could be to build a core group of shares to hold for the duration, for those that wish to do so, while also utilizing a group of trading shares in order to take advantage of the trading opportunities that may arise along with the inherent volatility of the sector. After all, the day, swing, catalyst and momentum traders will all make sure profits are taken at opportune times, so there's no reason why true longs shouldn't take at least some profits, too, along the way, while potentially holding onto that key position.
Looking towards the mid to long term, there are enough catalysts pending to maintain significant investor interest, as described above, and that interest could grow as the coming trial gets under way and results start rolling. Potential over the long terms could also be huge, given the size of the target market for diabetes treatment, which is growing at exponential levels. Other reasons for optimism are contained within the trial design itself. The FDA has agreed to use some of the data compiled during a previous trial in consideration with the coming trial, too. Although the previous trial failed to meet its end-goal, dermaPACE did demonstrate efficacy and safety, which could expedite the current approval process somewhat, as safety is a relative non-issue at this point. Modest changes to the new trial design should help to alleviate any issues that contributed to the last trial missing the endpoint. That said, some investors will remain skeptical, but others will look to take advantage of the depressed prices with eyes towards this trial's outcome.
One to watch this week due to the recent price action and potentially a nice 'play the dips' play, as the current market cap does not quite justify - even on an extremely speculative level - the potential of dermaPACE, should this coming trial prove successful.
AntriaBio Pullback Could Spell Opportunity
AntriaBio, Inc. (OTCQB:ANTB) is another still-developing player in the sector of diabetes treatment that has recently pulled back and could be worth a look to both short- and long-term investors. This company is bringing to human trials over the near term a once-a-week basal insulin shot (AB101) that would look to replace the once-daily current standard of care. The noted benefits to a patient's quality of life that this product could have to those currently needing a shot a day is obvious, and AntriaBio shares have the potential to move in-line with catalysts as they develop during the coming quarters - especially in light of the recent pullback. After hitting highs of over two roughly a month ago, the share price has trickled lower on light volume, an indication that those who are already in are holding, while others looking to get in may do so when the see the share price settle. Given the relatively light volume, however, this one could still be trading below the radar - but that could change as progress is made this year in the clinical development of AB101.
Human trials in Russia are slated to begin over the near term and once data starts rolling in from those trials, then AntriaBio plans to use that data - assuming its positive - to search for potential partners, whether they be regional or international, according to a recent presentation (pdf). Diabetes is growing at a very rapid pace worldwide, as discussed in the SanuWave write-up, so AntriaBio could be positioning to enter a very lucrative market and could attract the swift interest of partners or potential acquirers if human trials move forward with success.
In addition to the above-mentioned catalyst events, FDA milestones could be forthcoming, as well, as the company has stated plans to proceed with the IND process in the U.S. while simultaneously conducting trials overseas. Emphasis has been put on the overseas trials first, however, due to significant costs benefits of conducting trials elsewhere, while patient recruitment is often easier, too. Once some human data is established, then it makes the FDA process at home a little bit easier. The path to approval should also be estimated as quicker than the standard drug approval process, due to the established nature of basal insulin, meaning developments could unfold quickly once trials are started.
Standard risks apply for developmental companies in the sector, but the recent price pullback, pending catalysts and overall potential of AB101 in the commercial market - should it make it that far - makes AntriaBio's recent trading action worth watching.
Roundup: International markets were up on Monday, leading us into a shortened trading week. U.S. markets looked to start the week on an up note, too, as a final deal on the Cyprus bailout was agreed upon. Focus now goes to the housing and durable goods data expected this week and on the run towards a record high for the S&P, an event that looms as likely, given the positive turn of events in Europe. Budget negotiations in Washington should not be ignored, though, but it's unlikely that any of our elected officials would feel comfortable being seen as the one(s) to rain on what's been an encouraging economic parade of late, so expectations should have it that a deal will get done this time. Plenty of items relating to individual stocks and stories were breaking early, too, as BBRY shares continued lower during pre-market trading on the heels of a downgrade by Goldman Sachs (GS) to neutral. YUM! Brands (YUM), on the other hand, was up early on news that the company would maintain its dividend rate and shares pushed through 70 in the pre-market - a far cry from the doom and gloom surrounding the stock earlier in the year when tainted Chinese chicken started eating away at the company's growth prospects. Plenty to keep an eye on this week, including the closing days of Spring Training - where everyone is still a contender, even the Mets.