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. Although focusing intently on the biotech and healthcare sectors, due attention is also given to potential market-moving or game-changing companies in a broad variety of sectors and industries. The 'Weekly Stock Watch' will also introduce new companies for coverage and identify some stocks that may have entered 'buy territory'.
As expected, all eyes were on the historic Facebook (FB) IPO last week, although continued economic trouble in Europe probably deserved more attention and should prove to be a whole lot more relevant to the markets from here on out.
Although having only one full day of trading in the history books, Facebook is already starting to look like a dud to any investor not already on the inside leading into the IPO. Emotion and investing don't mix, and those that excitedly predicted swift increases in the FB share price when they flooded the Nasdaq market were thoroughly disappointed on Friday as the closing price was not even a percentage point higher than the open.
The most hyped IPO ever looks just like that right now - all hype and little substance, and with shares trading for a cap of 100 times earnings, it's going to take a whole lot more hype to keep the FB share price afloat.
One has to wonder just how much hype is left.
Last week it was argued that the IPO was geared more towards milking as many riches as possible for the insiders than it was for creating a stable trading market, and the headlines that poured from numerous media outlets over the weekend look to agree with that assessment. It could be a tough week ahead for Facebook, which at the end of the day is still a company out to prove to be more than just the latest fad.
An historic event it was, this Facebook IPO. Success, overnight millionaires and lavish spending sprees all resulted from a small idea that turned big.
That's the American dream, isn't it? But let's not lose sight of the fact that the IPO was not designed to benefit the retail investor - it was designed for the insiders, so tread carefully with this one and take emotion out of the equation.
And come on now, did Zuckerberg's nuptials warrant all those headlines?
Was nice to see the NY Rangers drop the Washington Capitals and advance to the next round.
All the markets dropped heavily last week, and this week may be no different.
Europe is still a mess right now, with it looking more and more likely that Greece may depart the Euro Zone. It looks as if the banks and big business have had ample time to prepare for such an event, which could soften the economic blow, but still throw an already wobbly situation into chaos as Spain, Italy and Portugal could be rumored to be the next to go.
Meanwhile, you know the Brits are glad for having decided to stand clear of the Euro and stick with the pound all those years ago.
In the United States it is likely that President Barak Obama will become increasingly interested in the events that unfold in Europe, with a key focus on creating short term growth. After all, the President's re-election hinges chiefly on the state of the US economy on the day voters go to the polls this coming November, and any serious setback in Europe could hamper any hopes of a continued recovery in America.
The situation surrounding Iran and its nuclear program could also intensify this week, with some reports from Moscow indicating that Israel may be ready to strike while Western countries continue to negotiate. Any tension in the Straits of Hormuz could quickly spike the price of oil and collapse global markets, but its unlikely that Western powers - and others in the Middle East - would allow that to occur.
Lost in all of this ancillary noise is that the killing and destruction in Syria continues, as the UN proves just as futile today as it was during the wars surrounding the breakup of the former Yugoslavia.
At some point soon the broad market is likely to experience somewhat of a rebound after dropping day after day, and there are plenty of good deals opening up, in my opinion, which will be worth taking advantage of.
Unfortunately, too many will still be focused on Facebook to take much notice of anything else.
Here's a few stocks and stories to keep an eye on during the coming week...
NovaBay Pharmaceuticals (NBY): NovaBay could be a company whose share price might have become a whole lot more attractive during the recent downturn in the markets, having dropped from the $1.30 range to under a dollar at one point with no associated news announcement to justify such a fall. The move south was accompanied by higher-than-average volume, but not enough, in my opinion, to spark fears of a mass sell-off.
In fact, with a market cap of under thirty million, it could be argued that shares are still highly undervalued, based on the potential of the company's proprietary technology that may be the answer to the growing medical crisis of resistance to over prescribed antibiotics.
NovaBay is moving forward with clinical trials testing its NVC-422 Aganocide compound in numerous conditions and its first FDA-cleared product, NeutroPhase for hospital wound care, is expected to hit the market this year.
After shares slipped to below ninety cents during intra-day trading last Wednesday, an announcement the next morning sparked a quick rebound to over a dollar, with NBY closing the week above that key level.
Thursday's press release noted that the company had enrolled its first patient in a recently-commenced trial testing NVC-422 for treating adenoviral conjunctivitis, a highly contagious form of "pink eye."
Another trial testing NVC-422 for Impetigo is also expected to commence this year while results from yet another trial, for the treatment of urinary catheter blockage and encrustation (UCBE), are also expected in the near term. Initial results from this trial have already rolled in with encouraging results, while investors and company officials anticipate the release of 'Part B' data.
With a pending commercial launch and numerous trial catalysts expected over the coming quarters, NBY may be trading at price levels that could prove to be a steal, should the catalysts turn out positive.
In my opinion, the potential alone justifies some accumulation at these levels, and I took the opportunity to add a few shares at sub-$1 prices, as the risk/reward profile is arguably the best its been in a while.
Last week's price action makes NBY a stock to watch during the coming week.
Dendreon (DNDN): A five percent Friday drop following initiated 'Sell' coverage by the Maxim Group has Dendreon in the spotlight once again. DNDN shares actually began their drop earlier in the month after an earnings report that was, for the most part, in line with estimates and expectations. What had investors nervous, however, was the continued talk of slow sales growth for the company's prostate cancer vaccine, Provenge.
Additionally, investors and traders who may have bought-in prior to the earnings announcement hoping for a surprise likely bailed in a hurry when that wasn't the case, accentuating the drop that continued the following week after news circulated that the SEC had opened an investigation into the company citing potentially misleading statements from management regarding the potential of Provenge.
Positive expectations came to a screeching halt last summer when the company released statements emphasizing logistical and pricing-related concerns surrounding Provenge, and shares collapsed as a result.
It's been a see-saw ride ever since and last week's turbulent investigation and analyst news only added additional downward pressure. Maxim's 'Sell' rating also came with a $5 price target, citing the aforementioned logistical and pricing challenges, as well as noting growing competition on the market.
In addition to Friday's drop, DNDN experienced a ten percent plung on Thursday.
With a recent history that includes numerous instances of surges and drops, this will be a stock to watch over the coming week as those predicting a rebound will likely take up positions, while those that believe that another nail in the coffin for Dendreon was hammered in with the Maxim report continue to bail.
As always, never a dull moment with this one.
Ampio Pharmaceuticals (AMPE): Shares of Ampio Pharmaceuticals also dropped by nearly five percent on Friday, approaching the 52-week low after a run to nearly ten dollars last year sparked an intensive round of investor interest in the company.
Ampio has three pipeline products with significant potential chugging along through development, and a a few ORP diagnostic devices that measure oxidative stress in patients and are also worth noting as a potentially more accurate measure of a patient's total health than the current standard of care test of vital signs one receives upon entry to a doctor's office.
The company made progress last month with its most advanced product, Zertane, as a move to bring the product to approval in Australia for the treatment of premature ejaculation (PE) was followed up with an announcement that a pathway for a US approval is also being discussed with the FDA. As talks with the FDA progress, Ampio has taken Zertane overseas where two regional deals were signed to commercialize the product, offering the company near-term revenue potential as the rest of the pipeline develops - and the rest of the pipeline might hold even more potential than Zertane.
Ampion is being developed to become a key player in the anti-inflammatory market and has thus far in development demonstrated a solid safety and efficacy profile while not being accompanied by the same side effects as other common anti-inflammatories, such as Tylenol and Ibuprofen. While development continues in bringing this product to market in other areas of operation around the globe, discussions are underway with the FDA to initiate definitive trials in the United States. Those trials could commence as early as the second half of this year.
Optina is being developed as an oral treatment for diabetic macular edema and diabetic retinopathy, offering the company another large market to target. Developmental results have been positive to date and the product completes a solid trio of potential large-market product candidates for Ampio, conveniently at a time when large pharmaceutical companies, such as Pfizer (PFE) are taking measures to boost pipelines that have been depleted by key patent expirations.
Given that Ampio's pipeline is devised of "re-purposed" drugs with already-established safety profiles, approvals may come at a much more rapid pace than would new drugs at similar stages of development. That face could be key to potential buyers and large investors.
Last week's drop to the 52-week low makes AMPE a stock to watch this week, and could have opened up a nice buying opportunity for those that remain unconvinced that the push lower is anything but the work of some timely short sellers.
Human Genome Sciences (HGSI): Shares of Human Genome Sciences about doubled on the announcement of a buyout offer by partner GlaxoSmithKline (GSK) last month, but the company was unimpressed with Glaxo's offer of $13/share and the deal has yet to be consummated.
Upon rejection, Glaxo took the bid hostile, but the story took another twist last week when Human Genome injected a "poison pill" into the equation and cited talks with numerous other entities regarding a potential takeover or buyout.
Shares closed down on Friday, although modestly, but at this point the story is worth watching for the drama surrounding it. The fact that other suitors for HGSI are involved may just be posturing by Human Genome, but it certainly adds to the mystique surrounding negotiations.
Glaxo had long been rumored to eventually take over its smaller partner, but nothing definitive materialized until HGSI was trading near its 52-week low, and that is when Glaxo pounced.
Not surprisingly, Human Genome does not feel the deal is of sound value - HGSI traded as high as nearly thirty bucks in the past year - and its likely that management, and investors, will not be satisfied with any offer sub-$20.
This deal will get done, but the question is for how much.
Still a story to watch.
Advanced Cell Technology (OTCQB:ACTC): Friday's ten percent price spike has shares of Advanced Cell Technology on the watch list moving into the new trading week. It's also worth noting that the company's CEO, Gary Rabin, will be presenting at the World Stem Cells and Regenerative Medicine Conference in London this week.
Mr. Rabin will offer updates on three ongoing clinical studies testing ACT's stem cell therapy in the treatment of severe blindness in a presentation titled, “Successes and ongoing advancements of human clinical trials for the treatment of AMD & Stargardt’s Disease.”
Shares of ACTC have dropped since the announcement of intent to conduct a reverse stock split, a move that comes as the logical next step in the company's development, and if the RS is accompanied by a move to a larger trading board, then it could provide an instant credibility boost to those who won't touch OTCBB stocks.
The CEO presentation may also draw additional attention to the stock, which posted impressive gains on Friday, considering the overall down market.
Since Geron (GERN) dropped out of the stem cell game last year, Advanced Cell may be the recognized leader of the field.
Synergy Pharmaceuticals (SGYP): Still hovering at right around the price of a recent stock offering, shares of Synergy Pharmaceuticals could prove to be quite the bargain, should the company's ongoing clinical trials turn out positive, as is generally expected, and should lead product candidate, Plecanatide, even remotely approach its billion-dollar potential upon approval in the indications of chronic idiopathic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C).
Shares soared to highs of over seven dollars last month when attention was paid to the high chances of success for Plecanatide in the aforementioned indications, based on similarities to competitor Ironwood's (IRWD) product which is under approval review after posting successes in late stage trials.
Synergy received another boost when it became known that the FDA review for Ironwood's product candidate would be delayed by three months, offering Synergy a full quarter to play "catch up."
Another advantage that Synergy has over Ironwood is that it currently owns all rights to its product, a key factor when considering the company's buyout and revenue-generating potential. Ironwood's product is already partnered, taking a significant catalyst off the table, while the potential for Synergy to land a significant deal still exists.
Flush with cash in the bank following the recent offering, and with the full pipeline potential still in tact, SGYP is a stock to watch this week and for the coming months.
Cytosorbents (OTCQB:CTSO): The more impatient of investors looked to be unimpressed with the perceived slow progress of Cytosorbents to capitalize on the European approval of its CytoSorb blood purification technology on the open market in Germany, and the share price fell to below ten cents for a period last week as a result.
The southward move followed an earnings report and corporate update proved that progress moving forward, although still at a methodical pace.
Progress on multiple fronts was reported in the update, and for a small company with a still-infantile market cap in comparison with its potential, the move to commercialization should be viewed as a positive. With that in mind, the fact that Cytosorbents is still a small company, patience must be exercised as the plan unfolds.
If the update is an indication to what is going on behind the scenes, then believers are being made on the European market and the company is positioning for quicker growth over the coming quarters.
The dip to below ten cents was, in my opinion, an opportune time to add some shares as CTSO inches ever closer to realizing its potential.
Cel-Sci Corp (CVM): Shares of Cel-Sci Corp dropped by nearly twenty percent on Friday on reports that shareholders will vote to add authorized shares to the count, a move the often predicates dilutive financing.
A letter to shareholders released last week painted a positive tint on the ongoing trial, although specifics were again avoided.
Cel-Sci is partnered with Orient Europharma and Teva in a global Phase III trial testing the effectiveness of its cancer immunotherapy treatment, Multikine, in the indications of head and neck cancer.
Often a volatile stock, the recent pullback could have opened up a buying opportunity for those looking to make a Multikine play.
Titan Pharmaceuticals (OTCQB:TTNP): Titan received initiated analyst coverage last week from Rodman & Renshaw, an event that pushed the share price to eighty cents again as the coverage was accompanied by a "market outperform" tag. On Friday, however, the share price dropped back closer to seventy cents again, the price level to where shares fell after the announcement of a stock offering earlier this year. Potential catalysts could be the announcement of a Probuphine partner or other developments related to the approval of the product in the treatment of opioid addiction.
Probuphine is also being developed for the treatment of chronic pain.
The initiation of coverage put Titan back on the map and could lead to a push back to a dollar as interest draws in and developments unfold.
Keryx Biopharmaceuticals (KERX): KERX continues to be a stock to watch this week after another seven percent drop on Friday put shares right back at the $1.50 mark. The out-flux of investors from Keryx began after failed Phase III Perifisone results, but does not appreciate the potential of Zerenex, being developed for end stage renal disease and which could hold significant advantages over the market competition.
Should Zerenex trials prove to be positive later this year - as they did in Japan just a short time ago - then a return to previously-achieved highs is possible. It's also likely that another runup will materialize in anticipation of those results. Such action is common in the biotech and healthcare sectors.
Celsius Holdings (OTCPK:CELH): Although down for the week, shares of Celsius Holdings closed up by ten percent on Friday on average volume. Another stable earnings report released this month provided a good indication that a solid foundation for growth is in place and CELH could be positioned to capitalize.
Celsius has launched multiple calorie burning, pre-workout products - including both carbonated and non-carbonated drinks, powdered packets and energy shots - into the health and pre-workout markets, and a successful PR push could draw enough attention to increase sales.
While currently trading for a market cap of just over twice revenue for the last quarter, CELH might have room to grow if new interest flows in enough to provide a continued volume boost.
Sirius XM (SIRI): Shares of Sirius XM quickly dropped to below the two dollar mark as the market as a whole fell during the past trading week, although a slight rebound on Friday left shares three percent higher at $1.88.
Liberty Media has been attempting to gain majority control of the company for some time and has undertaken recent measures to continuously increase its position to near fifty percent. Debates as to whether this will benefit or betray shareholders are ongoing, although any significant pullbacks will likely be accompanied by a bout of buying by longs, many of whom are staunch believers in the company's long term potential.
The Liberty factor is worth watching.
McDonalds (MCD): The broad market down turn has shares of the world's most recognized restaurant brand now trading for below ninety dollars. With a long term view, the recent drop in the MCD share price, and any other pullback that may follow, could have opened up a nice opportunity to pick up a few shares, which are down roughly ten percent over the past few months.
McDonalds continues to bank on international growth and earnings have been solid through the market turmoil, always an encouraging sign.
The swift move lower makes MCD one to watch this week.
Agenus (AGEN) down five percent on Friday...BioElectronics (OTCPK:BIEL) down fifteen percent after a recent move higher...Interest in Biovest Internation (OTC:BVTI) and Accentia Biopharmaceuticals (OTCPK:ABPI) grows following ASCO abstract...Amazon (AMZN) down two percent on Friday...Siga Techonologies (SIGA) falls to the south side of $2.50...Implant Sciences (OTCQB:IMSC) up seven percent in a return to a dollar...Netflix (NFLX) below seventy bucks again...Happy Trading!
Dislcosure: Long NBY, CELH, IMSC, SIGA, AMPE, SGYP, CTSO, CVM, TTNP.