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'.
...[A]lthough Friday's close was a weak one, the markets posted weekly gains last week for the first time in a month. That broad sentiment carried into the open of Monday's European trading session, as concerns over mass calamity surrounding a possible Greek exit from the Euro eased, but concerns over Spain's banking troubles took hold mid-day and down shares went. Likewise, the feel-good boost of last week may not carry forward in the U.S. markets come Tuesday morning.
Although Europe looks more prepared than ever to deal with Greece's economic crisis, the new French government is likely to insist that Germany keep shelling out millions to keep Greece within the eurozone, and without implementing the plans put forth by Angela Merkel & Co., Germany may only go so far before kicking its poorer -- and less responsible -- neighbors to the curb.
Financially, Germany holds most of the cards and few believe Merkel is going to create a welfare state in Greece without receiving a whole lot of assurances that the already-agreed upon measures will stand. Leave it to the French to believe that they will come out on top when bargaining from an inferior position.
While all that drama plays out, financial news from Spain -- and potentially Portugal and Italy, too -- will also continue to weigh down the global markets and add to the long-existent volatility. In the United States news related to consumer confidence, gross domestic product and payroll reports will hit the wires this week, all which could provide indicators as to the state of the recovery.
Cancer stocks will also be in the spotlight this week since the American Society of Clinical Oncology's (ASCO) annual meeting will kick off the following week. It's not uncommon to see a broad spike in the sector as numerous companies receive a larger amount of exposure, so keep an eye out to see what the sector may have to offer.
With a lot going on in the world this week, here's just a few stocks and stories to watch...
Facebook (FB): It's tough not to headline with Facebook again (FB) after the over-hyped IPO turned out to become maybe much more of a headache than it was worth, at least for those that saw the event as the beginning of a new era for the social media giant and not just a way to make a whole bunch of new millionaires. Since the company depends so much on loyalty and name, the PR hit taken since the IPO may be just the opportunity that Google (GOOG) needed to make serious headway in gaining market share from the dominant Facebook with Google+.
That said, it is yet to be seen how many of Facebook's loyal followers actually pay attention to the financial markets and consider the IPO a relevant event, but as the negative publicity and the lawsuits mount, the implications could end up becoming more far-reaching than first predicted. A mass-exodus of "customers" is unlikely considering the time and effort users have put into building their networks, but it wasn't too long ago that MySpace was running the show, either. You just never know, and companies cannot afford to pull off major PR blunders like this one -- unless the goal was to rake in billions for a select few and not provide a solid platform for future investors.
Google, however, may have more important things to worry about right now than gaining ground on Facebook. Governments all around the globe are looking to reinvigorate allegations of major privacy breaches conducted by Google's 'Street View' cars when they were tooling around streets world wide with cameras - and software that was stealing information, emails, texts and just about everything else in the radio spectrum from unsuspecting citizens.
The company claims ignorance -- like that one is going to fly -- as it has become public that private medical records, emails from married individuals looking for "extracurricular activities," and all sorts of other information was sucked up by the Street View cars and uploaded into Google's massive databases. One poor lad even got caught exiting an adult toy store, but has since seen his picture removed from the Google site. This story was already buried once, but chances are the growing momentum by national-level officials in various countries could cause Google some unwanted stress at a time when it could have taken advantage of Facebook's PR nightmare.
On the other hand, maybe the "ignorance" play might work. You've all seen the code-writing engineers that can create code to say, steal information from the air with a Street View car, but have trouble tying their shoelaces in the morning or putting on their drawers right-side-front. Having said that, these guys might come gunning for me now, so if you see various posts of me praising the Philadelphia Phillies, then you know I've been hacked.
Synergy Pharmaceuticals (SGYP): Volume is just now starting to return with strength to trading of Synergy Pharmaceuticals after a recent stock offering quickly returned shares to the $4.50 range from highs of over seven dollars reached shortly before the announcement. With significant catalysts pending for the remainder of the year relating to a drug that could have billion-dollar potential, this one may be ready to roll again.
Trial results for the company's lead product candidate, Plecanatide in the treatment of chronic idiopathic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C), are due later this year and provide the most notable pending catalyst, but there are other indicators and variables that could play a roll into a pre-announcement move higher.
Synergy's current market cap is just a fraction of that of its chief competitor, Ironwood Pharmaceuticals (IRWD). Thus far along in development, Plecanatide has proven to be at least as effective with none of the side effects presented by Ironwood's product, which is currently before the FDA for review. That fact alone would justify a higher market cap for Synergy, but add into the mix that Ironwood has already signed a deal to split proceeds of its product with Forest Laboratories, Inc. (FRX), and the case can be made that Synergy is highly undervalued in comparison.
With trial catalysts pending and a restocked war chest, SGYP is going to be a stock to watch for the coming weeks and months. When all things are considered, this could be one of the more undervalued plays out there right now in the sector, in terms of potential.
Dendreon (DNDN): If ever there was a week that Dendreon could rebound from the lows hit after a recent downgrade and increasing bad press, this is it. The company has numerous presentations planned and is expected to release some additional data regarding its prostate cancer vaccine, Provenge, also in the coming weeks.
Volatility has ruled DNDN trading since last summer's dramatic drop, so investors loading up at the lower end of the trading range will be eyeing another potential rebound, but it might take more than some press and presentations to spike shares to the north side of ten dollars again until Provenge sales numbers pick up at a pace higher than the low to mid single digits that has recently been realized.
ASCO press might do this one some short term good, but although the potential is there for an all-out rebound to be realized, each passing day of growing competition convinces more and more investors that this company will get credit for ushering in the age of cancer immunotherapy treatment, but not much more. Still, with ASCO pending and a potential market rebound always in store, DNDN is still one to watch.
CytoSorbents Corp (CTSO): The last two weeks have proven to be highly volatile for Cytosorbents, and with the markets in flux as they have been, the coming week could bring more of the same. Shares rebounded solidly after a post-earnings dip last week, but then fell again to close the week as the short-term swing and momentum traders likely took profits on those shares purchased for below ten cents just days before. Once those traders are out -- if they're not already -- then CTSO could again consolidate and possibly inch to the higher end of its recent trading range as the story continues to develop.
As described last week, this company has made solid progress over the past couple of years, especially considering its size, and although many investors do not have the patience in this day and age to wait out a solid growth story, CTSO has rewarded that patience on a few occasions before -- and the best may still be yet to come. Given the trading action of the past couple of weeks, this will be one to keep an eye on, and those with the long term in mind may appreciate the once-in-a-while dips to the dime level.
Keryx Pharmaceuticals (KERX): Positive trial news from across the globe and a recent analyst upgrade that may be more than justified has reinvigorated new life into the potential of Keryx Biopharmaceuticals. Investors bailed out in droves in early April following disappointing results from Perifisone in Phase III trials, but although many have not given Zerenex much of a chance to rake in significant market share, the case can be made that Keryx has positioned the product to maximize its potential on the market and reap hefty rewards for the KERX share price, which could still be due a significant boost if Zerenex Phase III results are positive later this year.
Some recent presentations may have also attracted additional interest to the company, and as time draws nearer to the release of Zerenex results, another pre-decision runup could take shape.
Ampio Pharmaceuticals (AMPE): Still hovering in the mid-to-high $2 range, Ampio Pharmaceuticals is still one to keep an eye on as a company positioned for a rebound. Some bad press late last year initiated by admitted short sellers threw some downward pressure on the share price, but with numerous trial catalysts pending and nothing but solid news coming from the pipeline development, this one could run if the news flow remains the same.
The short percentage still remains high, but the low float and high insider ownership are also variables to consider. Each product in development has blockbuster potential and the company will initiate definitive trials in the United States later this year, if all goes according to plan. It's definitely worth watching.
NovaBay Pharmaceuticals (NBY): With a technology that could potentially counter antibiotic resistance and a market cap that is relatively minuscule when all potential is considered, NovaBay Pharmaceuticals may be skimming along below the radar right now. A recent drop in price from roughly $1.30 to a buck indicates that many are not adequately valuing the potential of the company's NVC-422 Aganocide compound, which is involved in studies to treat numerous indications, nor are they valuing NeutroPhase, an FDA-cleared treatment for chronic wound care that is due to launch in the United States this year.
With volume and market cap low, NBY has the potential to move higher on positive pipeline news. NovaBay shares quickly regained the dollar mark last week when news hit the wires announcing that the company had enrolled its first patient in a Phase IIb study that will evaluate the Company's lead compound, NVC-422, in the treatment of adenoviral conjunctivitis, a highly contagious form of "pink eye."
The initiation of this trial, entitled BAYnovation, and the enrollment of the first patient should be viewed as a significant milestone for NovaBay, as there is currently no treatment for viral conjunctivitis on the market. The company is also working closely with the FDA to ensure that all guidelines and criteria are met to facilitate the most efficient compilation of data in preparation for achieving the goal of commercialization as quickly as possible. BAYnovation commences on the heels of Phase IIa results that produced encouraging results in a potentially lucrative field. Should the pipeline continue to advance with encouraging results, then it's highly unlikely that shares will be trading at these levels for too much longer.
Amylin Pharmaceuticals (AMLN): Shares of Amylin Pharmaceuticals (AMLN) spiked by over eight percent on Friday on double the average volume -- not bad for a "holiday" Friday -- after reports surfaced that both Sanofi (SNY) and Merck (MRK) had put in bids of "at least" $25 for the company. Amylin had already run big once this year when Bristol-Myers Squibb Company (BMY) put an offer on the table for $22 per share and Friday's price run indicates that investors believe that we have yet to see a final offer. Can anyone say $30/per and it's a done deal?
Amylin is a fine example of how enjoyable it can be owning shares in a company that becomes the target of a "bidding war," and with companies like these -- and Pfizer (PFE) as well -- flush with cash and on the prowl to buy, the biotech and small pharmaceutical sectors should continue to be ripe with rumors and excitement.
Oncothyreon (ONTY): Oncothyreon was written off by many earlier this year when Stimuvax trial results were perceived to have been delayed, but with shares trading for under four dollars and an analyst at WBB Securities upgrading the stock to a 'Hold' from a 'Sell', some new interest and new life could be reinvigorated into the trading action.
This company looks to become a major player in cancer immunotherapy treatment with Stimuvax, partnered with Merck KGaA (MRK.F) and currently in a Phase 3 pivotal trial, for the treatment of non-small cell lung cancer. If successful, ONTY could turn into another DNDN story, from the times when a Provenge approval launched that stock into the range of a billion-dollar-plus market cap. A stock offering announced earlier this year also contributed to ONTY's share price drop.
Disclosure: Long SGYP, CTSO, AMPE, NBY,