The volatile trend continues in the markets, but the DOW has done a pretty good job at remaining in the range of 13,500 as the mood was merry at the mid-week point, given the somewhat-encouraging economic indicators and comments from the Fed earlier in the week. Barring any European developments that may influence trading trends beforehand, all eyes will now be on Friday's employment numbers.
Amid the overall market movement this week, there were also some individual mid-week movers (both to the up and downside) that might be worth keeping an eye on.
Healthcare, Biotech, Pharmaceuticals:
Amarin Corporation (AMRN): Amarin shares suffered a near-five percent blow on Wednesday after a Wedbush analyst downgraded AMRN from "outperform" to "neutral" and lowered its price target to $15 from $20. Reasoning behind the downgrade revolved around the lowering of expectations surrounding a potential acquisition of Amarin by a larger big-pharma company looking to boost its pipeline of marketable products. Previous expectations had it that Amarin was high on the list of buyout candidates, but the revelation that the company is in the process of hiring a sales force in preparation for the commercial launch of Vascepa, recently-approved for the treatment of very high triglycerides, are glaring indications that an imminent acquisition may not be in the works. Buyout speculation in the past had run Amarin shares to nearly twenty bucks and many intrigued with the idea again once Vascepa was approved.
Another factor that may be coming into play, however, is the longer-than-expected wait for the FDA to issue a final decision regarding Vascepa's status as a new chemical entity (NCE). Even as Amarin continues to boost its foundation with patent protection, an NCE designation would provide the product more rock-solid protection from generic competition. The fact that the outcome is still undecided may be delaying any buyout or partnership talks that may or may not be in the works, but it also may be what is sparking Amarin to take precautions and hire its own sales force in the event the NCE decision is again delayed or does not work out in favor of the company.
Wedbush, on the other hand, views the elapsed time since approval with no deal announced as a sign that there will not be a buyout - NCE or not - as many had speculated. Wednesday's share price dip resulted from that opinion.
The Amarin story is still worth watching. One analyst's opinion does not disqualify the potential for a buyout, although investors may tire of waiting for something to develop day after day, and an NCE designation for Vascepa could change everything. It's also worth noting that Vascepa is still predicted by many to become an ultimate blockbuster, meaning there is still room for a considerable rise in the AMRN share price whether a buyout develops or not - it just might take a little bit more time for sales to gain momentum if the company does decide to go it alone.
Neostem, Inc. (NBS): Neostem was noted last week as one of five share price dips that were worth watching for their potential to turn into a quick rebound story. On Wednesday of this week Neostem shares demonstrated their potential for quick rebounds by closing the day nearly six percent higher after an announcement earlier in the week that the company would be presenting at some high-profile conferences during the coming weeks that could significantly boost its exposure and technology to potential investors. Shares may also have received a boost by a Seeking Alpha author's coverage of the subject in a Wednesday article.
Neostem is gaining increasing attention in the regenerative medicine space as its chief product, AMR-001, makes its way through development. AMR-001 is designed to repair damaged heart tissue following a heart attack and - as a result of the regenerative aspects of the treatment - to also prevent major cardiac events from re-occurring. The treatment has already successfully completed Phase I trials, and the Phase II PreSERVE trial is already underway with results expected to start rolling in during the latter half of 2013. With the scope and attention on this trial in the stem cell sector - and the size of the market being targeted by the AMR-001 technology - shares of NBS would stand to appreciate rapidly, should further results repeat earlier successes.
That factors into the current volatility of the NBS share price and also contributes to its quick ability to rebound. The treatments are still relatively early in development, but NBS is positioned to potentially become an overall leader in regenerative medicine.
AEterna Zentaris (AEZS): AEterna shares were on the move this week, too, although to the downside on Wednesday as the company announced plans to implement a reverse share split. Such events are generally unkind to company share prices in the days immediately before or after implementation, but in order for AEterna to regain compliance with the Nasdaq's minimum price listing, the reverse split needed to take place. The RS is expected to take effect on 5 October and will be implemented on a six-for-one basis. As mentioned above, it's routine to see a share price drop immediately following the implementation of an RS - and/or just before - as evidenced this week by AEZS, but it's a company's pipeline and potential that will still ultimately dictate overall success. In the case of AEterna, nothing changes with regards to potential based on the undertaking of an RS.
The company's fairly deep pipeline consists of Perifisone in the treatment of multiple myeloma (MM), AEZS-130 as a diagnostic test for Adult Growth Hormone Deficiency (AGHD) (already proven successful in Phase III trials) and AEZS-108, another anti-cancer agent that has already proven successful in multiple Phase II trials. The company plans to file an NDA with the FDA early next year for AEZS-130 while AEZS-108 is being prepared for a near-term launch of a Phase III trial for endometrial cancer with other earlier-stage trials still planned. There may be some hesitation by investors to jump into any Perifisone enthusiasm based on a failed clinical trial earlier this year for metastatic colorectal cancer when the product was partnered with Keryx Biopharmaceuticals (KERX), but the MM condition could offer the product new life.
Roth Capital also initiated coverage on the company with a rating of 'Buy' and a price target of $1.75 (pre-split) last month, citing the company's developing pipeline and pending catalysts over the course of the next few quarters. That target values AEZS shares at nearly triple that of the current mid-week trading, although specific price targets will have to be adjusted, although market cap projections remain intact.
For those looking at this still-speculative company for its pipeline potential, the RS may provide an opportune time to play a dip, while others may enjoy the prospects of a quick trade. After months of sideways trading following the early year drop on the trial failure, AEZS is once again a stock to watch.
Sunshine Heart (SSH): Sunshine Heart was another company whose shares we listed last week as one of five share price dips to watch for the potential of a quick rebound, and it didn't take long for a rebound to take effect as news of a conditional FDA approval on Monday sent shares pushing the ten dollar mark once again. The FDA granted the company's C-Pulse Heart Assist system an Investigational Device Exemption (IDE), which paves the way for the initiation of a pivotal U.S. trial during the current quarter. Already this year the company has received an approval in Europe for the device and noted positive results from a North American feasibility study. C-Pulse is a medical device that has thus far in development proven to halt - and possibly reverse - the effects and progression of heart failure in patients with Class III and ambulatory Class IV heart failure and targets a multi-billion dollar market.
Sunshine shares were on the move following the FDA news earlier this week, but they have already retreated back towards the eight dollar mark. Such up-and-down action has been common for this stock over the summer, especially following an explosive run to seventeen dollars from three as the aforementioned key developments started to play out. Such as action should also be expected over the course of the near future, too, as many will continue to view the company as highly speculative until they see encouraging results from the U.S. trial, should they pan out that way, and/or building momentum on the European sales front. Given those prospects, some investors will continue to use these volatile moves to bank quick profits at opportune trading points, while possibly holding some shares for the long run. Such a strategy is a wise one, in my opinion, and often allows investors to come out on 'house money' or better before the major catalysts unfold. Shares again dipped below the eight dollar mark on Tuesday following the run towards ten to open the week, potentially offering investors another range to play as a trade - or long-term hold.
Industry, Clean Energy, Green Technology:
FuelCell Energy (FCEL): Shares of FuelCell had dropped recently as declining sales and revenue from the most-recently completed quarter played on the minds of investors who are closely following the company's trek towards profitability. Encouraging signs were prevalent earlier in the year, however, when news of a large cash infusion from a South Korean partner hit the wires and fueled a run towards the two dollar mark, while positive coverage from both Forbes and Bloomberg also offered an encouraging glimpse into the future. The announcement of a stock offering, however, stalled any momentum and sent shares south.
Shares were on the move again during the mid-week, though, with a five percent spike coming on the heels of a report that the company had received a $6.0 million "cost share award from the U.S. Department of Energy (DOE) to continue existing research and development under phase III of the Solid State Energy Conversion Alliance (SECA) coal-based systems program." The monetary award is provided to continue development of megawatt-class solid oxide fuel cell power plants to efficiently and cleanly generate electricity from coal syngas. Should the culmination of these efforts result in the achievement of the goals set forth, it would greatly reduce dependence on oil while also providing another solid source of clean energy.
Although kept in check by the continuing path to profitability, FCEL is clean energy play that could ultimately pay off should its technology make it the mainstream. International deals could also bode well for the company, as evidenced by the Korean deal and the progress of its European subsidiary.
Technology, Products, Services:
Sirius XM Radio Inc. (SIRI): Shares of SiriusXM have been thrust upwards since the mid-summer months and are on the move again this week, closing over four percent higher on Wednesday on high volume. The specific Wednesday boost can be partly attributed to comments by the Bank of America (BAC), who - as discussed by another popular stock and investment website - rates SIRI shares significantly higher than where they stand today. Investors are also enthusiastic about the seemingly-inevitable takeover by Liberty media since the FCC has announced that comments are now welcome from those who oppose any such deal. Liberty has methodically been increasing its stake in SIRI since bailing the company out from the brinks of destruction a few years back when SIRI shares traded for a mere nickel.
Although facing stiff competition from Apple (AAPL) products and other services provided by Pandora and Amazon (AMZN), SiriusXM has successfully held its own with its unique diversity of exclusive content and has returned hefty rewards to those who were willing to buy while others were selling. The company has consistently increased its subscriber base quarter-over-quarter - providing investors with sound reason to stick around other than the potential liberty takeover - and the trend is expected to continue with the next quarterly announcement, slated for 30 October.
Sirius does go through its bouts with shorts now and again, but shares have burst through the $2.30-$2.40 range with conviction, and the BAC comments indicate that a further move higher is possible. Moving hard over the past weeks, SIRI is a story worth watching.