Carol Flake Chapman's  Instablog

I wrote about Valeant Pharmaceuticals (VRX) back on June 16, when the stock was trading at a little over $22. The company came to my notice because of Efudex, its treatment for actinic keratosis and basal cell carcinoma. Not only does the treatment work to remedy an almost epidemic growth in skin cancer among baby boomers -- it turns out that the treatment also improves the appearance of the skin. After undergoing surgical treatment myself for basal cell carcinoma, I can safely say that patients who have a choice will opt for the cream over surgery. The improvement in appearance is a bonus.

Since then, the stock has run up to $29, and after its earnings report this morning, it was up another 12% at $33 in pre-market trading, making a gain of 50% in four and a half months.

The company reported total revenue of $220.3 million in the third quarter of 2009, an increase of 31% over the third quarter of 2008. Product sales in the company's Specialty Pharmaceuticals segment, which includes Efudex, increased 45% to $101.6 million. And what's more the company has raised guidance for 2009 to between $2.10 and $2.20, up from prior guidance of $1.90 to $2.10.

I am long VRX and happy to be so.

 

 Flu Bonanza

When the swine flu first began claiming victims back in April, I predicted here in one of my posts that a number of stocks would be affected, including makers of preventative vaccines, flu tests, treatments and sanitary products like surgical masks. As it turns out, every stock I mentioned has risen, from vaccine maker Roche (RHHBY) and test makers Quidel (QDEL) and Life Technologies (LIFE) to mask maker Alphaprotec (APT). The more speculative stocks I mentioned have risen the most, including Novavax (NVAX), Biocryst (BCRX) and Sinovac (SVA).

Here are the percentages of gains from April to Sept. 1:

RHHBY: 40%

QDEL: 45%

LIFE: 52%

APT: 500%

BCRX: 800%

NVAX: 745%

SVA: 850%

Disclosure: I am long RHHBY, LIFE, QDEL, BCRX and SVA.

A very good friend in her early 80s recently had to use a prescription skin cream to remove some precancerous spots on her face. Her face turned red and blotchy for a week, but after the treatment, not only were the lesions gone; so were some wrinkles. I made a note, wondering if this was the usual result. If so, I thought, here's an inexpensive and effective wrinkle treatment, similar to Retin A, but stronger. And maybe a promising stock. And this morning, I came across a report confirming what I had suspected.

According to a study in the June issue of Archives of Dermatology, a skin cream containing fluorouracil, a chemotherapy medicine that treats precancerous skin patches, also reduced sun damage and wrinkles on the faces of 21 people who used the drug. Researchers saw improvements over 24 weeks in dark spots, yellow skin tone and hyperpigmentation, according to the study. The fluorouracil caused the skin to become red and irritated, making it peel as it worked to eliminate unhealthy skin, study authors said.

The result was consistent with my friend's experience, who described her face as looking like raw hamburger for a few days. She was pleasantly surprised, however, by the quality of her skin after it healed.

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The sudden appearance of a new strain of influenza has become a dramatic lesson in stock market dynamics. If we apply chaos theory to the market, a cough in Mexico can cause an economic storm in Asia.

Markets in Asia and Europe dropped sharply on speculation that the outbreak of swine flu will curtail travel and consumer spending. Shares of airlines and hotels were particularly hard hit, which is not surprising. The price of corn and soybeans dropped as well on speculation that an outbreak of swine flu may reduce demand for pork, and consequently the grains that feed them.

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