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Daniel Lauchheimer
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Investor with no formal training. Enjoy reading about happenings in corporate America, and trying to predict where things will land in the future. Interested specifically (but not limited to) Healthcare, and Real Estate. Also interested in macro strategies, and derivatives-- both for investing... More
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  • Torch Energy Heading To Zero

    Torch Energy Trust (NYSE:TRU) is a royalty trust whose only asset is a net profits interest (NYSE:NPI) in four fields in Alabama, Louisiana, and Texas. An NPI is a percentage of the profits (as opposed to revenues) derived from a specific oil field. The trust only does one thing -- collects its net profits interest from these fields, and distributes them to shareholders. Once the Trust no longer holds the NPI's, its worth comes down to the cash on its balance sheet less liabilities - book value. The trust currently trades at 20 cents a share, or a $1.72mm market cap. To put it mildly, this makes no sense. Briefly, in January 2008, by a 2/3's unitholder vote, the trust voted to terminate. This triggered a clause forcing the Trust to liquidate their NPI's, and distribute the proceeds from the sales. The Trust sold the fields in Alabama in December 2011 for $1mm, and sold the remaining fields in Louisiana and Texas in August 2013 for $3.2mm. In December 2013, the Trust distributed $3.258mm of these proceeds to unit holders, and after trust fees currently has $510,000 in cash, or 6 cents per share, and nothing more. The Trust might have even less than $510,000 if the costs associated with winding down the trust increase. Additionally, the Trustee has no outstanding litigation with any parties that could increase the value of the trust through settlements or legal victories. Either way, the trust will hit zero in the near future after it distributes the last of its cash, but in the meantime it has a 76% downside to 6 cents a share where it should trade because that's all that's left.

    Amazingly, the stock still has some liquidity. Average volume hits close to $10,000 per day, and Interactive Brokers has an inventory of shares to lend, so you can still get in on this trade.

    Two possible catalysts that could move the stock lower come to mind, first the announcement of the final distribution at which point the Trust will announce it has no more money, and second the actual delisting of the shares. I spoke with the Trustee, and he believes that the Trust should wind down in the next 30-60 days, so stay tuned for more info.

    In the Seeking Alpha Database, the stock has the ticker TRU, but the real ticker is TRRU (with two R's)

    I am short TRRU

    Disclosure: I am short TRU.

    Tags: TRU
    Mar 20 4:22 PM | Link | Comment!
  • All Berkshire Hathaway Annual Shareholder Letters Combined

    I downloaded all of the BRK.A annual shareholder letters, PDF'ed them, and combined them.

    I think it could be useful if you want to search through all of the letters at once to see if WB ever wrote about a certain company/topic.

    This is an update to the file I made late last year. I added a table of contents, clickable from within the document, and with bookmarks in the side panel as well. In order to view the file properly you will need to either view it in Firefox, or download it as a PDF and view it in Acrobat/Foxit. The Chrome PDF viewer doesn't support the clickable links in the file.

    Anyways, here is the file.

    Good luck and enjoy

    Tags: BRK.A
    Aug 04 4:32 AM | Link | 1 Comment
  • Pharma Friday 6/7-6/13

    Earnings

    1. Pfizer (NYSE:PFE) reported that its two new potential blockbuster drugs -- Eliquis, a blood thinner, and Xeljanz, a rheumatoid arthritis medicine -- have not met sales estimates. Eliquis wants to replace warfarin, a generic pill used to prevent strokes, and competes with Boehringer Ingelheim GmbH's Pradaxa, and Bayer (OTCPK:BAYN) and J&J's (NYSE:JNJ) Xarelto on this front. Xeljanz competes directly with AbbVie's (NYSE:ABBV) Humira, an injection, and is approved for use after patients fail a first-line therapy, typically methotrexate. Eliquis may generate $613 million in annual sales for Pfizer by 2016, according to the average of three analysts' estimates compiled by Bloomberg. Xeljanz may have $1.6 billion in sales by then, according to the analysts' estimates

    M&A etc

    1. Carl Icahn continues to wage battles against Forest Labs (NYSE:FRX) trying to shake up management. Mr. Icahn has criticized current CEO Howard Solomon of trying to install his son as CEO, has pointed out the lack of company vision to replace its two best selling drugs Namenda (AD) and Lexapro (antidepressant), and failure to deal with regulatory issues. Despite these issues, Mr. Icahn and FRX avoided this by agreeing to add Mr. Icahn's representative, Vincent Intrieri to help guide the company in their future plans.

    2. Royalty Pharma (NASDAQ:RP) raised its offer for Elan (NYSE:ELN) to $13/share from the previous offer of $12.50. In addition, ELN shareholders would recieve $2.50 of contigent value rights (NYSEMKT:CVR) if ELN's MS drug -- Tysabri -- reaches certain milestones. RP has made its bid contingent on shareholders rejecting ELN's deals with Therevance (NASDAQ:THRX).

    3. Quest Diagnostics (NYSE:DGX) and Hologic (NASDAQ:HOLX) inked a 5-year deal to add Hologic APTIMA tests for HPV, chlamydia and gonorrhea, among other infections, to their already established tests for cervical cancer. Additionally, the deals calls for increased collaboration on developing women's diagnostic tests.

    4. AstraZeneca (NYSE:AZN) bought Pearl Therapeutics and its PhIII LABA/LAMA COPD therapy in a $1.15 billion deal. Industry analysts at Berenberg Bank said that Pearl Thera's product would lag behind Novartis' and then GSK's similar products.

    5. St. Jude Medical (NYSE:STJ) invested $40 million in Spinal Modulation, for pain treatment. The device won a CE mark, and got FDA approval for a large scale trial. STJ wants to improve its neuromodulation business, and Axium complements the company's existing line of deep-brain stimulators and spinal modulation implants.

    6. In a sharply worded letter, Coppersmith Capital Management (NYSE:CCM) asked Alere (NYSE:ALR) to make significant changes to its current business structure. Specifically, CCM asked ALR to exit its Health Information Solutions business, sell its consumer products joint venture with P&G and consider ditching its toxicology unit. CCM figures all that will generate about $3 billion Alere can use to pay down the mounting debt from its expansion binge over the past two years. Furthermore, Coppersmith wants Alere to shave between $50 million and $100 million from its annual costs, restoring spending to pre-expansion levels, and Coppersmith has nominated three board members who could institute the changes. The firm owns about 5.8% of Alere

    7. Questcor Pharmaceuticals Inc. (NASDAQ:QCOR), a maker of treatments for nervous system disorders, bought the rights to the immune drug Synacthen from Novartis (NYSE:NVS). Questcor will continue the approval for Synacthen -- an autoimmune and inflammatory conditions treatment in the U.S., where it hasn't been approved, and may sell it in more than three dozen countries abroad. Novartis received $60 million upfront and will get $75 million more and possible milestone payments in coming years

    8. Teva (NYSE:TEVA) and Sun Pharma need to pay Pfizer (PFE) and Takeda (OTCPK:TKPYY) $2.15bn for infringing on the patent of Pfizer's acid reflux drug Protonix. Teva had set aside $670mm for litigation, but will need to pony up a lot more cash to take care of this problem. Out of the $2.15bn, Teva owes around $1.5bn, with the balance going to Sun Pharma

    9. The FDA gave its approval to Sanofi's (NYSE:SNY) Fluzone Quadrivalent, a 4-in-1 influenza vaccine. Analysts forecast sales of Sanofi's product should bring in $384 million in 2022 and predicts compound annual growth of nearly 14%. This vaccine joins SNY's already industry leading vaccine group, which generated $5.5bn in revenues -- tops amongst big pharma. SNY's new drug will compete against GlaxoSmithKline's (NYSE:GSK) Fluarix Quadrivalent and AstraZeneca's (AZN) MedImmune, but only SNY's drug has approval to treat young children.

    10. Amgen (NASDAQ:AMGN) cut a $25mm deal with Cytokinetics (NASDAQ:CYTK) -- $15mm in cash, and $10mm in stock -- in exchange for the Japanese rights to heart drug, omecamtiv mecarbil, now on the threshold of Phase III testing. CYTK said it could also recieve $50mm in royalties if Japanese regulators approve the drug.

    11. Amgen (AMGN) reported positive top line results from one of its PhIII trials for its anti angiogenesis drug for ovarian cancer, trebananib. Trebananib registered 7.2 months of progression free survival, compared to 5.4 months for the control. However, the drug failed to show positive overall survival -- a key measurement the FDA wants to see before approving any new cancer drug. If approved, analysts believe trebananib could generate $300-500mm in top line revenues.

    12. A court ordered NuVasive (NASDAQ:NUVA) to pay Medtronic (NYSE:MDT) royalties of 3.75% on NuVasive's CoRoent XL implants and 8.25% on MaXcess retractors. This settlement falls short of MDT's request for 36% royalty for CoRoent XL implant sales and 22% on MaXcess retractors. This settlement will cost NUVA $16mm in 2013, up from the previous estimate of $11mm -- neither having a material effect on NUVA. NUVA and MDT settled a separate part of the suit out of court.

    13. ThermoFisher (NYSE:TMO) priced a $2bn common stock offering, which will help it finance its $13.6bn acquisition of Life Sciences (NASDAQ:LIFE). This financing comes in addition to a different $1bn securitization financing, and a $5bn term loan.

    Regulatory

    1. A government panel called for easing restrictions on Glaxo's (GSK) onetime big-selling diabetes drug Avandia. The FDA put severe restrictions on the ontime $3bn drug in September 2010 following studies which showed a 43% heart-attack increase.

    2. Aveo ($AVEO) received a complete response letter from the FDA which concluded that the "inconsistent progression-free survival and overall survival results and imbalance in post-study treatments make the TIVO-1 results uninterpretable and inconclusive when making a risk-benefit assessment necessary for drug approval." To get an approval, the FDA noted, Aveo would have to mount another trial for renal cell carcinoma. However, with the dropping out of partner Astellas Pharma, Aveo might have trouble pulling off the necessary study.

    3. US. regulators asked Dynavax (NASDAQ:DVAX) for a wider study to assess the safety of the company's hepatitis B vaccine. The agency wants to see a study that goes beyond the 3,500 people Dynavax examined for adverse events in clinical trials, a process that may take months or even years. Advisers to the FDA suggested at a November meeting that Dynavax should study 8,000 to 10,000 patients using the vaccine.

    4. Exact Science's (NASDAQ:EXAS) Cologuard, the company's colorectal cancer screening test, is now in the FDA's hands, as Exact has turned in the results from DeeP-C, a pivotal 10,000-patient trial. The study found 92% colon cancer sensitivity for Cologuard but reported just 42% sensitivity to precancerous polyps and 66% for polyps two centimeters in size or larger, results that sent Exact's shares into a tailspin on their April 17 announcement, dropping as much as 30% in 24 hours.

    5. The Obama administration has decided to stop trying to block over-the-counter availability of the best-known morning-after contraceptive pill for all women and girls. The government's decision means that any woman or girl will soon be able to walk into a drugstore and buy the pill, Teva's (TEVA) Plan B One-Step, without a prescription.

    6. Abbott (NYSE:ABT) has started studies to gain approval for its dissolvable stent, Absorb, in the Japanese markets.

    7. Data from a new study showed that patients suffering from RA who took a combination of methotrexate and two other generic pills, a cocktail known as "triple therapy," saw statistically equivalent, or non-inferior disease improvement to patients receiving methotrexate in combination with Enbrel. Despite these findings, many remained pessimistic over whether doctors would change their prescribing habits. As such, revenues from Amgen's (AMGN) Enbrel, AbbVie's (ABBV) Humira, and J&J's (JNJ) Remicade should remain unchanged.

    8. St. Judes (STJ) won approval for its newest implanted defibrillators -- Ellipse and SJM Assura. These devices are outfitted with technology that detects electrical shorts and tailors shocks to the patient, but, perhaps most importantly, St. Jude said the implants have been redesigned to cut the odds of lead abrasion, the bête noire behind Riata's recall and Durata's shaky public perception

    9. RTI Biologics (NASDAQ:RTIX) inked a deal to buy Michigan's Pioneer for $130 million in cash, planning to roll the company's technology into its fleet of implants. The deal will expand RTIX's offerings and distribution network

    10. Eli Lilly & Co. (NYSE:LLY) said it stopped a mid-stage trial of an experimental Alzheimer's drug in a category called beta secretase, or BACE, inhibitors. The therapies help prevent the formation of plaque tangles in the brain called beta amyloid, which is associated with Alzheimer's. Patients in the test showed abnormal liver biochemistry.

    11. AbbVie (ABBV) challenged long held beliefs by stating today that it might beat Gilead (NASDAQ:GILD) to market in its effort to replace interferon as the standard of care for Hep C patients. Hep C affects about 150 million people worldwide with the market estimated at $20 billion. Analysts polled by Bloomberg project Gilead's drug to have annual sales of $6.03 billion by 2016.

    12. The Supreme Court ruled unanimously that parts of Myriad Genetics Inc. (NASDAQ:MYGN)'s patents on genes linked to breast and ovarian cancer improperly covered natural phenomena. Other parts, the court said, involve enough human intervention to be eligible for legal protection. MYGN softened the legal blow by claiming that its genetic tests for BRCA-1 and BRCA-2 are still covered by 24 different patents.

    13. Eli Lilly (LLY) and Incyte (NASDAQ:INCY) reported strong efficacy results from their latest baricitinib test, for RA. LLY seeks to gain approval for a drug similar to PFE's Xeljanz, an oral (as opposed to injectable) RA drug.

    Jun 14 1:33 PM | Link | Comment!
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