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EXP is a graduate from The University of Wall Street (EF Hutton / Shearson Lehman) and the CEO / Chief Stock Strategist at EXPstocktrader.com research firm. With over 30 years of trading the market, EXP is an experienced market geek. A technician using a technical approach; a technical analyst,... More
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  • Idera Pharmaceuticals' Proof Of Concept Goal Was Met

    If you have been following Idera Pharmaceuticals (IDRA), which I wrote about in my prior article here, you will see that they have been ramping up as one of the most cutting edge companies in the field of discovery and development of novel synthetic DNA- and RNA- based drug candidates which I believe could radically change gene therapies in medicine today.

    Lets Stay Focused On The Goals:

    The primary objective of the latest trial was to evaluate the "safety and tolerability" of its lead antagonist IMO-8400 over a 12-week treatment period, with a secondary objective to evaluate the "clinical activity" of IMO-8400.

    In the news that was released on March 28, 2014, the company announced that its randomized, double-blind, placebo controlled Phase 2 trial of IMO-8400 in 32 patients with moderate-to-severe plaque psoriasis resulted in "positive top-line data." Quite simply, this translates into meaning that they met both safety and tolerability at all dose levels. This particular low-dose IMO-8400 treatment was "safe."

    About the Phase 2 Trial

    As explained by the company in its press releases: This Phase 2 trial was a randomized, double-blind, placebo-controlled trial, in which the Company enrolled 32 patients with moderate-to-severe plaque psoriasis, with a minimum PASI score of 12 or above. All patients were withdrawn from prior therapies with an appropriate wash-out period, and were randomized equally to receive subcutaneous IMO-8400 monotherapy at dose levels of 0.075 mg/kg, 0.15 mg/kg and 0.3 mg/kg or placebo, weekly for 12 weeks, with a six-week follow-up period. The primary objective of the trial was to evaluate the safety and tolerability of IMO-8400. A secondary objective of the trial was to evaluate the clinical activity of IMO-8400 as assessed using standard clinical metrics, including Psoriasis Area and Severity Index (PASI) scores.

    Remember that this trial was only 12 weeks, not a full year:

    While the cohorts (groups) only lasted 12 short weeks, the trial was able to successfully meet a secondary objective of demonstrating clinical activity based on PASI scores. In layman's terms, a PASI score is a tool used to measure the severity and extent of psoriasis (Psoriasis Area and Severity Index).

    Furthermore, the company stated that among patients who completed 3 months of treatment per protocol, PASI 50 was achieved in nine (45%) of 20 who received IMO-8400 at any dose level, and in one (14%) of seven who received placebo. PASI 75 was achieved in four (20%) of IMO-8400 treated patients at any dose level, and in zero placebo patients. PASI 50 and PASI 75 are defined as 50% and 75% improvement, respectively, compared to baseline PASI.

    The Two Platforms Can Now Advance

    Specifically, Idera Pharmaceuticals is working towards two very unique platforms. One is focusing in on autoimuune diseases (in which there are many) and the other is a novel approach in the treatment of certain genetically defined forms of B-cell lymphoma. So, the very astute scientific team at Idera is very strategically working on developing two key drug discovery platforms based on nucleic acid therapeutics:

    1. Toll-like Receptor (TLR) antagonists
    2. Gene Silencing Oligonucleotides (GSOs)

    I strongly believe that this company is still pretty much under the radar. Also, as stated in my article in March, if Idera could show positive "proof of concept" (which it just did) in psoriasis, and it's treatment can show "clinical activity" then it would only make sound business sense to go after many more serious unmet indications including, but not limited to, lymphomas, lupus and other various autoimmune diseases.

    Now For The Disconnect:

    On March 24, 2014 only a few days prior to the announcement of the Idera P2 trial, Celgene (CELG) announced that the U.S. Food and Drug Administration (FDA) has approved OTEZLA® (apremilast), the Company's oral, selective inhibitor of phosphodiesterase 4 (PDE4), for the treatment of adult patients with active "psoriatic arthritis." While I do believe that the approval of this "pill" is great news for Celgene, this is not and was not the intended goal that Idera was striving for in its IMO-8400 trial. According to my research, Idera has never intended to go into this already crowded space (but has stated in its webcasts and news releases that they could partner this out).

    Given these recent announcements, I do believe that investors sold on this news which I believe is unwarranted, hence the disconnect. Maybe investors aren't looking deep enough into the real translation of the data to see that we are actually are on the cusp of something very remarkable. The positive Top-Line data seems to be clearly overlooked, misunderstood and misrepresented by the individual investor. In simple terms, the current stock evaluation of $4.10 (in my sincere opinion) is not representative of what is lurking under the hood. Investors might think we have a 6 cylinder engine, but as far as I can interpret the data, it seems as though we just might have a 427 big block hemi. I could be wrong, but I don't believe that I am and I will be anxiously waiting for more data from the "higher dose" cohorts to be announced soon enough.

    These Are My Thoughts At The Present Time:

    First, as shown in this biotech ETF chart below, symbol IBB (IBB) which I have been mentioning to investors from the $90's a few years back, you will see that even the largest biotech investments may be in a brief correction phase. With good news or bad news sometimes it doesn't even matter when the "powers to be" are selling off. At this juncture, we just need to dust ourselves off and get ready for the next bull run. Is this correction bad? No, actually not at all. On the contrary, its quite healthy to have these brief pullbacks from time-to-time as we trend higher in the current economic recovery process. I'm calling the recovery a process, because the global rebound that started a few years ago isn't a one time event, but rather a "process" of upward and downward waves in stock valuations. These waves are not entirely in our control week after week or month to month. Preferably, we would like to see higher highs and higher lows. Remember that at the present time, the U.S. economy is still only advancing from a modest 2%-2.5% growth rate, but at least we are moving in the right direction, and that is up.

    (click to enlarge)

    Moving Forward:

    Despite getting caught up in the recent biotech correction in the past few weeks (as seen in the chart above) I still very firmly believe (as a biotech investor) that DNA- and RNA- therapies are the place to be as these novel types of medical advancements make significant progress. Advancements in science take time and a great deal of patience. So far, it has taken takes many years to get us to where we stand today; decades.

    The company has developed first, second and now third generation science (at Idera's labs) which is taking place right now. Hiccup's do occur in science and there is no question that it has been a long haul for the many dedicated scientists and lab technicians. These are the folks who have been working month after month to discover and develop novel synthetic DNA- and RNA- based drug candidates standing right before our very eyes. Yes, without question, these are exciting times. Some of us just don't realize how lucky we are to stand witness to these new breakthrough discoveries.

    I truly believe that we are at the forefront of controlling the behavior of DNA and proteins. Imagine a company who has the technology to target specific molecules that could either increase or decrease their activity or even silence bad genes causing cancers or diseases to patients around the world. What kind of value would this be worth?

    This question that I pose is exactly why I believe that Idera Pharmaceuticals has amassed what I would call the elite team of biotech leaders and investment bankers over the past several quarters. What I am referring to is Idera's highly gifted management team, it's board, leadership, and two main investment banking firms; Pillar Invest Corp. and Baker Brothers Advisors. See the company news releases for more information if you need to get up to speed here.

    (click to enlarge)idra

    Future Catalysts:

    Idera Pharmaceuticals clinical development for IMO-8400 is focused on B-cell lymphomas harboring the MYD88 L265P mutation, and on orphan autoimmune disease indications this could be a very big deal as the company maintains its focus in the area for in 2014. Expect further updates on its IMO-8400 trials for Waldenstroms toll-like receptor antagonists and more details about its - gene silencing oligonucleotides (GSO) program.

    Also, on March 27, 2014 PiperJaffray stated that Idera Pharmaceuticals' weakness appeared to be overdone and they maintain a PT of $7.00. This would be a respectable percentage move from where it sits today.

    Note: PiperJaffray has been very successful in its coverage of this company quarter after quarter, as well as with many other successful companies in the biotech industry such as JAZZ, Vanada, ACADIA and others. Cowen & Co has provided excellent coverage too.

    Disclosure: I am long IDRA.

    I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: IDRA
    Apr 01 10:33 AM | Link | 10 Comments
  • A Top Pick For March: Questcor Pharmaceuticals

    Questcor Pharmaceuticals (QCOR) is a very good long term, as well as a reversal biotech stock play, with its 19 indications for flagship product Acthar Gel, a naturally-derived formulation of adrenocorticotropic hormone used in a variety of inflammatory disorders. QCOR stock is expected to exhibit more upside from valuation multiples. Additional Company background and due diligence about Questcor can be seen here, as well as by another SA associate who lays out some pretty compelling arguments about owning Questcor stock here. I will also include this 74 page report by the FDA for you to review as well. In the meantime, please let me say that fundamentally, this company is financially strong as evidenced by its latest earnings report which you can review here.

    At the present time, (according to its filings), Acthar revenues are only showing low market penetration, which suggests there is significant room for long-term growth. Management commented on potentially weaker January scripts owing to MS seasonality and patient insurance re-enrollment, with trends improving in February. Its overall growth story is intact. I would expect sales to continue to ramp through 2014, particularly from contributions in rheumatology, nephrotic syndrome, and the recently launched efforts in sarcoidosis.

    Recently, management (whom I personally believe is solid) finally stepped up to defend against relentless short seller activities. On March 3, 2014, Questcor Pharmaceuticals, Inc. provided the following information here. "

    "Over the last few years, Questcor has demonstrated a strong track record of providing therapies to patients with unmet medical needs. Despite its track record of creating value for Questcor's investors, has been the subject of a few "bear raids." Questcor believes that these short attacks have been actively engaged in tarnishing Questcor's good in the medical community by distracting investors from the Company's investment fundamentals. Regarding Acthar containing "deamidated corticotropin," this peptide has been listed for many years in the FDA-approved Acthar package inserts. Acthar is a naturally-derived, complex peptide formulation that is still not yet fully understood." Questcor has discussed this more in depth here.

    (click to enlarge)

    Investment Thesis:

    There is increasing confidence in Questcor's Rheumatology (RA) marketing plan that could match or exceed sales that are currently being generated in its Nephrotic Syndrome (NS) sales program. Rhematology sales should continue to rise as doctors look for additional options for their refractory patients. This is a market that could be as much as 10x as large as QCOR's market in NS. The patient population could be as large as 200,000 patients or more. RA sales were in the low 22%-23% of sales and are expected to increase to over 30%-35% in the next few years. Also, the company is on a nationwide hiring campaign too to ramp up its sales force to meet the anticipated demands.

    I don't want to overlook the fact that there appears to be some concern about its pricing structure, but in reality it isn't a concern for patients who understand that Acthar is a last-line therapy for hard to treat refractory patients. The number of doctors prescribing Acthar has actually been growing over the past several quarters according to my research, not declining. This is because doctors see that there are justifiable benefits to the patients being prescribed the treatments.

    Also, if we connect the dots to QCOR's growth strategy, you really can't overlook the fact that Questcor has added Kelly Martin, the former CEO from Elan Pharmaceuticals to Questcor's board. The writing may be on the wall that he was added to the QCOR board along with the Rajesh (Raj) Asarpota, the Company's new Chief Financial Officer, effective February 17, 2014 to work on a corporate tax strategy that is taking hold with many large US corporations.

    It just might be that Questcor is working on a strategy to re-domicile QCOR in Ireland who has been known to offer corporate-friendly rates as low as 12.5%? Think about the multi-millions of tax savings that would go to its bottom line. A future announcement about a re-domiciling of QCOR to Ireland would boost the share price dramatically in shareholder value don't you think? I'm betting that it would.

    So, if you crunched the numbers with its earnings growth and expected new tax-rate if it were to relocate (which seems highly probable), you might very well be looking at a $90 or more stock valuation; $80 per share for its existing 19 indications and $10 per share cash = $90.00+ without any re-domiciling or controversial settlement news that could occur at any time. If either of these events does in fact occur, I believe that you are looking at another incremental move up in the stock of about $15 - $20 per share which would bring the EOY 2014 valuation at over $105+ very easily.

    The Latest Financials Showed:
    Questcor Fourth Quarter and Full Year 2013 Financial Results
    - Fourth Quarter Net Sales $243 Million; Increase 51% Year-over-Year
    - Fourth Quarter GAAP EPS of $1.44, Non-GAAP EPS of $1.67 up 53%
    - Full Year 2013 Net Sales $799 Million; Increase 57% Year-over-Year
    - Full Year GAAP EPS of $4.76, Non-GAAP EPS of $5.48 up 65%

    What Some Wall Street Analysts Are Saying:

    Mizuho stated: We find it implausible that Acthar is somehow mislabeled or adulterated, lab error more likely. They maintain a $93 target.

    Oppenheimer: Says it expects continued momentum into 2014 and has the stock rated as Outperform with a $99 target.

    Janney Capital: Fair value estimate is $90.00.

    Piper Jaffray: Has the stock rated as Overweight and raised its price target from $85 to $98.

    Merrill Lynch stated: Product quality allegations create a compelling opportunity - BUY.

    Relax, Management and the Board is strong:

    Since the acquisition of Acthar Gel from Aventis in 2001, management and the board have been strong. There is no question that the company has performed very well.

    I recently told some friends that Questcor Management picked up Acthar like it was a Picasso sold in a garage sale. The drug was abandoned folks. I was soon reminded that Acthar was not merely purchased for a song as some shorts might suggest, but rather Questcor's elite team of highly skilled and trained professionals have spent multiple millions in refining the Gold (its key product) that has led them to such great success over the years. By 2012, Questcor's spending on research and development had risen to $34M, and that was budgeted to nearly double in 2013.

    Look, in life you make your own luck, it doesn't just fall in your lap like some people believe that it does. Stock valuations (over time) are earned over time and QCOR has definitely earned my respect.

    Finally, in the case of Questcor, I would like to suggest that followers take all of the fear, uncertainty and doubt (FUD) with a grain of salt because, after all, it's just noise in the grand scheme of things. Focus on the fundamentals, because this will ultimately prevail. In the meantime, I would expect a reversal followed by a bleed-up in the stock on anticipated and improved earnings. For those who may still be skeptical of Questcor, have faith and trust in those who actually "do what they say that they will do, when they say that they will do it!" So many companies fail on promised execution, however in this case I have no doubt this company is a "real" growth story and its stock will move significantly higher in the near term, as well as into 2014 on improving fundamentals, not to be confused with fud-a-mentals.

    Disclosure: I am long QCOR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Mar 12 8:45 AM | Link | 10 Comments
  • Some Stock Picks For January

    First of all, welcome to January 2014. We made it! Now with that being said, let's make this a banner year!

    The "January Effect" is expected to start us off with another banner year. As defined, it is a seasonal anomaly in the financial markets whereby stock prices generally increase in the month of January more than in any other month. This creates an opportunity for investors to buy stock for lower prices before January and sell them after their value increases. Tax loss selling season ended on December 31st so therefore the motivation to sell a stock loses its appeal. Therefore, the main characteristics of the January Effect are an increase in buying securities before the end of the year for a lower price, and selling them in January to generate profit from the price differences. The January Effect was first observed in, or before, 1942 by investment banker Sidney B. Wachtel. This phenomenon has been observed since 1925, and generally small companies have outperformed the broader market in the month of January, with most of the disparity occurring before the middle of the month. The most common theory explaining this phenomenon is that individual investors, who are tax sensitive and who disproportionately hold small stocks, sell stocks for tax reasons at year end (such as to claim a capital loss) and reinvest after the first of the year (January). Another explanation could be that year-end bonus money is used to purchase stocks, thus driving up stock prices. It does make sense. Whatever the reasoning, economic data remains favorable for 2014. Avoid the "noise."

    DOW JONES CHART - It's possible that we may see 18,000 by the end of the year.

    (click to enlarge)

    BELOW ARE A FEW STOCKS FOR YOU TO REVIEW NOW:

    EXPstocktrader RESEARCH: SOME IMMEDIATE STOCKS TO FOCUS ON FOR JANUARY

    Note: Please Watch For The Chart Set-Ups On These Or Any Company Mentioned In This Or Anyone Elses Articles.

    APPLE (AAPL)

    Apple, Inc. as you are already aware designs, manufactures, and is highly successful in marketing mobile communication and media devices, personal computers and tablets. Also, it sells portable digital music players worldwide. As a favorite among consumers, Apple also sells software, services, peripherals, networking solutions, and third-party digital content and applications related to its products. I suspect that this will be a good year for Apple following the CES conference that has proven to be an international success that packs in tech enthusiasts worldwide, who flock to the 2014 International CES - Consumer Electronics Show January 7-10 in Las Vegas, Nevada.

    Lastly, Cantor Fitzgerald initiated coverage on Apple with a recent Buy rating and a price target of $777.00. Analyst Brian White thinks the stock is poised to rally ahead of its new product cycle. I tend to agree.

    (click to enlarge)

    ARIAD PHARMACEUTICALS (ARIA)

    ARIAD Pharmaceuticals, Inc. operates as a biopharmaceutical company, and focuses on the discovery, development, and commercialization of small-molecule drugs for the treatment of cancer. The stock reversed off its lows after the FDA recently and unexpectedly ok'd the fast return of its leukemia treatment Iclusig to the U.S. Iclusig is a tyrosine kinase inhibitor (TKI) that is approved in the United States for the treatment of adult patients with chronic, accelerated, or blast phase chronic myeloid leukemia, who are resistant or intolerant to prior TKI therapy, as well as for the treatment of adult patients with Philadelphia chromosome-positive acute lymphoblastic leukemia, who are resistant or intolerant to prior TKI therapy. The company sells and markets Iclusig through specialty pharmacies and specialty distributors in the United States. It also has a collaboration and license agreement with Merck (MRK) for the development, manufacture, and commercialization of ridaforolimus, for use in cancer. Ariad expects to resume re-marketing Iclusig with a narrower label by mid-January 2014.

    ARIA will present at the 32nd Annual J.P. Morgan Healthcare Conference being held in San Francisco. Harvey J. Berger, M.D., chairman and chief executive officer, will provide an overview of the Companys business on Tuesday, January 14 at 3:00 p.m. I'm expecting renewed interest once investors are updated on its progress.

    (click to enlarge)

    SUNSHINE HEART (SSH)

    Sunshine Heart, Inc. is an innovative medical device company that develops new technologies for cardiac and coronary disease. It focuses on developing, manufacturing and commercializing C-Pulse heart assist system, which is an implantable, non-blood contacting, heart assist therapy for the treatment of moderate to severe heart failure which can be implanted using a minimally invasive procedure. This really is an exciting company to follow and you can read more about its potential by reading one of my recent articles here about SSH.

    (click to enlarge)

    BIODEL (BIOD)

    Biodel, Inc. is a development stage biopharmaceutical company. Its focus is on the development and commercialization of innovative treatments for diabetes, namely ultra fast insulin (UFI). I suspect that as the company makes more announcements involving its UFI product, we could see more interest like we saw in 2013 when the stock advanced from $2.50 to $6.00. Currently, its way undervalued and in due time may be good for a double with more news. To become more familiar with the BIOD story I woul dsuggest reading a colleagues in-depth article that discloses the truly unique investment article in BIOD now. The article is titled; Biodel: Creating A Better, Faster Acting Insulin, The Next Big Thing For Diabetic Therapy.

    (click to enlarge)

    ROCKWELL MEDICAL (RMTI)

    Rockwell Medical is a 2013 top performing biopharmaceutical company developing a pipeline of drug therapies targeting end-stage renal disease (ESRD) and chronic kidney disease (CKD) with innovative products and services for the treatment of iron deficiency, secondary hyperparathyroidism and hemodialysis. As one of the few major suppliers in the U.S., Rockwell's products are sold in the two largest dialysis centers, DaVita (DVA) and Fresenius (FMS) and used to improve the quality of life of patients with kidney failure on hemodialysis, by removing toxins and replacing critical nutrients in the dialysis patient's bloodstream. Look for this stock to change course and reverse to the mid-teens in due time. For more due diligence please refer to one of my earlier articles written here and here.

    (click to enlarge)

    WALTER ENERGY (WLT)

    Walter Energy, Inc. is a producer and exporter of "metallurgical coal" used for the global steel industry. It also produces thermal coal, anthracite, metallurgical coke and coal bed methane gas and other related products. The company operates through two segments: U.S. Operations and Canadian and U.K. As you see, the stock has been lifting from the bottom and broke out in the $14's. A "Golden Cross" chart formation is pending a breakout, meaning that this is very bullish sign. Stay tuned to see what happens here near term. SA colleague Equity Watch has a new article that you should review that talks more about this opportunity.

    (click to enlarge)

    NQ MOBILE (NQ)

    NQ Mobile, Inc. provides mobile Internet services. It offers mobile security software and mobile games. The company also offers advertising, consulting, mobile platforms and mobility services for the consumer and enterprise markets. Its other services include mobile privacy, mobile productivity, personalized cloud, family protection and enterprise protection. The company operates its business through two segments: Consumer and Enterprise. Several 13G filings have been filed in the past few months. Most recently by Morgan Stanley (MS).

    For some detailed coverage, I would like to refer you to a colleague's articles regarding NQ that can be seen here and here, as well as, by another reputable colleague who wrote about NQ's opportunity here.

    (click to enlarge)

    Disclosure: I am long ARIA, BIOS, SSH, NQ, RMTI, WLT, .

    Tags: AAPL, ARIA, BIOS, NQ, SSH, RMTI, WLT
    Jan 07 3:18 PM | Link | 3 Comments
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