EXPstocktrader's  Instablog

Often times on Wall Street companies get raided by short sellers (those who profit when they sell a stock high and buy in when that stock falls). This may have been the case with Questcor Pharmaceuticals (QCOR) last month around mid-September 2012. Questcor appeared to be doing well moving from $35 to $55 throughout the trading year in 2012 until some fear mongering and questions scared several investors to abandon this stock and fast. There are more details about this if you read my article published when the stock was at the $19 - $20 level. Some of you may have acted on the drop and picked up some cheap shares?

See the chart collapse and rounded bottom reversal as tensions subsided:

Looking At The Chart Above:
In reviewing the chart above, we see the collapse, capitulation to $17 then the STO and MACD cross up to the upside which shows us at least some kind of reversal (maybe short covering) taking place? As you can see, on September 19, 201 QCOR stock fell from $50 to a low of approximately $22, then fell to the $17 range within days as news of Acthar Gel sales and medical reimbursement controversy plagued this company. However, now at least for the short term, it seems as though the dust has settled a little.

As of this week the stock has recovered nicely from the September bear raid. We now can see that following two weeks from the drop to the $17 level when investors capitulated, the stock has rebounded up 47% from that low counting this week's move to $26. I personally had purchased about 3,000 shares on the severe drop and was recently stopped out to protect my gains.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in QCOR over the next 72 hours. 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.

Additional disclosure: I was recently stopped out on my QCOR long position for a very nice gain.

If you read my prior article written several months ago in June 2012, you will see that many I/P (patent) stocks are grabbing a lot of headlines these days! It appears that the Vringo (VRNG) vs. Google (GOOG) I/P patent dispute is taking center stage right now.

VRINGO:
Most notably in the past several days, Vringo has grabbed a lot of attention and followers since they filed suit against Google, and their customers: AOL (AOL), Gannett (GCI), IAC/Interactive (IACI) and Target (TGT) who have been accused of using Vringo's patented intellectual property for several years to boost revenues.

Allegedly, Vringo's position is that Google, as a search engine, was struggling until they adapted and changed over to the Vringo's patented processes to help them boost their sales immediately to +20%. In court, it has been suggested that Vringo is interested in damages of 3.5% of the additional revenues that Google has participated on with the help of Vringo's patents. Their feeling is that the 3.5% past use for these patents is a reasonable and acceptable number. Keep in mind that a judgment could range from 1% - 5% though.

I have done some extensive due diligence on this case and believe that you will see Vringo's expert witnesses including (very credible) Dr. Ophir Frieder (who holds the Robert L. McDevitt, K.S.G., K.C.H.S. and Catherine H. McDevitt L.C.H.S. Chair in Computer Science and Information Processing and is Chair of the Department of Computer Science at Georgetown University. He is also Professor of Biostatistics, Bioinformatics and Biomathematics in the Georgetown University Medical Center. He is a Fellow of the AAAS, ACM, and IEEE) testify that Google is and has been infringing on the patents "ab infinito" - meaning from the beginning! So much so, that Google allegedly even told their best customers of the change in the processes about the new processes which is exactly what Vringo patents do. So, I strongly suspect that Dr. Frieder will testify that Google is the best company at explaining exactly what Vringo's patents are all about.

ZTE:
Following the lawsuit against Google et.al. Vringo has also filed in court a lawsuit against China's #2 telecom maker giant ZTE (ZTCOF.PK) over their alleged use of the Nokia (NOK) patents that Vringo recently purchased to go after suspected patent infringers. ZTE is currently doing business in about 140 countries.

Vringo Stock Performance Throughout The Year 2012:

Special Note Regarding Dr. Freider's Case History and Experience:

Prior to Joining Georgetown - Consulting and Staff Positions Include:

January 2001 - August 2008
August 1996 - February 1999
Consultant to the Information/Government Systems Division
Harris Corporation
Melbourne, Florida

May 1999 - December 2000
Consultant
IIT Research Institute
Chicago, Illinois / Bethesda, Maryland

August 1995 - September 1997
Consultant
Software Productivity Consortium (SPC)
Herndon, Virginia

September 1994 - August 1996
Consultant
Science Applications International Corporation (SAIC)
Arlington, Virginia

November 1993 - June 1994
Consultant
IBM Federal Systems Company, (Loral Federal Systems - as of March 1994)
Manassas, Virginia

June 1992 - August 1993
Consultant to the Computer and Software Engineering Division
Institute for Defense Analysis
Alexandria, Virginia

August 1991 - July 1993
Consultant to the Technical Services Division at Headquarters
Federal Bureau of Investigation
Washington, DC

Selected Short Term Consultancy Contracts:
Computer Sciences Corporation (CSC), Landham, Maryland
IBM German Software Development Laboratory, Germany
Computer Data Systems, Inc. (CDSI), Rockville, Maryland
Information Systems & Networks Corporation, Bethesda, Maryland
CALIBRE Systems, Inc., Falls Church, Virginia
The Library Corporation, Inwood, West Virginia

Legal Consulting:

Dr. Freider has consulted as a technical expert or as an expert witness on several intellectual property disputes. His disputed topics include multiple Internet commerce and software technology issues. His case history includes:

Case: MercExchange vs. GoTo.com
Role: Plaintiff expert witness
Firm: Hunton & Williams
Resolution: Out of court settlement

Case: MercExchange vs. Ebay.com
Role: Plaintiff expert witness
Firm: Hunton & Williams
Resolution: Willful infringement court verdict - heard by U.S. Supreme Court

Case: Hewlett-Packard vs. Intergraph (third party lawsuit vs. Microsoft)
Role: Defense technical expert for Microsoft
Firm: Venable
Resolution: case dismissed

Case: e-Plus.com vs. Ariba.com
Role: Plaintiff expert witness
Firm: Hunton & Williams
Resolution: Willful infringement court verdict

Case: Autobytel.com vs. Dealix.com
Role: Plaintiff technical expert
Firm: Paul Hastings
Resolution: Out of court settlement

Case: IBM vs. Amazon
Role: Plaintiff technical expert
Firm: Jones Day
Resolution: Out of court settlement

Case: Civix vs. Yellowpages.com, Travelocity.com, Orbitz.com
National Association of Realtors, & Yahoo!.com
Role: Plaintiff expert witness
Firm: Niro, Scavone, Haller & Niro / Niro, Haller & Niro
Resolution: Out of court settlements

Case: Nokia vs. Qualcomm
Role: Plaintiff technical expert
Firm: Alston & Bird
Resolution: Out of court settlement

Case: Mapquest vs. Civix (breach of contract - not IP dispute)
Role: Defense expert witness
Firm: Niro, Haller & Niro
Resolution: Out of court settlement

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Please refer back to another follower's argument about:
What The Supreme Court Says About Vringo? Please see the article here.

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In Summary: Vringo has substantial and sufficient evidence and witnesses from industry experts to prove that the accused infringed on the asserted claims of the '420 and '664 patents. Vringo will show the court substantial exhibits and testimony relating to the issues of material facts that do exist. Experts will explain in detail, what I believe to be, overwhelming evidence in this case that demonstrates that infringement of the '420 and '664 patents do exists.

It is my belief that Vringo is looking for is some kind of "reasonable" settlement or judgment for prior use of their patents, as well as, future licensing / royalties for ongoing uses of the Vringo patents. At this point, no one knows what the outcome will be, so we will have to wait for the courts and/or two sides to come to some kind of mutual agreement or wait for the trial to run its course?

In the meantime, please stay tuned for more updates relating to Vringo as the trial with Google continues and the court proceedings with ZTE start to take shape. Also, one last note: I suspect that there will be other suits to follow with additional search engines like Google and possibly other telecom firms like ZTE?

Disclosure: I am long VRNG. 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.

There are several types of cancer drugs on the market today and unfortunately for the patients taking chemotherapy, nausea and vomiting are some of the serious side effects of a cancer therapy regiment.

Nausea is a very unpleasant feeling that may lead to vomiting for many treatment patients. Vomiting is throwing up the contents of the stomach through the mouth, and retching is the movement of the stomach and esophagus without vomiting causing dry heaves. As cancer research develops new drugs, so do the products used with the prescriptions that are suppose to make patients get better. So, although treatments have improved over time, nausea and vomiting are still serious side effects of cancer treatments found in the market today. Doctors will tell you that some patients are bothered more by nausea than by vomiting.

A nausea and vomiting product is currently in the works from AP Pharma (APPA.OB) in Redwood City, California (formerly known as Advanced Polymer Systems) who today announced that they received FDA acceptance on their recently announced "resubmission" filing on September 28, 2012 for its New Drug Application (NDA) lead product candidate called APF530, to be used for the prevention of acute and delayed onset chemotherapy-induced nausea and vomiting or CINV.

Investor Significance:

Investors have been patiently waiting for the next step with AP Pharma to move forward with this NDA, and today it was reported by the company that the resubmission was accepted. This is good news in a series of hurdles that the company must overcome in the following several months.

Stock Ownership:
We always like to see who the major stock holders are in any company. It is reported that the insiders own approximately 61% of the stock, and 12% of the float is held by some very strong institutions as well. This shows very good confidence.

FDA Acceptance:
Now that we have the FDA letter of acceptance of the resubmission, the company has established a Prescription Drug User Fee Act (PDUFA) "goal date" within the next 60 days or so. After speaking to the company, the company anticipates a six-month review by FDA which would result in a PDUFA date and an FDA decision on approval in late March 2013 or early April 2013. Usually, after the FDA acceptance letter announcement, biotech stocks can experience a "run up" into the PDUFA date, whereby some investors may look to take profits and others who may have a greater risk tolerance tend to stay until a drug gets "full FDA Approval."

Competition:
Aloxi (palonosetron) is the only other 5-HT₃ receptor blocker on the market. A 5-HT₃ receptor blocker works by blocking the action of serotonin in certain parts of the brain and nervous system, which helps reduce or prevent nausea and vomiting. It is currently used to prevent nausea and vomiting caused by cancer chemotherapy, as well as, being frequently used to prevent nausea and vomiting after surgery. Critics say that the longer the patient is on this particular drug, the less effective it is for CINV vs. the claims that APF530 may actually work better the longer the patient uses this product. So, there is a lot of interest in getting APF530 approved by the FDA as another product to at least offer patients an alternative choice if Aloxi isn't successfully working for them.

Stock Analysis:
As with any biotech that gets FDA acceptance into a PDUFA date, we might expect that APPA will run up on this news it gets more attention in the media. Clearly, with the announcement today, more risk has been taken out of this stock. The last time the company went into a PDUFA date with the APF530 the stock went to $2.00. Given an FDA approval in 2013 this could very well be a $4.00 - $5.00 stock, so please stay tuned here as the company works on getting their product approved and to market.

OK, so why is AP Pharma's lead product so important?

During chemo therapy, it is very important to prevent and control nausea and vomiting in patients with cancer so that they can continue on the path to their treatment and perform activities of daily life with few interruptions.

Uncontrolled nausea and vomiting can cause the following side effects:

• Malnutrition from loss of appetite
• Chemical changes in the body
• Dehydration
• Mental changes
• A torn esophagus
• Some broken bones
• Reopening of surgical wounds

There are four types of nausea and vomiting that are caused by cancer therapy:

• Anticipatory
• Acute
• Delayed
• Chronic

Anticipatory nausea and vomiting:
If a patient has had nausea and vomiting after the previous three or four chemotherapy treatments, he or she may have anticipatory nausea and vomiting.

Acute nausea and vomiting:
This usually happen within 24 hours after beginning chemotherapy

Delayed nausea and vomiting:
This occurs more than 24 hours after chemotherapy. Also called late nausea and vomiting.

Chronic nausea and vomiting:
Occurs in patients with advanced cancer, chronic nausea and vomiting may be caused by the following:

• Brain tumors or pressure on the brain.
• Colon tumors
• Dehydration
• High or low levels of certain substances found in the blood
• Medicines
• Radiation therapy
• Stomach ulcers

Summary: I really like the AP Pharma story, the strong management team involved, the prospect of their lead product APF530, the large insider and institutional ownership, and of course the unmet need for another effective product to help patients with CINV. I am currently long this stock prior to today's announcement, and into the PDUFA date and will make a determination in the future as to the risk/reward benefits of holding all of my position into final approval. It might be prudent to sell some shares going into final approval depending on the price rise which is undetermined at this time. Please be aware that biotech stocks are very risky and volatile. Each investor should make their own risk tolerance determination with the help of their financial advisor. I may also buy shares on any dips in the coming months if it makes sense?

Disclosure: I am long APPA.OB. 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.