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I run a stock website specializing in small cap stocks called Investor Soup.com. Our tagline says "intelligent commentary and solid analysis" and that is what we try to provide. Our subscribers recieve commentary, stock alerts and have access to our chat room. Here is a writeup on our... More
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  • 3 biotech stocks to watch

    As a person specializing in technical analysis of small cap stocks, it is easy to get caught up with analysis and to take the emotion out of stock picking (sometimes preferable, too).

    It is hard to do that with today's article, though.  You see, I am taking a look at several diabetes biotech stocks: ECTE, MKND and ACCP.  Where it gets personal is that my Dad has diabetes and I see the pain and suffering that it causes him on a daily basis.  I am hopeful for a cure someday, but right now every advance in detection, monitoring and treatment is welcome.  These three stocks are all on the forefront of treating and monitoring the disease.

    Let's start with the statistics first.  There are currently 23.6 million diabetics in the United States alone (7.8% of the total population, including 17.9 million diagnosed cases (and my Dad) and 5.7 million undiagnosed). Cases of diabetes have doubled from 1990 to 2005.  Total cost of diabetes (direct and indirect) is conservatively at estimated $174 billion a year.  source: DAGC.org

    The market opportunity for biotech firms is immense and I have identified several interesting small cap companies to outline.

    The first of the small cap stocks is Echo Therapeutics (NASDAQ:ECTE).  Echo has been much in the news lately with some positive FDA results and a spike in its stock price. 

    The most recent positive PR involved the product development work for its Prelude SkinPrep System.  Echo now has the commercially ready product to be used in final clinical trials.  Echo anticipates that no further changes will be made to the Prelude SkinPrep System and that the current device will be the one used for sale, subject to FDA market clearance of the product. The final Prelude device will be tested in the near-term in a study using LMX4 lidocaine cream which should form the basis for a 510-k filing with Ferndale Pharma Group for the enhanced delivery of lidocaine. The Company believes that the addressable market for enhanced, fast acting topical lidocaine exceeds $1 billion.

    Further good news is contained in last year's announcement of positive results in a clinical study for its needle-free Symphony™ Transdermal Continuous Glucose Monitoring (tCGM) System as a non-invasive, wireless, transdermal solution for monitoring blood sugar levels when used in conjunction with the needle-free Prelude SkinPrep System.

    An interesting cross-pollination between the two stand-alone systems is that they can be used in tandem very effectively.  Of course the Prelude SkinPrep system is a stand-alone system in its own right.

    The second small cap company is MannKind Corp. (NASDAQ:MNKD).   Mannkind has had a more checkered past with concerns that the FDA would not approve (or delay) its inhaled insulin product called Affreza.  The company recently issued a press release quoting the company's chief executive that the FDA is expected to approve its experimental inhaled insulin device "within days" of inspecting a manufacturing plant that supplies the insulin.

    It appears from the price action and the recent chart that investors are believing the company thus shares have almost doubled since late November of 2009.  The question in investors' minds should be whether the good news is already "burned in" the stock price or there is further price appreciation possible. 

    Short sellers were rewarded by a drop on the shares from Mid-December from the high $9's down to the low $8's, but have been squeezed lately by the renewed strength in the stock.  As volatile as Mannkind's stock has been, it is not for the "faint of heart".

    The last small cap company is Access Pharmaceuticals (OTCQB:ACCP), a company that is best known for its cancer products, but has several promising diabetes-related drugs in clinical trials.

    As a corollary to its cancer research, the company is working on a nano-polymer drug delivery system for the oral administration of large molecules such as insulin, human growth hormone, and erythropoietin  which are typically delivered by injection. This drug delivery technology using insulin containing Cobalamin™-dextran nanoparticles as the intrinsic factor in the gut triggers greater absorption by a significant factor.

    The company is also involved in the development of Pexiganan, a novel topical anti-infective for the treatment of diabetic foot infection.

    Clinical trials continue for both drugs concurrently with licensing discussions with several partners.  Both drugs are considered late-stage and the company is working with several bio-pharmaceutical companies to conduct pre-clinical studies.

    Access Pharmaceuticals chart has been stuck in the low $3 trading range since early October of last year and volume has dropped off severely.  It may take some strong positive news to get retail traders interested in Access again.

    That is a short overview of three companies in the diabetes space that I believe have very interesting stories and I would highly recommend keeping them on the trading radar.  These will trade as bio and pharma typically trade...on news, rumor and innuendo.




    Disclosure: "No positions"
    Jan 14 1:57 PM | Link | Comment!
  • A Rose By Any Other Name - 1-800-Flowers (FLWS)

    I admit that I have called 1-800-FLOWERS.COM in the past.  Usually it is in a panic because I need to buy flowers or a gift for a loved one quickly  (usually my wife) because I left my gift buying to the last minute.  1-800-Flowers is always happy to help me.  I usually overspend because I feel guilty that I left things to the last minute.  Again, 1-800-FLOWERS.COM is only too happy to help me.

    1-800-FLOWERS.COM is is a provider of gifts, including flowers and a diverse range of other gift items:  gift baskets, plants, home décor, garden, candy, food and gourmet items.  The company's products can be purchased over the phone, online  through their own website or portal partners like AOL and through their nationwide network company-owned and franchised retail stores. 

    There are several things about the 1-800-FLOWERS.COM's stock and its chart that might make it a stock to trade in the near term.  As a recovering CPA, the first place I start are the fundamentals.  Despite revenues being off significantly in the third Q of 2009 ($173 MM, a 21.2 decrease over the prior year period), revenues for the year are expected to come in between 5 to 10% decrease over the prior year.  1-800-FLOWERS.COM did show heavy losses in both the 2nd and 3rd Q's of 2009, but those are attributible to goodwill and intangibles impairment and severance costs.  On an operating basis only (without the effect of non-recurring expenses) , combined operating income would have been in excess of $12MM.   The company reiterates that it is on track to deliver a promised $50MM operating expense savings for FY2010.  The balance sheet is strong and, according to the company, is in compliance with all terms of its loan agreements and have embarked on a program to accelerate the paydown and payoff of existing loans.

    Now the chart!  The stock is trading at the lower end of its 52-week range below both the 50 and 200 day moving averages and I believe might be primed to appreciate over the near term.  The stock is trading today at $1.86 which is almost 40% off its most recent high of $3.02 intraday on June 2nd, 2009.  Both the stochastic and RSI indicators are lending credence to the notion that the stock is oversold and could "bounce".

    The one fact to remember over the next few weeks and months is that full-year earnings will come out and the effect on the stock is unknown.  The old saying, "Buy on rumor, sell on news" might very well apply here.  While the company and analysts have given positive guidance for the FY 2009 numbers, any negative surprises might make the stock tank.  It isn't fair, but postiive surprises might not move the stock at all.  So, be aware.

    While 1-800-FLOWERS.COM's sales are down because the retail economy is weak, the company has brand awareness and strength that makes it one of the strongest players in its niche.  Its strong balance sheet will allow it to implement whatever strategies that are necessary to survive this economic downturn.  With 1.7 MM e-commerce customers placing orders in the third Q alone, 1-800-FLOWERS.COM is in an enviable position of being able to take market share away from its compeititors and consolidating its position as the pre-eminent gift company

     Disclosure: No Positions

    Jul 06 2:24 PM | Link | Comment!
  • A stock that Jack Bauer might like - TASR

    Every Tuesday morning I struggle with the same dilemna.  Do I start my day in the office checking e-mails, blogging for Investor Soup and doing research on stocks for our sites?  Or, do I go online and watch 24?  No contest ... I opt for 24 every time.

    Perhaps you have seen the show on Fox?  Kiefer Sutherland plays the rogue FBI agent, Jack Bauer, who routinely saves the world.  The show covers 24 hours in Agent Bauer's life.  It is a well-written show with an interesting plot device that really keeps the viewers hanging.  What really drives the show though, is the compelling performance of Sutherland.  You never know when he will snap and send several enemy agents to “meet their maker.”

    In Agent Bauer’s honor, the star of today’s “show” is Taser International (NASDAQ:TASR), a company that manufactures products the agent very well might use in the line of duty.  The company’s products are “Advanced Electronic Control Devices (ECDs), designed for law enforcement, medical, military, and other markets. Taser’s devices use the company’s proprietary technology “to incapacitate dangerous, combative, or high-risk subjects who pose a risk “ to law enforcement officers, citizens, as a safer alternative to other uses of force. 

    TASR, as a stock, has been both a meteor and a rock.  From its IPO price of $6 in 2001 to its high of $154 in early 2004, this stock was the darling of the market.  The stock was so hot, in fact, that it had THREE stock splits in 2004 (a 3 for 1 and two 2 for 1’s)!  ... Then a series of poor business decisions (Auto Taser and others), some very bad publicity and very strong selling dropped the stock precipitously.  The stock has trended down over the last five years, hitting its 52-week high of $7.63 in late September of 2008, then dropping like the proverbial rock as it hit a historic low of $2.54 in November of 2008.    The stock has proceeded to make turtles of its chart over the past six months.

    Despite this record, I am still bullish on the stock.  I took a look at Taser’s financials and key statistics and came away impressed.  It has a very solid cash position, no long term debt (which I like), and solid revenues.  The company did show a small operating loss in the most recent calendar quarter and don’t forecast a return to profits until next calendar year, but I see that as more as a blip than a trend.  TASR has the financial strength to weather any storms that might come their way.  What is most encouraging is that the company is well diversified in several strong, recession resistant (is anything recession proof these days?) markets: law enforcement and military.  Another encouraging technical sign is that its short interest ratio has declined significantly of late.  The stock is trading under both its 50 and 200 day moving averages and Stochastics indicate that this stock is oversold.

    To bring Agent Bauer back into the mix, he could really use TASR's products!  I have seen both bad and good guys reduced to quivering mounds of Jello by being "TASERED" on his show.  After a period of incapacitation, the person is as "good as new.".  However, when Agent Bauer shoots someone with his regular gun, they usually stay very dead.  I wonder if TASR does product placements on shows like 24?  Might be a good idea.

    Disclosure:  no positions

     

    Tags: TASR
    Jun 02 11:14 AM | Link | 1 Comment
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