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  • Do A Notable Insider Buy And Multiple Catalysts Set The Table For Short Squeeze At CEL-SCI?

    Chief Executive Officer, Geert Kersten of Phase III drug developer CEL-SCI Corporation (NYSE MKT: CVM) made a notable insider purchase of 170,000 Series S Warrants confirmed by a Form 4 filing reported on Monday with the Securities and Exchange Commission.

    Mr. Kersten's latest purchase, coupled with his other publicly filed insider purchases brings his buying total to 300,000 shares and 300,000 warrants during the last few months alone.

    Tracking Mr. Kersten's trading behavior as well as those of other CEL-SCI company executives, directors and registered "insiders" has proven to be profitable. In fact, immediately following Kersten's last stock purchase, registered on 12-30-2013, CEl-SCI shares began to climb and have returned a 160% return on his investment to date on that trade alone, and significantly more for others.

    One would think that this BUY sentiment might reinforce Bullish investors in the stock, given that insiders usually buy their own shares for one reason: They believe the stock is a priced to low and has tremendous upside. Large institutional money managers and savvy stock operators often look more closely at these types of buys to see if they agree with these organic insider buys.

    Like other stocks in the biotechnology sector, we note that CEL-SCI has been providing nice profits for traders on news catalysts. Shares jumped over 12% as recently as last week on news that the company has expanded its Phase III Head and Neck Cancer clinical trial of its investigational cancer immunotherapy treatment Multikine (Leukocyte Interleukin, Injection) in the U.S. with the addition of a new site in Scottsdale, Arizona.

    Our experience tells us that one might not wish to be caught on the short side of this trade for a number of reasons. Still, we also notice that Short Interest in the stock has inexplicably jumped to over 12.59% of the available trading float in the last few days. Why would anyone pull against such a strong upward trending stock slated with multiple catalysts that could send shares higher in the short term? Do the bears know something that the CEO doesn't?

    Recently, biotech analysts like Sharon di Stefano have noted that Cel-Sci is now enrolling patients for its Phase III with Multikine in head and neck cancer at a much faster pace than in the past, with the aid of two prominent contract research organizations. As recently as last month, Kersten disclosed publicly that his firm's "goal is to have between 10 and 15 U.S. clinical centers participating in our Phase III trial. We should be there by this summer." In our view, that statement clearly points to positive trade opportunities each time a new center and milestone is reached.

    In April of 2013, CEL-SCI replaced the clinical research organization running its Phase III clinical trial. This was necessary since the patient enrollment in the study dropped off substantially following a takeover of the CRO which caused most of the members of the CRO's study team to leave the CRO.

    That development, and other negative findings along the way, has become the subject of a major arbitration suit filed by CEL-SCI. The possibility that CEL-SCI's market cap could be greatly impacted if they are awarded even half of the $50 million+ they seek in damages is also worthy of attention from traders and speculators who seek to walk away with profits.

    CEl-SCI has now hired two CRO's who will manage the global Phase III study; Aptiv Solutions and Ergomed who are both international leaders in managing oncology trials. Both CRO's will help the Company expand the trial by 60-80 clinical sites globally.

    That brings us back to Kersten's new round of bullish insider buying. Could it be that one of the CRO's has seen something in the current clinical studies that no one else has been able to yet? Is that what prompted them to place their own multi-million dollar bet on CEL-SCI's Multikine?

    Under a co-development agreement, we know that Ergomed will contribute up to $10 million towards the study where it will perform clinical services in exchange for a single digit percentage of milestone and royalty payments, up to a specified maximum amount, only from sales for head and neck cancer. Ergomed, a privately-held firm headquartered in Europe with global operations, has entered into five similar co-development agreements, including one with Genzyme (purchased by Sanofi in 2011 for over $20 billion). Ergomed is responsible for the majority of the new patient enrollment since it has a novel model for clinical site management to accelerate patient recruitment and retention.

    Perhaps Kersten is anticipating positive news regarding the previously announced Cooperative Research and Development Agreement (CRADA) with the Naval Medical Center in San Diego, CA? We heard that the US Navy had fast tracked Multikine and was set to begin a dose escalation Phase I study using the company's proprietary version of small proteins that regulate immune response and inflammation, in men and women suffering from both HIV and human papilloma virus (HPV) that have developed unsightly and potentially dangerous warts around the anus. HPV is particularly insidious because of the lack of overt symptomology, making it the commonest of sexually-transmitted diseases.

    Perhaps the shorts, or their robotic trading engines, are anticipating another dilutive financing, which is one reality that most investors in biotech have come to expect on a regular basis? The Company believes that it has enough capital to support its operations for more than the next twelve months and believes that it has ready access to new equity capital should the need arise. During fiscal year 2013, the Company raised $9.8 million net proceeds from several institutional investors. During the three months ended December 31, 2013, the Company raised approximately $19.4 million in net proceeds through the sale of common stock and warrants in two public offerings. These funds are expected to meet the Company's cash requirements through 2014.

    With shares currently trading near support levels at which a lot of buyers tend to enter the stock, we are anticipating that any of these potential catalysts might push share prices higher and even cause a major short-squeeze. As the price of this stock falls towards this support level it becomes a test during which the support will either be reconfirmed or wiped out. The rising trend in share price for CEL-SCI's shares also points to a bullish "Golden Cross" involving the security's short-term 50-day moving average breaking above its longer-term 200-day moving average (both of which also represent strong support levels for these share prices).

    Apr 08 6:40 PM | Link | Comment!
  • Opportunity For Martha Stewart Living Omnimedia As Essentials Supplement Line Hits Walgreens Stores Nationwide

    A couple of positive headlines for Martha Stewart Living Omnimedia Inc. (NYSE:MSO) may have gone largely unnoticed recently thanks to a slew of other headlines regarding the firm's legal issues.

    On August 7th MSO rolled out a press release announcing the launch of Martha Stewart Essentials. Martha Stewart Essentials is a new line of six Whole-Food-Based high quality supplements made specifically for women. The Essentials line is one of the only lines of supplements made specifically to address the health needs of woman. The supplement line includes products for hair, skin and nails, bone support and menopause support. The press release stated that the product would be on retail shelves beginning September 15th.

    On Monday, August 12th Martha Steward personally attended the National Association of Chain Store Expo at the Sands Expo and Convention Center in Las Vegas to promote the launch of the Essentials line. By the accounts relayed to us, attendance was high at the booth and Martha announced on her Twitter account that MSO partnered with Inergetics on the Essentials line.

    To date MSO has not put out a press release announcing the stores that have begun stocking the line of supplements. But channel checks show that a rollout of Martha Stewart Essentials is moving forward. We have seen the product line in several Walgreens Stores, and a manager of a Walgreens store confirmed that the Essentials line is a nationwide rollout. As of May 31, 2013 Walgreen Co. (NYSE: WAG) said it had 8,096 stores opened further verifying this is a significant product launch for Martha Stewart Essentials.

    (click to enlarge)

    Inergetics, Inc. (OTCQB:NRTI) developed the Martha Stewart Essentials line in partnership with Martha Stewart Living Omnimedia, and now is in the process of marketing and distributing the line. Inergetics entered into a licensing agreement with MSO that is laid out in the Commitments And Contingencies section of Inergetics August 14, 2013 10-Q. The agreement has minimum royalty payments to MSO for the 5 years of 2014 through 2018 of $1,800,000, $2,100,000, $$2,700,000, $3,200,000 and $3,800,000 respectively, on top of the $450,000 paid as of June 30, 2013. As royalty payments typically have relatively high margins for the receiving company, a high percentage of these payments should have a significant impact on MSO's EBITDA over the next five years. Inergetics goes on to say in the Subsequent Events section in the 10-Q that during the third quarter of 2013 Inergetics has shipped in excess of $1.4 million of product to retail chains. Inergetics does not say specifically the products are the Essentials products, but we assume they are due to the facts that the Essentials line is rolling out at Walgreens and Inergetics revenues were $73,442 in the first two quarters of 2013.

    Inergetics is a supplements company that started with a protein product, Resurgex, which was proven in clinical studies to increased recovery time for NCAA Division I athletes.

    In June of 2013 Mike James was named the CEO and he took over the task of rebuilding the stagnant company. Mr. James began by bringing industry experts into the Inergetics management team. Since becoming CEO, Mr. James has paid off toxic debt, recapitalized the company with the least amount of dilution he could, grew the Resurgex product from one product into a line of top performance muscle building and recovery products for competitive athletes, acquired two new brands, Slim Trim and Bikini Ready, and launch them into retail stores. The crowning achievement for Mr. James and his team is the partnership with Martha Stewart Living.

    Inergetics has gone from a company with nearly no product sales in the first quarter of 2013, only $6,775, to shipping over $1.4 million of product in the third quarter at the time the 10-Q was released. The Inergetics management now has the Martha Stewart Essentials line going into 8,000 Walgreens. This is a management team that has produced. Not only does the 3rd quarter look like is will be the highest ever for Inergetics, but the fourth quarter could even top the third as the company continues to expand the rollout for Martha Stewart Essentials into other grocery chains over the next few months.

    Martha Stewart Essentials looks like a great opportunity for both Martha Stewart Living Omnimedia and Inergetics. MSO is capitalizing on their most valuable asset, their brand, with a woman's health line that is right in line with the message that they have been conveying for years. "I have envisioned nutritious whole-food-based supplements for women who live their lives the way I do, healthily and with passion," said Martha Stewart about the Essentials supplements. "I have confidence that consumers will recognize the high quality and nutritional value these formulas deliver, and that they will be as excited about them as I am." These licensing agreements are becoming more important to the financial structure of MSO, and we would expect to see more like it in the future. As for Inergetics, the new management team has turned Inergetics into a thriving company with loads of potential. Inergetics is about to have a significant spike in revenues that has not yet been realized in the stock price.

    MSO Stock is starting to bouce off a 52 week low reflecting the ongoing legal and licensing issues between Macy's, JC Penny's and MSO. Until this is all resolved there will be continued risk in the stock of MSO. However, it does look like MSO is attempting to produce higher margin revenues with partnerships that signify the Martha Stewart brand. If MSO continues along this path, these price levels could be a good entry point into the stock.

    (click to enlarge)

    The risk for Inergetics (OTCQB:NRTI) is that they are a small company that has failed to produce properly through their last two managements. The new management led by Mr. James looks to be on the right path, increasing the number of products and getting them into large chain retail stores. The current share price not taken into account the Martha Stewart Essentials rollout, nor the fact that the Inergetics has already shipped $1.4 million of product in the current quarter. Inergetics is the logical way to play the Martha Stewart Essentials product launch, as the rollout will have a significant upside effect on the Inergetics' top and bottom line.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.

    Tags: WBA, MSO, long-ideas
    Sep 26 11:55 AM | Link | 2 Comments
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