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Roland Rick Perry is the Managing Director of Institutional Analyst Inc. (IA), an independent investment research and investor relations firm, as well as editor of nine industry specific investment reviews. One of the best one mile runners to come out of the Chicago area, he attended Southern... More
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  • Apricus Biosciences, What's Wrong With This Picture ?

    Let's step back for a minute and look at the big picture (assuming Vitaros® is a commercial success) - we potentially have total milestone payments of $210 million and then add to that, $30 million in royalty revenues, which of course are ongoing as ED solutions are ongoing.

    Then let's take a look at recently patented RayVa's annual market of $200 million (assuming it is approved and then goes on to commercial success).

    And the market valuation? 43.6 million Shares x the current price of $1.33 = $58 million. Are we missing something here? Actually no. Is Wall Street missing something here? In our opinion, actually yes.

    Of course all of the above numbers are predicated on a successful full roll-out of Vitaros® (which is approved utside the US) and then later down the road approval and commercialization of RayVA.

    While trying to predict the future sales success of Vitaros (an Erectile Dysfunction drug) is sheer speculation, when you have assembled a marketing dream team (Takeda and Sandoz) to launch a better, safer and easier to use drug into a market which has world-wide "annual" sales of $5.5 billion, we feel pretty good about things and comfortable with projecting a share price considerably higher than where it currently trades 2-3 years down the road.


    With a market cap under $100 million ($58 million to be exact), with European and Canadian approval of its novel erectile dysfunction (NYSE:ED) topical cream called Vitaros® (affecting 150 million men worldwide), with its marketing and sales just launched in June by two Pharmaceutical giants - Takeda ($16 billion in sales) and in August by Sandoz ($9 billion in sales) - Apricus has considerable short-term upside potential and in our opinion could easily return to its 2012 high of $4.00 per share, providing aggressive investors with potential gains in excess of 150%.

    The long-term share price potential (double digit) will be bolstered by any reports of significant success in its current markets of Vitaros® (300,000 doses were shipped and re-orders have commenced) with the company estimating "peak" revenue potential of $300 million in existing European markets. The upside is further bolstered with potential approval news and sales in Asia or Latin America (14% of worldwide sales) and of course, the US (40% of ED sales). Sales of ED drugs are tracking $1.3 billion annually in Europe alone, as ED solutions aren't one time solutions, but rather ongoing solutions (and thus ongoing revenues) for men with ED problems.

    In addition to Vitaros®, the Apricus pipeline features enormous long-term potential from the successful development of two other medical solutions - RayVa™ for Raynaud's disease and Fispemifene (announced in October 2014), as a potentially safer and more effective solution to the current $2 billion Low Testosterone (Low-T) market and whose current solutions are mired in controversy. An estimated 13 million men in the U.S. experience low levels of testosterone.

    All in all, Apricus Biosciences (NASDAQ:APRI) has all the characteristics we look for in an undiscovered medical company including a small market capitalization, proven and approved medical solutions, well developed markets exceeding $100 million and deep-pocketed billion dollar marketing partners which most importantly rigorously vett both the efficacy and sales potential (in this case for Vitaros®) before agreeing to becoming their marketing arm and investing millions to assure a successful launch of a new product - something a company of Apricus' size could never do alone.

    The importance of the involvement of both Takeda and Sandoz to the investment equation, is such that in all likelihood, we would not be adding Apricus to the Watch List - had their involvement not been announced to spearhead the introduction of Vitaros® into the very competitive ED market. They are that good.


    Apricus entered the pharmaceutical industry in 1995 and initially focused on its NextACT DDAIP drug delivery technology culminating with licensing agreements in 2005 with Novartis (and later Tribute Pharma) for a nail fungus drug and in 2007 with Warner Chilcott for Vitaros®. The NextAct technology allows drug molecules (including those made by other pharmaceutical companies) to be rapidly absorbed by the patient.

    In plain English, NextACT is designed to enhance the topical or oral delivery of an active drug to the patient and if successful, improve the effectiveness of the drug (which may not be able to penetrate the skin) and potentially reduce the side effects. As such, Apricus is a technology company whose technology could improve the drugs made by many other companies (including drugs off-patent) in a variety of formulations such as creams (like Alprostadil in Vitaros®), gels, sprays, ointments, lotions, patches etc. In addition its oral delivery technology employs the same permeation enhancers which can slow or increase the delivery of drugs, which may have difficult characteristics with regards to being permeable or soluble.

    As such, Apricus Bioscences' next big drug could be a drug on the drawing board of another company or a drug from a major pharmaceutical giant (which Apricus has proven success in developing relationships) just coming off patent - and thus offers investors spectacular "out-of-the-blue" revenue potential. It's this technology, not just Vitaros® which makes Apricus such an attractive long term investment candidate.

    Vitaros® is an excellent (if not perfect) example of this potential. Vitaros® isn't a drug invented by Apricus, but rather a "package" which is in essence the patented delivery method of the drug Alprostadil - using the NextACT delivery technology. Alprostadil has been around for erectile dysfunction for years, but the other guys (aka competitors) use a needle or pellet to deliver it to the penis. HELLO a needle?

    We'd love to see that TV commercial. Just imagine a gray haired couple "After all these years, she's still the one for you" and here she comes, needle in hand. Suddenly side effects such as headaches, dizziness, lower back pain, fainting, swollen lips, and complete loss of vision as well as dangerous interaction with high blood pressure medications from the pill version of ED drugs - don't seem so scary after all.

    Alprostadil in our opinion is a better drug, a better solution, than Viagra, Cialis, Levitra or the latest entrant Stendra from Vivus. The problem in the past has been the "problematic" delivery system for Alprostadil - (a needle or pellet) which is something two of the largest pharmaceutical drug giants in the world (Sandoz, Takeda) apparently agree. Alprostadil - great drug. Delivery method - not so great. Vitaros® with the Apricus skin-permeation enhancer that speeds and aids absorption - game on.

    Pharma-giants do not agree to take on the sales and marketing for companies which have drugs with $25 or $50 million in annual sales potential. In fact anything under $100 million is mathematically defined as "statistically insignificant" for a billion dollar corporation. And yet, through their expertise and huge presence, pharma-giants often create their own success. Companies like Takeda, Sandoz and Abbott don't take drugs with small potential and make them big, they take drugs with big potential and make them huge.

    They see the enormous potential in Vitaros® - something which is not yet recognized on Wall Street, as it's not approved for sale here. There's no commercials for Vitaros® during the Super Bowl for Wall Street traders to see. Smart money in our opinion comes in here, at these price levels, with a market cap under $100 million - before Vitaros® becomes a proven success. Investors with lesser risk tolerances could of course wait until Vitaros® is a proven blockbuster (which we define as annual sales exceeding $100 million), but odds are the share price will be considerably higher than where it trades at today if it achieves that status.


    In late 2013, Transparency Market Research released an extensive report (cost $4,795) covering the ED market titled "Global Erectile Dysfunction Drugs Market - Industry Analysis, Size, Share, Growth, Trends and Forecast 2013 - 2019."

    In it they revealed the following information (it is a bit dated as it mentioned Vitaros® as "..under investigation in both preclinical and clinical settings…"). The report included an annual sales forecast of $3.4 billion in 2019, despite the loss of patent protection, showing just how powerful the demand for E/D solutions are.

    Erectile dysfunction is the inability to attain or maintain penile erection in men, sufficient for successful sexual intercourse. Erectile dysfunction is a common medical disorder primarily affecting men older than 40 years of age. In addition, other than the typical causes of erectile dysfunction, such as diabetes and hypertension, a number of common lifestyle related factors are also associated with development of the condition. These include obesity, excessive alcohol consumption, smoking, use of recreational drugs, and poor physical and psychological health. Commonly, oral drugs belonging to the PDE 5 inhibitors class form the mainstay of erectile dysfunction treatment. Other treatment options include lifestyle modification, testosterone therapy, penile devices, injection therapies and psychotherapy.

    The global market for erectile dysfunction drugs has been studied from the perspective of currently marketed branded drugs and pipeline drugs. Branded drugs include Viagra (sildenafil citrate), Cialis (tadalafil), Levitra/Staxyn (vardenafil), Stendra/Spedra (avanafil), Zydena (udenafil), MUSE (medicated urethral systems for erection), Mvix (mirodenafil) and Helleva (lodenafil).

    The drugs in the pipeline for erectile dysfunction treatment primarily consist of two major drugs, namely Vitaros® (alprostadil) and Uprima (apomorphine) currently in later phases of clinical trials.

    In 2012, Viagra (sildenafil citrate) accounted for the largest share (45%) by revenue of the total erectile dysfunction drugs market. However, due to the loss of the drug's patent exclusivity in Europe and other countries in 2013, the overall market revenue is expected to decline during the forecast period as international markets contribute considerably to the overall market revenue of the drug.

    In the U.S. market, Viagra will continue to maintain a major revenue share due to its extended patent exclusivity till 2020. The market for Cialis (tadalafil) accounted for the second largest share at USD 1,926.8 million, in 2012. However, it is expected to witness a decline in market revenue at a CAGR of (12.6%) from 2013 to 2019, owing to loss of patent exclusivity in 2017. In addition, the patent for Bayer's Levitra/Staxyn (vardenafil) is scheduled to expire in 2018 and is thus expected to contribute to the declining market revenue.

    A few novel compounds are currently under investigation in both preclinical and clinical settings, for the treatment of impotency. These studies are majorly focused on medications with improved efficacy, shorter onset of action and fewer side effects as compared to the currently available treatments. Such pipeline drugs include Vitaros® (alprostadil), Uprima (apomorphine) and Topiglan (alprostadil), amongst others.

    Geographically, North America dominated the global market for erectile dysfunction drugs in terms of revenue generation and is expected to maintain its position throughout the forecast period. The extended patent exclusivity for Pfizer's Viagra (sildenafil citrate) in the U.S., till 2020, will be responsible for the leadership of the North American market. Europe was the second largest regional market for erectile dysfunction drugs in 2012, owing to the increased demand for ED drugs. Market growth will also be facilitated by the expected marketing approvals for a few promising drug candidates such as Stendra/Spedra (avanafil) and Zydena (udenafil) by mid 2014.

    The global erectile dysfunction dugs market is dominated by few major players including Pfizer, Inc. Eli Lilly & Co., and Bayer AG. Post patent expiration of the major branded drugs and intense genericization of the market, the competition in this market is expected to be characterized by consolidation activities, partnerships, and intensive mergers and acquisitions. The other key players in the erectile dysfunction drugs market include Dong-A Pharmaceutical Co. Ltd., Vivus, Inc., Apricus Biosciences, Inc. and Meda Pharmaceuticals.

    The full report can be purchased here:


    Aprostadil as we mentioned earlier is the key ingredient in Vitaros® which has been made "super-effective" when enhanced by Apricus NexACT skin-permeation technology, to the extent it attracted the attention of Takeda Pharmaceutical and Sandoz (and Abbott Labs - details below).

    Aprostadil was first launched in the US as an E/D solution in 1997 by Vivus (NASDAQ:VVUS) using the MUSE delivery system (pellet). It was probably one of the most fantastic boom to bust drug stories in history. Muse was off to a good start, with sales totaling $129 million during its first year on the market, shortly before Viagra's appearance. Muse was the first revolutionary product for erectile dysfunction, but Viagra basically trumped it. Despite its effectiveness, Muse's mode of "pellet" delivery was uncomfortable for many men. To make a long story short, Muse was sold it to Sweden based MEDA Pharmaceutical (OTCPK:MDABY) for $23.5 million in 2010.

    But it was quite a ride for both the sales it generated and the excitement in the share price, as the chart below shows in a five-year period from May of 1995 to May of 2005 - with Vivus shares running from $3 to $40.

    (click to enlarge)

    Due to the presence and involvement of Takeda and Sandoz - we literally don't feel the need to spend an undue amount of time, effort and writing space in analyzing the Vitaros® effectiveness and sales potential. In sum, investors have to ask, do they have the capabilities to better analyze the sales potential of Vitaros® thenTakeda and/or Sandoz - who combined have agreed to upfront and pre-commercialization payments of $7.5 million and potential milestone payments of $110 million?

    This is in addition to the millions required to successfully market Vitaros®? We think their due diligence suffices, so at this point we'll simply share some slides from a recent corporate presentation and share what we think are the three most attractive markets.

    In our opinion, there are three markets which hold the greatest potential for Vitaros® - despite consumers' propensity to solve problems by "popping pills." The first is the growing amount of individuals who simply prefer not to orally treat issues (aka pills) which may have wide ranging potential side-effects.

    Vitaros demonstrated none of the side effects of PDE-5 inhibitors like Viagra, Cialis and Levitra, which are known to commonly cause headaches (in over 10% of patients), nasal congestions, vision changes, dizziness, flushing, etc. In fact, it appears that Vitaros is actually considerably safer than current oral treatments. With Health Canada's nod, Vitaros is the only drug that can be prescribed to the entire patient population.

    Vitaros® has no known interactions because of its non-systemic nature. As such, it is not known to be affected by food, alcohol or medication. This makes it appropriate for many patients in whom oral therapies are not, such as those patients taking nitrates.

    The second market is to overweight individuals who as a result of their obesity, suffer from high blood pressure and are required to medically treat the blood pressure with medications which may conflict with PDE-5 inhibitors. The slide above describes them as "contraindicted" users.

    1. 67 million American adults have high blood pressure (That's one in three).

    2. High blood pressure costs the nation $47.5 billion each year.

    3. 54% of all men over the age 55 have high blood pressure.

    CDC Factoids:

    The third market is for the "easy of use and quick to desired results" consumer. Consumer reviews which we read state that using the Vitaros® applicator is no more difficult or time consuming than putting on a prophylactic. It takes a few seconds to apply and a 30 second wait. It's a discreet drop of crème, which comes in a single dose, disposable container. No mess, no application pain, though some consumers have reported unexpected "warmth" when first used which is later posed no issue.

    UK Information leaflet:

    With regards to time of effectiveness, due the NextACT technology, Vitaros® has been reported to be the fastest acting E/D product on the market with desired results in as quick as five minutes. This in our opinion is probably one of the most compelling product features over the competition.

    Not to get overly technical, but what makes Alprostdail work, is the NexACT technology. The skin "down below" is relatively impermeable, even at its thinnest point. This is due to a tissue layer called the stratum-corneum which limits the absorption of drugs.

    The NexACT interacts with proteins which keep these cells together, loosening them up enough, to allow the active drug to swiftly pass through (This is the NexACT magic which can work with a host of other drugs).

    Using Vitaros® the Alprostadil is rapidly absorbed into the corpus songiosum and then the corpora cavernosa to quickly and effectively do its job. Afterwards, NexACT is quickly broken down into fatty and amino acids that occur naturally in the body.

    In comparison, one additional competitor to Vitaros ® as a side note is called Alprostadil for Injection (brand names Caverject and Edex) once available as a powder in an injection bottle (vial). Caverject had to be mixed with a solution called Bacteriostatic Water for Injection USP. Messy. And an actual injection.

    Edex had to be mixed with a solution called Sodium Chloride Injection USP. The solution for mixing came with the product and/or may have be already loaded into a syringe or contained in another injection bottle (vial). Not surprisingly, they didn't have the likes of Takeda or Sandoz knocking on their doors. Vitaros® - No pills, no mixing, no needles and no pellets - just a single dose drop of crème.


    In June 2013, Apricus received approval in Europe through the DCP for commercialization of Vitaros®, giving them the right to sell Vitaros® in multiple countries in the European Union. In little more than a year preceding the approval, Apricus announced that two of the most successful and powerful Pharmaceutical companies in the world were launching and spearheading the sales of the product.

    In August of 2014, Nick Haggar, Sandoz Head of Western Europe, Middle East & Africa stated, "Vitaros® is the first topical ED therapy to be made available to patients in Europe and the first novel ED treatment in nearly a decade. It is characterized by its ease of use, rapid onset and high tolerability. This launch demonstrates Sandoz's commitment to finding novel and innovative ways to meet patient need across a wide range of therapeutic areas."

    Sandoz employs over 26,500 employees and its products are available in more than 160 countries, offering a broad range of high-quality, affordable products that are no longer protected by patents. With $9.2 billion in sales in 2013, Sandoz has a portfolio of approximately 1,100 molecules, and holds the #1 position globally in biosimilars as well as in generic injectables, ophthalmics, dermatology and antibiotics, complemented by leading positions in the cardiovascular, metabolism, central nervous system, pain, gastrointestinal, respiratory, and hormonal therapeutic areas. They couldn't find a better marketing partner, unless of course you consider Takeda!

    In June of 2014 Takeda announced their launch of Vitaros®, Yasuhiro Fukutomi, Managing Director, Takeda UK Ltd. stated, "This is an innovative new product that offers the potential to provide men with a new first line or alternative treatment option. Vitaros® has been shown in clinical trials to provide rapid efficacy together with convenient local administration that is well tolerated. Takeda UK Ltd envisages that it will be a significant addition to our urology franchise... this is great news for Takeda UK and for the many men living with erectile dysfunction."

    Takeda is the largest pharmaceutical company in Japan and Asia and one of the top 15 pharmaceutical company in the world. The company has over 30,000 employees worldwide and achieved $16.2 billion in revenue during the 2012 fiscal year.

    With two of the 15 largest Pharmaceutical companies in the world (Sandoz is part of Novartis, the second largest in the world behind Pfizer - who interestingly own Viagra), we feel extremely optimistic that Vitaros® goes on to achieve the success it deserves.

    The launch into Canada by Abbott Labs has been delayed by Mylans' division acquisition from Abbott which included an attractive portfolio of more than 100 specialty and branded generic pharmaceutical products in five major therapeutic areas including Vitaros®. Mylan will retain an active sales organization of approximately 2,000 representatives in more than 40 non-U.S. markets. So we'll have to wait.

    (click to enlarge)


    Biotech companies can be much less complicated than they look, if investors focus on who is investing in the company, who is partnering with the company and what the overall size of the market they are addressing is in relation to their total market capitalization. Or in other words, what is the total value Wall Street is placing on the company - which is determined by simply multiplying the shares outstanding by the current market price. This in our opinion much easier than trying to assess the science and then further assess the marketability of whatever drug or solution a particular biotech company is working on. Drugs don't sell by themselves.

    On the fronts that are of concern to us, Apricus Biosciences scores high on every mark. Of course always at issue is how much can make they make (revenues) from selling Vitaros® - but we feel any attempts to estimate revenues on a newly launched drug is sheer speculation. In the most basic of view-points, we will note that (solely as it relates to Vitaros®) the company reported potential upfront and pre-commercialization milestone payments of $19 million, total potential milestone payments of $210 million and potential royalties in the double digits. In numerous press release the company has mentioned analyst estimated peak-revenues in the range of $300 million (excluding the US). While management has not revealed what percentage the royalty is, we'll be conservative and take the minimal definition of double-digit as 10% (not 12, 25 or 20%) and that adds to $30 million. And they have $16 million in the bank (as of 9/30/2014)

    So let's step back for a minute and look at the big picture (assuming Vitaros® is a commercial success) - we potentially have total milestone payments of $210 million and then add to that, $30 million in royalty revenues, which of course are ongoing as ED solutions are ongoing. And the market valuation? 43.6 million Shares x the current price of $1.30 = $58 million. Are we missing something here? Actually no. Is Wall Street missing something here? In our opinion, actually yes.

    Of course all of the above is predicated on a successful full roll-out of Vitaros®. Again, trying to predict the future is sheer speculation, but when you have assembled the dream team to launch a better, safer and easier to use drug into a market which has world-wide "annual" sales of $5.5 billion, we feel pretty good about things and comfortable with our initial price target of $4.00 per share.

    Tags: VVUS, APRI, long-ideas
    Jan 29 3:55 PM | Link | Comment!
  • Odyssey Marine Ranked #1 In Days To Cover.


    Marine Exploration Stock Review

    Marine Exploration Magazine

    Tags: OMEX
    Jan 28 7:16 PM | Link | Comment!
  • Adding Odyssey Marine $OMEX To Watch List.


    Marine Exploration Stock Review, Thursday, 04/24/2014.

    Los Angeles, CA 57…75F Cloudy.

    Chicago, IL 48…62F Cloudy.

    Delray Beach, FL 71…85 Sunny.

    Port Jefferson, NY 42…60F Sunny. (195)


    1. Adding Odyssey Marine (NASDAQ:OMEX) to Watch List $2.13.

    2. Disclaimer.

    To contact us send a email to:

    To Subscribe to the Marine Exploration Stock Review click here:


    1. Adding Odyssey Marine (OMEX) to Watch List $2.13.

    Okay, this is one of the best ideas we've ever stumbled across. Truly one of our best ideas ever. It has both excitement and danger. It's part technology play and part deep-sea treasure hunting play and part short-squeeze play - all rolled in one. And a $2.00 stock. The stars as they say, are aligned..

    So pull a bar stool up to our tiki-bar and at look at what we found.

    We have brilliant vicious short-selling hedge fund managers in one corner and brilliant nice-guy long hedge fund managers in the other corner. In fact one of the largest four largest asset managers in the world (GLG Partners) is long, as is BlackRock - which is THE largest asset manager in the world. Did we mention this a $2.00 stock?

    We're so excited about it, we built an entire website around the industry and have spent an entire month researching the group. An Epic short battle between the forces of good over the forces of evil in the making - and we just bought a ring side ticket.

    Marine Exploration Stock Review

    In reality shorts aren't evil, we believe they just made a mistake. A huge mistake, in our opinion and the opinion of some of the brightest minds on Wall Street (backed by their money as they are shareholders and not just people commenting on message boards). This could very well turn out to be the "mother of all short squeezes."

    Of course we could be wrong, despite our stellar track record. It's also appropriate for most portfolio's (widows and orphans excluded) meaning good for short-term traders and good for mid-term short "squeeze" traders and good for long-term investors. Since they're not a client (not yet) we'll even offer up dream targets.

    Closing price $2.13. We bought in the open market at $2.00 on the 14th.

    Short-term target $3.13

    Mid-term short squeeze target $7.00

    Long-term target $13

    Real long-term target $40 (say what)

    We have so much information we're not sure were to start - so we'll just offer up the most salient bullet points for now - including short and mid-term catalysts. We have a very long research report in the works - which will go into considerable detail - about the long-term potential and our wild real long-term target.

    There are so many exciting facets - we don't even know what order they should go in, so we'll just wing it, excuse us if we sound like we're rambling.

    Odyssey Marine (OMEX)

    Shares Outstanding: 83 million

    Market Cap: $180 million

    5215 West Laurel Street

    Tampa, FL 33607

    United States - Map

    Phone: 813-876-1776

    Fax: 813-876-1777



    Only one Wall Street analyst is following it, Mike Malouf with Craig-Hallum in Boston. He has a $7 price target. We've spoken, bright guy. We've also spoken to a number of the hedge funds, also bright guys. So a sense, nobody really knows about the company - and there appears to be no premium built into the stock price in anticipation of upcoming catalysts.

    The company does have what appears to be a small band of loyal followers - and we are of the opinion if the name was simply better known on Wall Street, it would sell for a considerably higher price. Not an internet company valuation, but certainly not $2 per share - nor $180 million. Way too much potential - and as we said, excitement.

    Odyssey is the world leader, the best and most successful "deep-water" exploration company out there. Unmatched track record. That's a fact. They found $500 million in treasure on the Nuestra Señora de las Mercedes in 2007, which sank off the coast of Portugal in 1804, when know one else could find it.

    What this means, to state the obvious is:

    #1. They had to first "know" a ship sank, somewhere off the coast of Portugal.

    #2. They had to "know" there was a valuable bounty on the ship.

    #3. They had to "find" a ship that sank 210 years ago, that no one else could find.

    #4. The ship was 3,000 feet down (took them two years we heard, to find it).

    #5. They had to send a remote operated vehicle (ROV) down, to get to the treasure.

    #6. The ROV was operated with camera, on deck.

    #7. The ROV had pick up the coins and bring them to the surface. While the ship rocked in heavy seas.

    #8. The ship had to be able to carry 17 tons back to shore.

    Sit back for a moment and contemplate, visualize # 1 - 8. They did what ? How ? What the ? 3,000 feet deep ? Yes this is a technology play. And they are benefitting from it. This is not the company it was 20 years ago. It is now technology driven.


    End result. 574,553 silver coins and 212 gold coins. End, end result - Spain seized the bounty and the company learned a very hard and painful lesson - get the permits and cut a deal with whoever claims ownership - PRIOR to even looking for any other treasures!

    Odyssey earlier (2003) found the SS Republic which sank in 1865 in a storm 100 miles off the coast of Georgia. The result of that expedition was a $75 million bounty of silver and gold coins. And more recently (2012) was they found the SS Gairsoppa, a British cargo steamship sunk by a German U-boat on February 17, 1941, approximately 300 miles southwest of Galway, Ireland. 4,700 feet deep.

    On July 18, 2012, Odyssey announced the recovery of approximately 48 tons of silver (1.4 million ounces) from that site. Then in 2013, they recovered an additional 61 tons (1.8 million ounces) of silver from the shipwreck - this is the largest and heaviest recovery of precious metal from a shipwreck in history. Like we said, they are the world deep-sea leader with an unmatched track record (Mel Fisher by contrast would be considered a shallow water hunter).

    For more information on the history of SS Gairsoppa click here

    For an operational overview of the project click here

    For answers to FAQ about the Gairsoppa click here

    To see pictures of the Gairsoppa shipwreck site click here

    Video can be viewed here:

    Right now their ship just departed Port Charleston after fueling up to go 160 miles off the South Carolina coast, to take a second run at SS Central America.

    The first run, twenty years ago where only 5% of the ship was excavated, brought up $50 million in gold coins. This would be called our "short-term" catalyst. Yes, exciting. It takes them about three months (barring a Hurricane, to excavate). Like we said, short-term catalyst and by looking at the stock chart, there doesn't appear to be a valuation bump as they set sail. So if they don't find anything, there shouldn't be a air-pocket drop - but you never know.

    On the other hand, while some think there is nothing more aboard, some think there may be as much as $500 million. Time will tell. They are also experienced enough to quickly tell if the recovery would be uneconomical and cut bait and redeploy.

    The SS Central America is one of the greatest shipwreck stories of all time and Odyssey was one of nine firms bidding for the contract. The ship was tied up in court for 20 years and the court receiver publicly stated, "We circulated a request for proposals to nine of the leading organizations in the deep-ocean exploration and recovery industry and established a rigorous proposal evaluation process. We found Odyssey's combination of experience, equipment and personnel are unmatched in their industry and we're now looking forward to their team completing the work that was started more than 25 years ago." Enough said.

    The company stated "We're very familiar with mid-19th century paddlewheel shipwrecks, as well as the range of artifacts that are likely to be on the site. We have extensive experience with the tools and techniques required for this archaeological excavation, which will be very similar to the successful recovery of more than 51,000 coins and 14,000 artifacts from the SS Republic completed by Odyssey 10 years ago. We're also experienced in working at extreme depths. The SS Central America is less than half the 4,700 meter (15,000 feet) depth of the SS Gairsoppa, from which we successfully recovered 110 tons (220,000 pounds) of silver over the past two years."

    Bob Evans, the chief scientist of the initial mission says he is thrilled to go back to the S.S. Central America after 23 years. "We are going to explore much more of the shipwreck this time, with much more modern equipment, he said. "We expect new, wonderful things to show up."

    Bigger picture, UNESCO estimates 3 million (yes million) shipwrecks are out there. Odyssey has a database of years of wrecks identified to find (minimum $50 million per ship in their database). Others, we assume due to advances in ship wreck finding and recovery will bring competition. We'll introduce the competition as they come to surface.

    If they are so lucky as to find anything North of $25 million, we believe this would be the first catalyst to ignite a potential short squeeze.

    The real story (short and mid-term) is the fact that there are 20 million shares short. It didn't scare us away, but rather, it brought us to the situation. A short squeeze would bring us to our mid-term target of $7.00, six months to one year out. There are more catalyst, which we will be in our report.

    High Short Interest list:

    On October 31st a short wrote a scathing 66 page report tearing into all sorts of things. We read it and quite a bit of it was beyond our grasp. Prior to the issuance of the report there was a 15 million share short position and by year end, it increased to 20 million shares. By looking at the float, it appears they are running out of bullet - if they aren't already out.


    Follow our math:

    There are 83 million shares outstanding.

    It trades 600,000 shares a day, so it would take about 25-30 days to cover (buy) 20 million shares. Just imagine if "any" fund tried to buy 20 million shares in the open market.

    Short ratio:

    20 million shares represents 24% of the float.

    It also represents 45% of the non-institutional held float, as institutions (which we believe are long-term holders) own 39 million shares.

    Guru Focus:

    For every dime the stock goes up, the short position loses $2 million. That's every dime. At $3.13 they are down $20 million. At $4.13 they are down $40 million. When do they say, as Roberto Duran once said, "No Mas" if the stock starts going up? Where indeed?

    We're told borrowing cost can be 20% annually, so add that to the "patience" mix. (Source: Astec Analytics which states, equity borrowing costs have risen by 41 basis points since 2007 in the North American stock markets)

    We checked the institutional ownership and since they didn't sell after the short-report was publicly released (and some added to the position) we'll assume they read the report and did not agree with the findings - though it did scare some of the retail (individual) shareholders. This is why we felt it wasn't essential to fully grasp the short story. It's short's opinion versus the opinion of the following shareholders. Who's right?

    Here is the short report website called the OMEX Truth.

    Here is a website called The Real OMEX Truth which has debating commentary from Green Asset Management.

    And drum are some of the top institutional shareholders:


    Brinker Capital (15 million shares).


    This is their 12th largest holding and the rest their top holdings are ETF's and short ETF's, so we assume this is a contra-bear market holding.

    Other holdings (amazing):



    Black Rock Trust (2.9 million shares), largest asset manager in the world with $4.3 trillion AUM.




    GLG Partners (2.5 million shares) 4th largest alternative asset manager in world with $30 billion AUM.




    Black Rock Advisors (2.2 million shares)




    Vanguard Group: (2.1 million shares) the world's largest mutual fund manager.




    Clear Harbor (1.4 million shares)




    Columbus Asset Management.

    The holding is so new it's not yet in the Relational Stock database, so well just link to the SEC filing. They showed up on the most recent Proxy statement with 4,781,100 shares owned, currently valued $10,422,798. Oh boy. This is like the "Thrilla in Manilla."

    We'll also note, since the filing was made as of January 29th, 2014 - that they had the opportunity to read the 66 page short report - and unlike us fully grasped the short sellers points and went ahead and bought $10 million dollars worth anyway!

    We'll also speculate since the share price is near unchanged from where the short report came out and and that the short position went up 5 million shares in the two months following it - that Columbus may have been buying what the short sellers were selling. Our logic is since 5 million shares of selling didn't push it down and 5 million shares of buying didn't push it up - it was a push.




    Okay, thats' all for now.

    (This isn't the Shipwreck Exploration Stock Review, it's the Marine exploration because it is our opinion that many treasures which lie below the seas surface are the mining of minerals - not much different than mining for minerals on land. That's what's behind our real long-term target.)

    Oh and one other crazy thing to note. Look at these four billionaires who just showed to the shareholder party. You can't make this stuff up. Google any of them. Ken Griffin $4.4 billion (Chicago), James Simons $12 billion (Port Jefferson), Paul Tudor Jones $3.7 billion (Greenwich) and David Shaw $3.5 billion (NYSEARCA:NYC).

    Ranked by net worth:

    James Simons (#3):

    Ken Griffin (#8):

    Paul Tudor Jones (#9):

    David Shaw (#10):

    You can follow the Odyssey Explorer ship as it makes its way to SS Central America site at

    As for the long-term target, you can get a heads up on by studying Deep-Ocean Mineral explorations. Click here for that:

    If you think mining underwater is crazy, look at the press release where LockHeed Martin (NYSE:LMT) states they think they can bring $67 billion to the UK National Economy over the next 30 years by mining undersea:


    Disclaimer: The U.S. Securities and Exchange Commission (SEC) permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this press release, such as "measured" "indicated," and "inferred" "resources," which the SEC guidelines strictly prohibit us from including in our filings with the SEC. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. U.S. investors are cautioned not to assume that part or all of the inferred mineral resource exists, or is economically or legally mineable, and urged to consider closely the disclosures in our Form 10-K which may be secured from us or from the SEC's website at Forward Looking Information

    Odyssey Marine Exploration believes the information set forth in this Press Release may include "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. Certain factors that could cause results to differ materially from those projected in the forward-looking statements are set forth in "Risk Factors" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission on March 12, 2013. The financial and operating projections as well as estimates of mining assets are based solely on the assumptions developed by Odyssey that it believes are reasonable based upon information available to Odyssey as of the date of this release. All projections and estimates are subject to material uncertainties, and should not be viewed as a prediction or an assurance of actual future performance. The validity and accuracy of Odyssey's projections will depend upon unpredictable future events, many of which are beyond Odyssey's control and, accordingly, no assurance can be given that Odyssey's assumptions will prove true or that its projected results will be achieved. Not a client.

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    Disclosure: I am long OMEX.

    Tags: OMEX
    Apr 30 3:48 PM | Link | 3 Comments
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