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  • ICEL- An Under The Radar Cell Sciences-Regenerative Medicine Value Play

    Notes: This research report was going to go out to our SRP members on 3/23, but the Biotech sector took a hit and we held off. Well, they got bought out by Fuji Film for $16.50 as announced 3/30/15 in pre-market. Either way, we wanted to sample our research work and not lose all the time we put into this report... is our paying subscribers premium service and is our free opt in service.

    ICEL- Cellular Dynamics International $8.03 as of 3/23/15 Close

    All time post IPO high $24 2013; Post IPO Low: $4.72 2015

    Shares Outstanding 16 Million; Current Cash: 34 million; Market Cap: 125 million

    IPO Date: 7/25/13- $12.00 3.8 Million shares sold, about 25% of the total shares outstanding.

    Underwriters were JP Morgan and Cowen and Company. Also, we note the esteemed Piper Jaffray firm was recently participating on the last conference call, which is a good omen. Also, a Goldman Sachs executive joined the board in the 4th quarter of 2014 which we find of interest.

    • With over 100 employees and more than 800 patents, CDI manufactures human iPS cell-derived cell types with the quality, quantity, and purity required for basic life science and drug discovery research.
    • Their founder, James A. Thomson, VMD, Ph.D., is considered the pioneer and inventor of modern day Stem Cell research and technology.
    • The company is emerging as a leader in Regenerative Medicine with recent 57% year over year revenue growth.
    • The Pritzker family (Hyatt Hotels) controls 20% of the shares; Wasaatch Advisors own 10%; Founder owns 6%.
    • Insiders took up 25% of the original shares in the IPO offering
    • No insiders have sold a single share since the IPO
    • Insiders basis in the stock prior to the IPO was $10.46 per share, lower than the current price

    Company Summary: CDI (NASDAQ:ICEL)

    We develop and manufacture fully functioning human cells in industrial quantities to precise specifications. Our proprietary iCell Operating System (iCell O/S) includes true human cells in multiple cell types (iCell products), human induced pluripotent stem cells (iPSCs) and custom iPSCs and iCell products (MyCell products).

    Our iCell O/S products provide standardized, easy-to-use, cost-effective access to the human cell, the smallest fully functioning operating unit of human biology. Customers use our iCell O/S products, among other purposes, for drug discovery and screening; to test the safety and efficacy of their small molecule and biologic drug candidates; for stem cell banking; and in researching cellular therapeutics.

    Its important we think to understand the background of this company and specifically Dr. Thomson:

    Dr. Thomson's derivation of human ES cells was featured as Science Magazine's "Scientific Breakthrough of the year" in 1999, and work from Dr. Thomson's laboratory has been cited in TIME Magazine's "Top 10 Discoveries of the Year" on three separate occasions, including the isolation of human ES cells (1998, #1), the isolation of human iPS cells (2007, #1) and the collaborative mapping of the human epigenome (2009, #2). He was featured on the cover of TIME Magazine's "America's Best in Science and Medicine" in 2001, and in 2007 was named one of TIME Magazine's "100 Most Influential People in the World." Dr. Thomson has published over 150 scientific, peer-reviewed papers and has been an inventor on 30 issued patents.

    Since the IPO, this BioScience company has managed to fly under investors radars in a big way. After initially doubling from the IPO on a lot of initial excitement, the stock has drifted down for about 15 months until very recently when then trend we believe has reversed for the long term. With a market cap of only about 125 million we could call this a micro cap company and the smallest market cap in our long term SRP stock universe. That also means the upside may be the best as well.

    Company description of business:

    Our iCell product line currently includes four different cell types: cardiomyocytes, neurons, hepatocytes and endothelial cells. We are actively developing an additional seven different cell types, and we expect to use our platform to continue to expand the iCell product line. iCell products are a consumable designed to be used once and then reordered. We manufacture our iCell products from our iPSCs. An iPSC is a cell that has the ability both to replicate indefinitely and to be transformed into any cell type in the human body. We develop and manufacture our iPSCs from ordinary blood or skin using proprietary techniques that expand upon those pioneered by our founder Dr. James A. Thomson. Once we produce an iPSC, it becomes a renewable source of starting material for our iCell products and stem cell banks.

    The fact is the controversial method of using human embryos to create stem cells was holding stem cell research adoption back. Isolating the cells typically destroys the embryo, and the research sparked fierce debates over bioethics. In many countries, including the United States, political decisions limited the work scientists could do with hES cells. However, Dr. Thomson was among a few scientists to make all of that change in 2007.

    In 2006, Japanese researchers reported that they had found a possible way around the practical and ethical questions surrounding hES cells. By introducing just four genes into mouse tail cells growing in a lab dish, they could produce cells that looked and acted very much like ES cells. They called these cells induced pluripotent stem (iPS) cells. This development was recognized as the first runner-up in Science's 2007 Breakthrough of the Year issue, that same team and Dr. Thomson, the founder of ICEL, extended the reprogramming technique to human cells. That result opened the floodgates to new research.

    First published in Science in late 2007 in an article titled "Induced Pluripotent Stem Cell Lines Derived from Human Somatic Cells", the results garnered international attention for potentially ending the ethical controversy surrounding human embryonic stem cell research. Science later featured induced pluripotent stem cells in its "Scientific Breakthrough of the Year" article, 2008. The invention in 2007 though of stem cells derived from human tissue has since then quickly paved the way for massive innovation by ICEL and a tremendous growth in their customer base. Using iPSCs sidesteps any ethical concerns that have been raised over the years in using human embryonic cells as well as decreases the risk of an immune system response to attack implanted cells.

    Cumulatively, through its licenses from Japanese Scientist Dr. Shinya Yamanaka (he won the Nobel Prize in Medicine or Physiology in 2012 for his work on iPSCs) and intellectual property, CDI uses iPSCs to make human heart cells, brain cells, blood vessel cells and liver cells, as well as offering its iPSC skillset tailored to a client's needs. Yamanaka has ties to CDI (ICEL) as it's often called, as a member of the scientific advisory board of iPS Academia Japan, Inc. IPS was originally established to manage the patents and technology of Yamanaka's work, and is the distributor of several of Cellular Dynamics' products, including iCell Neurons, iCell Cardiomyocytes and iCell Endothelial Cells. In 2010, Cellular Dynamics was the first foreign company to be granted rights to use Yamanaka's iPSC patent portfolio.

    These human cells produced by CDI are used for in vitro and in vivo applications for drug discovery, toxicity testing, chemical safety, stem cell banking and other therapeutic research. In a highly technical and niche market, CDI has emerged as a global leader with the ability to generate iPSCs with specific disease-related genes that are invaluable to researchers across a broad array of indications.

    ICEL is some 7 plus years from these early stunning stem cell innovations and yet still trading $4 below the IPO price of $12 in 2013. Concerns and misconception over human embryo based stem cells weighed the stock down, most of that is due to lack of understanding and education though. Pluripotent Stem Cells are derived from human tissue, and not from Embryos, and hence the breakthrough and IPO.

    This is all about to change if we are right due to recent business developments and wider spread adoption of ICEL's manufacturing of cells for various indications, testing, trials and more and the kicker being the introduction and growing adoption recently of what we call Hepatocytes, which are emerging as cell usage for Liver related studies and diseases in various trials as well as testing (Malaria). If these emerge as the standard for testing, then ICEL stock will blast off at some point we think.

    Business Developments:

    Hepatocytes for liver study: Possible emerging standard for testing and also liver disease studies

    So what is starting to permeate the literature and starting to happen in pharma is they are seeing that our cells can be used to predict the therapeutic benefit of compounds. Data in the past has shown that you can show the toxicity profile, that's where the cardiomyocytes and FDA comes in but the upside is when the cells are useful in finding new therapies, they can be used in high throughput screening for that. And I'd just encourage everybody to watch what happens with our hepatocytes over the next year or two, because I think that's where we're going to see it first.- CEO on recent conference call

    Much better than cells from Cadavors and other current options, Hepatocytes can mimic actual human liver cells in vivo. iCell Hepatocytes are virally infectible. They support the entire lifecycle of hepatitis B and C. This makes them a unique model system for use in high throughput screening of drug libraries, particularly for their effectiveness in treating hepatitis B and C and other infections of the liver. Liver is the most difficult organ in the body for scientists to come up with solutions for disease, not to mention the punishment the liver takes during chemotherapy. This is therefore one of the most studied organs in the human body and therefore the likely demand for the use of ICEL's Hepatocytes could balloon. The opportunities for iCell Hepatocytes product continues to grow. Q4 hepatocyte revenue grew to $904,000 from $390,000 in Q4 2013, an increase of 132%.

    Malaria and other tests: Hepatocyte application out of MIT

    In February of this year in fact, ICEL announced they were able to develop Malaria in a dish using Hepatocytes to help test for Malaria in a study done out of M.I.T. This shows the expandibility of the ICEL platform. This is yet another example of utility of this product.

    Super Donor Lines

    Recently, ICEL also announced the manufacturing of initial "Super Donor " stem cell lines. "Cell therapy offers the promise for the repair and replacement of this damage and for the regeneration of healthy tissue. CDI is delighted to have produced two HLA superdonor iPSC lines that match 19% of the U.S. population, and over time we plan to build a bank that will match 95% of the U.S. population. We expect this bank to prove to be an excellent resource for CDI and others to develop HLA matched cell therapies."- Bob Palay, CEO February 2015

    Importantly, ICEL was also awarded a U.S. Patent in August 2014 covering automated production of all human pluripotent stem cells which covers research, cell therapy, and cell banking. Automation is essential to building large banks of stem cells and to the eventual banking of iPSCs for therapeutic use.

    Blood Cord Developments:

    First, in January 2015, we announced a research collaboration with Cord Blood Registry, CBR. CBR has stored over half a million cord blood samples for potential therapeutic use. Under the collaboration, CDI will demonstrate our capability to reprogram umbilical cord tissue into induced pluripotent stem cells. If successful, we believe this will open the door to working with cord blood banks and make CDI's iPSC products more widely available. CEO- Bob Palay 4th quarter conference call

    Clinical work:

    CDI has also seen steady progress in their work with academic collaborators in moving themselves toward the clinic. Efforts continue with academics on pre-IND animal studies of their DopaNeurons and cardiomyocytes for use in the treatment of Parkinson's disease and myocardial infarction heart attack.

    Macular Degeneration: October 2014: Massive market opportunity

    AMD is a common eye condition and a leading cause of vision loss among people age 50 and older. It causes damage to the macula, a small spot near the center of the retina and the part of the eye needed for sharp, central vision, which lets us see objects that are straight ahead. In some people, AMD advances so slowly that vision loss does not occur for a long time. In others, the disease progresses faster and may lead to a loss of vision in one or both eyes. As AMD progresses, a blurred area near the center of vision is a common symptom. Over time, the blurred area may grow larger or you may develop blank spots in your central vision. Objects also may not appear to be as bright as they used to be.-

    The company announced that the National Eye Institute (NASDAQ:NEI), a division of the National Institutes of Health (NIH), awarded the company a $1.2 million contract to manufacture clinically compatible induced pluripotent stem cells (iPSCs) and iPSC-derived human retinal pigment epithelial (RPE) cells. These cells will be manufactured from individuals suffering from dry age-related macular degeneration (NASDAQ:AMD) and will be used for investigational new drug (NYSE:IND) enabling studies. Once the IND is approved, the same procedures will be used to generate clinical-grade iPSC-derived RPE tissue for transplantation into AMD patients. This process, known as autologous cellular therapy, would be the first of its kind in the U.S. This alone is exciting as Regeneron has a 50 Billion market cap and has grown dramatically since getting FDA approval for an AMD indication.

    Revenues and Customer Growth:

    Regenerative Medicine is not just the future, but the present. Having industrialized iPSCs, CDI is unlocking an exciting potential product matrix, every cell type in the human body by every person on the planet. Over a 10 Billion dollar opportunity for ICEL alone according to company data. The first is the $3.5 billion market for the in-vitro use of cells in drug discovery, toxicity testing and chemical safety. The second market is the $1.3 billion market for stem cell banking. The third market is the $5 billion for in-vivo cell based therapeutics.

    CDI Customers have grown year over year from 150 to 200 in 2014 per a recent conference call. Revenues grew 40% year over year in 2014 vs. 2013 and accelerated in the 4th quarter to 57% growth. Q4 2014 revenue was $6.6 million versus $4.2 million the previous year. In addition, the CEO Bob Palay in the most recent earnings conference call hinted at new initiatives out of Japan. There is the potential for AMD (macular degeneration) applications, Cell Banking, Super Donors, Liver studies, Malaria and other tests, Parkinsons, Heart Failure, and the list continues. At 125 million market cap, SRP research thinks patient investors should be rewarded.

    Even returning to the IPO level of $12 would produce a 50% gain from here alone. Other companies in the regeneration Bioscience sector include INO, SGMO, BLUE, FCSC, BCLI etc. all of which are carrying much larger market caps than ICEL. In addition, all of them are presenting at an industry Conference on March 25th in NYC this week.

    The charts indicate the downtrend is over and a new uptrend is likely underway. We would expect the stock to trade up to the $12-$13 area this year from $8 levels for a 50-62% upside. The company has not issued a single share since the 2013 IPO which is quite amazing at this time, they have been very good stewards of shareholders cash.


    Mar 30 8:05 AM | Link | Comment!
  • Trevena- An Emerging Threat To Morphine, Oxycodone And Heart Failure Indications!

    TRVN-Trevena Inc. $5.74 close of 3/11/15

    This is a research report by You can opt in free at or join our SRP Premium service at and get these reports as we send them out. Recent winners include CLDN, QURE, BLUE, CHRS, CNCE, BLUE, KITE and the list continues. We delve deep into undiscovered plays and hang on and add on dips.

    (click to enlarge)

    39 Million shares outstanding- 225 Million Market Cap

    9.25 Million issued at $7 in February 2014 IPO; 11 Million issued at $4 in December 2014 raise;

    Corporate Presentation (PDF February 2015)

    Pre IPO insiders bought 2.1 Million of the 9 million shares in the $7 offering, something we always look for.

    Shareholders: Actavis- 18% (NYSE:ACT); RA Capital- 3 Million shares (Peter Kolchinsky, Harvard Grad with PH.D in Virology, one of the top Healthcare Hedge funds hands down since 2001); Several venture funds including Alta Partners, New Enterprise Associates, Polaris Ventures etc.

    Pre-IPO Shareholders stock basis ahead of the $7 IPO was actually $7.27 per share for 16.5 million pre-IPO shares. This happened because at the time of the IPO last year, the Biotechs and the market were under pressure. The IPO was postponed in November 2013 and then finally went off a few months later. So you can actually buy into this stock well below what insiders basis is... a very rare situation. We look to find PRE-IPO shareholders who have a reasonable basis in the stock and not $1 or $2 for example.

    Using its proprietary product platform, Trevena is developing four biased ligand product candidates it has identified - TRV027 to treat acute heart failure (Phase 2b), TRV130 to treat moderate to severe acute pain intravenously (Phase 2b), TRV734 to treat moderate to severe acute and chronic pain orally (Phase 1), and TRV250 for treatment-refractory migraine and other CNS disorders (Preclinical). The patient population for these indications is well over 30 million in total. Compare this to CLDN which is 350,000-525,000 for example.

    Trevena's drug discovery and development approach is to identify and develop therapeutics targeting established GPCRs while offering a differentiated and superior therapeutic profile compared to currently available GPCR-targeted drugs. More simply, Trevena is going after alternatives to the standard of care pain killers Morphine and Oxycodone, and Fentanyl. So far they have had impressive early stage results. This is a highly lucrative "pain management" post surgical area of medicine. In addition a phase 2b trial for Acute Heart Failure is progressing very well in partnership with Actavis.

    Their Founder, Robert Lefkowitz M.D., won the Nobel Prize in 2012 for Chemistry relating to his work in the GPCR field of science. The company has licensed the technology from Duke University where Dr. Lefkowitz is a professor in addition to his scientific exploits.

    "We believe that we are the first company to progress a GPCR biased ligand into clinical trials. The members of our executive management team have held senior positions at leading pharmaceutical and biotechnology companies and possess substantial experience across the spectrum of drug discovery, development and commercialization."

    Now you may need to read this passage a few times, but its worth your time:

    "Currently available therapeutics that target GPCRs, or GPCR ligands, are typically not signal specific, and therefore either inhibit both the G protein and b -arrestin pathways (an antagonist ligand) or activate both pathways (an agonist ligand). This lack of signal specificity often results in a suboptimal therapeutic profile for these drugs because in many cases one of the pathways is associated with a beneficial therapeutic effect and the other is associated with an undesirable side effect (see Figure 1). We use our proprietary Advanced Biased Ligand Explorer, or ABLE, product platform to identify "biased" ligands, which are compounds that activate one of the two signaling pathways of the GPCR and inhibit the other (see Figure 2). This signaling specificity is the basis for our drug discovery and development approach, which is to identify and develop therapeutics targeting established GPCRs while offering a differentiated and superior therapeutic profile compared to currently available GPCR-targeted drugs."

    Essentially the science here is TRVN operates a traffic light as it were, so it can turn on and off signals whereas current standard of care products such as Morphine and Oxicodone can't. This means better and more efficient efficacy, less side effects, and lower dosage requirements, less costs for hospitals etc.

    Lets look at some images to help out:

    This is what current Ligands have a problem with:

    (click to enlarge)

    Now this is what TRVN Nobel Prize Winning chemistry does that is different:

    Pipeline: (Heart Failure, Post Op pain, Acute and Chronic Pain, Parkinsons, Migraines and more)

    Trevena is taking this trade secret and proprietary technology and developing several initial targets in the clinical trials. Post Operative Pain (Intravenous), Acute and Chronic Pain (Oral), Parkinsons Disease, Depression, Pain (Oral), and Migraines (Oral). All of those are wholly owned by TRVN and as yet have not been licensed or partnered. They are also partnered with Forest Labs for Acute Heart Failure (Intravenous), and that is advancing rapidly with 620 patients currently enrolled in a phase 2b.

    (click to enlarge)

    Acute Heart Failure-With Forest Laboratories, now owned by Actavis after 2/2014 acquisition covering much of the costs. AHF indications include portions of some 20 million patients living with heart failure in the US and Europe. Actavis option: potential $65M exercise after delivery of data Additional potential milestones of $365M and 10-20% royalties. Top line data due out 4th quarter 2015.

    TRV027 as a first-line, intravenous, or IV, treatment in combination with standard diuretic therapy for AHF patients. We expect data from this trial to be available by the end of the fourth quarter of 2015. If subsequent Phase 3 development is successful and TRV027 is approved by regulatory authorities, TRVN believes TRV027 would be used as a first-line in-hospital AHF treatment. Also, TRV027 could improve AHF symptoms, shorten length of hospital stay in the short term, and potentially lower readmission rates and mortality rates in the long term.

    A recent UPDATE on this phase2b Trial was just released this week. "Trevena and Actavis have agreed to weight future enrollment toward the most promising dose and to increase target enrollment in the study from 500 patients to 620 patients. Actavis, which holds an exclusive option to license TRV027, will fully fund this expansion of the study via a $10 million payment to Trevena."

    Unlike current therapies, TRV027 has shown beneficial effects on the three key organ systems affected in heart failure, the blood vessels, heart and kidneys in our preclinical studies and Phase 1b and 2a clinical trials. In combination with standard diuretics, we believe these effects may translate into improvements in symptoms and outcomes such as hospital readmission rates, length of hospital stay and mortality rates if TRV027 successfully completes Phase 3 development and is approved by regulatory authorities. Safety studies have also been extremely impressive.

    Its important to note that Actavis (Forest prior to acquisition) has been granted an exclusive option to license TRV027, which may be exercised at any time before TRVN delivers Phase 2b clinical trial results to Forest and during a specified period of time thereafter. If activated, Activis will have an exclusive worldwide license to develop and commercialize TRV027 and specified related compounds. They would be responsible for subsequent development, regulatory approval and commercialization of TRV027 at their expense. TRVN could potentially receive up to $430 million in the aggregate, including an upfront option exercise fee of $65 million and milestone payments depending upon the achievement of future development and commercial milestones. TRVN could also receive tiered royalties between 10% and 20% on net sales of licensed products worldwide, with the royalty rates on net sales of licensed products in the United States being somewhat higher than the royalty rates on net sales of licensed products outside the United States. A U.S. patent directed to TRV027 has issued and is expected to expire no earlier than 2031.

    TRV130- Post Operative Pain indication:

    November 2014 phase 2a met endpoints and progressed to phase 2b (click to read PR)

    January 2015 Phase 2b begins (click to read PR) with top line due mid 2015 then on to phase 3 which is also setting up parallel with phase 2b work...Phase 3 expected to start in January 2016

    TRV130 is an intravenous G protein biased ligand that targets the mu opioid receptor. Trevena is developing TRV130 for the treatment of moderate to severe acute pain where intravenous therapy is preferred, with a clinical development focus in acute postoperative pain. 47 million scripts were written in 2013 for post op pain.

    In studies so far a patient can take a lower dosage of TRV130 vs Morphine and get equal or better effect with less side effects. At a slightly lower dosage, peak patient pain relief was dramatically better than Morphine. (Source: Page 14 Slide Investor presentation). Higher magnitude, faster onset, and better response rate vs. standard of care so far.

    "We believe that the management of moderate to severe, acute postoperative pain represents the largest opportunity for an intravenously administered µ-opioid therapy like TRV130. Accordingly, we plan to focus our clinical trials on the treatment of surgical patients. We believe avoiding the side effects typically associated with the activation of the µ-opioid receptor will position TRV130, if approved, to more effectively treat postoperative pain than currently available µ-opioid therapies, thereby expediting postoperative recovery and hospital discharge." (From IPO prospectus)

    Despite the development and adoption of guidelines for the management of postoperative pain and the extensive use of current treatments, significant unmet need remains. In a survey of 250 surgical patients in the United States, over 70% of the patients undergoing in-hospital procedures reported pain in the postoperative period before hospital discharge, of which almost 50% experienced severe or extreme pain. The dosing of the most effective class of analgesics currently available, m -opioid agonists, is limited by severe side effects such as respiratory depression, nausea and vomiting, constipation and postoperative ileus, which is a condition that most commonly occurs after surgery involving interruption of movement of the intestines in which the bowel enters spasm and stops passing food and waste. TRV130 showed superior analgesia compared to a high dose of morphine, while causing less respiratory depression, nausea and vomiting in a phase 1 trial.

    TRV734: orally administered follow on to TRV130 compound for the treatment of moderate to severe acute and chronic pain

    Opioid drug sales across the United States, Europe and Japan were almost $11 billion in 2012. Opioids are used to treat moderate to severe acute and chronic pain. However, these drugs are limited in their safety and tolerability by constipation, nausea and vomiting, and respiratory depression.

    TRV 734 is a small molecule G protein biased ligand targeting the µ-opioid receptor. "TRV734 takes advantage of a well-established mechanism of pain relief by targeting the µ-opioid receptor, but does so with enhanced selectivity for the G protein signaling pathway, which we believe, based on preclinical studies and clinical trials, is linked to analgesia as opposed to the b -arrestin signaling pathway associated with side effects. Subject to successful non-clinical and clinical development and regulatory approval, we believe TRV734 may have an improved efficacy and side effect profile as compared to current commonly prescribed oral analgesics, such as oxycodone." From IPO prospectus 2014

    We have completed full preclinical safety pharmacology, toxicology, genotoxicology and pharmaceutical development studies and have an active investigational new drug application, or IND, with the U.S. Food and Drug Administration, or FDA. We have completed enrollment in a second Phase 1 multiple ascending dose clinical trial and expect to report data from this trial early in the first quarter of 2015. We have retained all worldwide development and commercialization rights to TRV734. We intend to seek a collaborator with experience in developing and commercializing controlled-substance therapeutics in chronic care pain markets, thereby leveraging their expertise while retaining rights to commercialize TRV734 in hospital and specialist markets in the United States.

    d -opioid receptor program

    We are pursuing a research program to identify an orally bioavailable small molecule G protein biased ligand targeting the d -opioid receptor for the treatment of CNS disorders, of which we intend to initially focus on Parkinson's disease, pain or depression. We expect to complete IND-enabling preclinical studies in 2015. We intend to maintain flexibility on whether to develop and commercialize this product candidate in collaboration with a pharmaceutical company licensee depending on the clinical indications we ultimately decide to pursue, but we intend to retain meaningful commercial rights in any event.


    "We have identified a new product candidate, TRV250, a small molecule G protein biased ligand targeting the delta-opioid receptor. Based on the initial profile of TRV250, we anticipate focusing our initial development efforts on the treatment of treatment-refractory migraine headaches. According to Decision Resources, a healthcare consulting company, the acute episodic migraine market encompassed approximately 12 million drug-treated patients in 2013 in the United States, representing approximately $2.2 billion of sales. We estimate that approximately 20% to 30% of these patients either do not respond to or cannot tolerate the market-leading triptan drug class, and an additional 30% would benefit from improved efficacy compared to these drugs."

    (click to enlarge)

    So there is the pipeline, much of the info we took directly from the IPO prospectus filing from February 2014. What we can see our numerous indications getting deeper into the pipeline. The fact that the target populations are so large is what makes TRVN attractive for long term investors. 20 Million heart failure patients in the US and Canada, 30 million scripts per year for Post Op pain, and the list goes on. Migraines effect 10's of millions of people around the world. The fact the founder has won the Nobel Prize for this science and the early safety and tolerability and now efficacy studies are going well is very promising.

    We like to find undiscovered Biotech/Biomedical small to mid caps before they are being written about. We wrote up QURE, CLDN, CNCE, CHRS, BLUE and others way before they took off, some just recently in fact. Sometimes our research reports are met with no movement in share price for awhile, but in almost all cases we see huge percentage moves within weeks to months of our reports as the "A-Ha" moment finally kicks in with the masses. In the case of Trevena (NASDAQ:TRVN) we think there is little to no coverage in terms of people writing or talking about them. We also don't think anyone is really adding up all the math and the potential of the huge target populations they are going after with this chemistry. Reminds us of CLDN which is now nearing a 700 million market cap and was about 400 million when we were writing about it in January this year.

    The market cap for Trevena is still only 225 million. If we were to take 30 million POST Op pain management scripts per year and assign only 20% of those to TRVN future drug (If approved), that alone makes for a 100 million revenue potential on the very low end. 20 Million heart failure patients many of whom receive intravenous drugs via 2.1 million hospitalizations per year, could easily result in hundreds of millions of annual revenue to TRVN down the road. As it stands, an up front payment of 63 million would be payable to TRVN from Actavis as soon as 4th quarter of this year or earlier if they opt to fully license the heart failure indication. That would be reported as earnings and would result in about $1.50 per share in profits alone just on the payment potential.

    The company is cashed up with a recent 45 million raise in December along with the 50 million they raised in the IPO 13 months ago. This is enough to take them deep into 2016 and cover the costs of all their trials and more.

    Analysts current targets range from $13 to $21 for what its worth.

    The chart is building some momentum for a potential breakout in the weeks and months ahead. Consider that many of our research reports do not always result in immediate upside moves CHRS sat from 13-15 for many weeks then ran to 32. CLDN sat from 16-18 for 7 weeks than ran to 26 just recently and so forth. We like to buy while there is some resistance from sellers who have lost patience with the stock. Then we like to keep adding on dips if we continue to like the potential and the science. We have had multiple big winners lately at our SRP service like QURE, CLDN, ZIOP, CNCE, CMVLF and the list goes on by being patient. We buy stock while people are not paying attention, and then we add and wait patiently for the valuation to move up.

    The market cap here as we said is only 225 million and they have enough cash to take them deep into 2016 with multiple catalysts in 2015 as it stands. We estimate they have about 110 million in cash currently. We also would not be shocked to see Actavis consider a buyout of the entire company assuming the Heart Failure indication is doing well in phase 2b. This would make more sense than ACT paying them 65 million up front fee plus royalties, funding requirements, and milestones... but that is just our take.

    We see plenty of sellers from 6-6.50, so our thinking is we can accumulate the stock for awhile and then look to the catalysts to likely move this market cap much higher going forward. We have 3 catalysts between now and mid 2015 and another in the 4th quarter of 2015. This market cap could easily double, even to reach the analysts mean target of $14.33 there is a fair amount of upside potential from 6.50 and below.

    (click to enlarge)

    Mar 12 5:49 PM | Link | 1 Comment
  • Market Report And Using Attack Capital

    Every weekend we send out a report with philosophy, trading and investing tips, market comments and stock ideas. Make sure you sign up and opt-in Free for our SR membership. Our Premium Service delivers trades to your inbox every week, morning pre market reports daily, long term research reports on Biotech and Tech growth stocks, Email and Text alerts, entries, exits, projections and more!! Join us today at


    Another volatile week just went by but importantly for now the SP 500 climbed back past the 2035 resistance line we had some concerns with. Our trading ranges were pointed out to SRP members as 1985-2035, above bullish and below bearish. The ECB kicked a bond buying program into gear effectively on Thursday that was more than expected, enough to push the market to 2061. We did pull back on Friday though, so expect continuing volatility ahead.

    (click to enlarge)

    To wit, the SP 500 is only up about 3% in the last 6-7 months from July highs. We obviously are in a resting period for the bull market and in a trading range. This causes frustration at times as you can see certain stocks or sectors soaring out of the blue like the Airlines this past week, and others dropping hard and then rallying a week or two later. (Chip stocks a few times, Biotech etc). This makes for difficult trading and even investing or position trading environments. Sometimes, all of the positions you are holding or SRP is recommending and covering are in consolidations with no real net movement. The 5% up move that looks poised to break out, then turns right back down causing more frustration. You expect to hold for the breakout that looks obvious on the charts (NASDAQ:HOLI), and then you get slapped upside the head with a decline on no news out of nowhere. This is the environment we are dealing with right now, so getting Alpha is the key… and also difficult of course.

    It is key during these periods of market consolidation to take profits a little faster on swing positions as your 5-8% gain can disappear quickly and breakouts are few and far between. It is also though a good time to use the downside volatility to your advantage with Attack Capital.


    We used some Attack Capital this week at the firm when CLDN dropped once again out of the blue from $18 early in the week to as low as $15.81 on Thursday. Our opinion is we have done the research, we have evaluated the opportunities, balance sheet, share structure, catalysts, management and more. So often you will get these downdrafts that come out of the blue, a waterfall type move over 1 or 2 days. It can happen at anytime with almost any stock in the universe. We always have attack capital (cash) ready to deploy aggressively when we see these anomalies. When CLDN dropped again this week we bought from 17-17.40, then 16-16.40, and then more at 16.73 over a few days. We bought as low as 15.98 and saw 17.20 just 2 trading days later for a 7-8% swing. The bank doesn't pay you 7% in a few days right? So the way we look at big downdrafts in our favorite names is an opportunity to make some interest on our attack capital.

    Attack Capital Planning:

    Mentally we have an image in our mind that as we are adding and (in this case CLDN, the stock, is declining to 17, 16.80, 16.50, 16.30, 16.10 and so forth)… that we are going to earn interest on every dollar we use to buy more stock during that waterfall decline. This is literally how we look at it in our minds so as to have the fortitude to attack with our cash, and not hide in a bunker or under a desk. We assume the stock will head back up at some point from the senseless decline and pay us interest for having the strength to buy. Most waterfall declines are computer generated stop loss selling, margin calls, more stop loss selling, then panic selling by traders. Use it to your advantage, don't panic…

    We also respect the market and do not pretend we are going to pick the exact bottom and plow one big trade of cash in at just the right price. That is not a risk reward metric that works in the market, because most often you will have put your attack capital in all at once, and had you waited one more day you could have picked up more shares much cheaper. When you use attack capital, scale in over many trades over 1-2 days on a decline, never pretend you are smarter than the market or the computers and you can pick the bottom, its not going to happen that often. Worst case you only got a small amount and the stock heads back north, best case you get more shares cheaper lowering your average and making more $$ when the stock reverses. This avoids the common mistake of thinking you are smarter than the market and you plan to pick the exact bottom. More often than not a stock in a sell off declines more than you planned or thought it would.

    There is nothing wrong with then selling some of your stock you bought with attack capital on the way down when the stock reverses back up and banking the gains while holding a core position. In fact, with core long term positions like we have at SRP, it makes total sense to trade around the position a little bit for best results. If you are skilled at it, you can lower your net cost with your trading and maintain that long position for the upside you are projecting. At our firm, we always look for big declines in our favorite names and then we slowly add to those positions as the stock drops, and we keep on adding and adding a little at a time… try it sometime if you can stomach the drop. Dealing with paper drawdowns is mentally tough, but financially rewarding if you have a plan!

    Now on to some ideas for the coming near term environment. We have a list of some stocks that are of interest and may turn into SRP related swing positions or other soon!

    (NYSE:XRS)- Tal Education Group- K-12 Chinese provider of tutorial and educational services. May finally be coming out of a slumber stock wise. We have covered it at SRP in the past.

    (NYSE:IPHI)- Semiconductor manufacturer breaking out

    (NASDAQ:PCRX)- Pacira Pharmaceuticals, breaking out of a multi month base it looks like. The company's current emphasis is the development of non-opioid products for postsurgical pain control, and its lead product, EXPAREL, was commercially launched in the United States in April 2012. EXPAREL and two other products have utilized the Pacira proprietary product delivery technology DepoFoam, a unique platform that encapsulates drugs without altering their molecular structure and then releases them over a desired period of time. Some are calling it a miracle drug and delivery system platform. A break over 110 would be pretty bullish long term.

    (NASDAQ:PRXL)- A move over 65 would break this one out. We have covered it in the past. a Biopharmaceutical outsourcing services company, provides clinical research, clinical logistics, medical communications, consulting, commercialization, and advanced technology products and services for pharmaceutical, biotechnology, and medical device industries worldwide.

    (NASDAQ:AKRX)- Generic Drug maker we have also recently had on weekend lists

    (NASDAQ:RJET) (On last weeks list, rallied big with airline stocks)

    (NYSE:BIN)- Progressive Waste Solutions- New uptrend?

    (NASDAQ:ULTA)- Ulta Beauty supply, we profited from this at SRP not long ago in a swing position, looks like a breakout as they expand into more stores nationwide.


    Jan 25 10:15 AM | Link | Comment!
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