Theodore Cohen

Long only, biotech, healthcare, mid-cap
Theodore Cohen
Long only, biotech, healthcare, mid-cap
Contributor since: 2008
I love the smell of shorts burning in the morning.
"To be honest, I am personally chagrined because just a few months back, on this very blog, I had quoted from a Jim Birchenough report on ZIOP and noted that he was a "highly respected" analyst...After the shenanigan he tried to pull today, I, just like the market, have changed my mind and now stand corrected!"
What he pulled also may have been illegal. It's one thing to issue a negative analyst report but it's quite another for the retail side of the house to help the traders desk and their customers out of a jam. A major Wall Street firm did just that on the Thursday prior to the May 2002 expiry of GNTA options and was nailed by Hon. Eliot Spitzer and the State of Washington, for which, among other things, they paid a huge fine. Let's see if the SEC and FINRA were watching yesterday morning's actions, both Birchenough's and the market's.
Yes, Rob certainly has his hand on both ZIOP's and XON's pulses, to be sure. And I tend to agree...the gap does appear to be a 'runaway gap', from all appearances.
http://bit.ly/1QqpONa
Runaway Gaps
"Runaway gaps are also called measuring gaps, and are best described as gaps that are caused by increased interest in the stock. For runaway gaps to the upside, it usually represents traders who did not get in during the initial move of the up trend and while waiting for a retracement in price, decided it was not going to happen. Increased buying interest happens all of a sudden, and the price gaps above the previous day's close. This type of runaway gap represents an almost panic state in traders. Also, a good uptrend can have runaway gaps caused by significant news events that cause new interest in the stock."
Thanks...I've read this on the XON and ZIOP IV Websites, among other places, and understand well the technologies involved. Still, from a technical standpoint, gaps always bother me. That said, I concur with you regarding the significance of the one earlier this year.
Great review! One thing that's always bothered me, from a technical standpoint, is the unresolved gap from last January. I understand there are gaps that, because of their significance, won't 'close', and wonder if this is one of them. Can you comment?
Excellent piece of work. Congratulations on your first article.
Ted
Everybody wants their pills to cost $1 or less. That's what the SECOND pill costs. The first one cost $1 billion or more. Who pays for THAT one?
Right, I saw that. Terrible. I was, however, looking for verification regarding the high percentage of patients who might need ribavirin. Should have been clearer. If the number is really that high, it's going to be a rough ride. I can almost see the lawyer ads on television now.
BTW, I saw that the Wm. Blair analyst, John Sonnier, in a note yesterday, stated: "Moreover we estimate that about 75% of patients taking Viekira Pak will need the addition of ribavirin, which has been associated with significant adverse events.”
Could you comment on this, Pharma Doc (or someone)?
Re your comment:
VIEKIRA PAK must not be taken if people:
1. have severe liver problems
2. take any of the following medicines: alfuzosin hydrochloride (Uroxatral®) - carbamazepine (Carbatrol®, Epitol®, Equetro®, Tegretol®) - efavirenz (Sustiva®, Atripla®) - ergot containing medicines including ergotamine tartrate (Cafergot®, Migergot®, Ergomar®, Ergostat®, Medihaler®, Wigraine®, Wigrettes®), dihydroergotamine mesylate (D.H.E. 45®, Migranal®), methylergonovine (Ergotrate®, Methergine®) - ethinyl estradiol-containing medicines - gemfibrozil (Lopid®) - lovastatin (Advicor®, Altoprev®, Mevacor®) - midazolam (when taken by mouth) - phenytoin (Dilantin®, Phenytek®) - phenobarbital (Luminal®) - pimozide (Orap®) - rifampin (Rifadin®, Rifamate®, Rifater®, Rimactane®) - sildenafil citrate (Revatio®) when taken for pulmonary artery hypertension (NYSE:PAH) - simvastatin (Zocor®, Vytorin®, Simcor®) - St. John's wort (Hypericum perforatum) or a product that contains St. John's wort - triazolam (Halcion®).
3. have had a severe skin rash after taking ritonavir (Norvir®).
So...how long do you think it will be before enough people are sufficiently affected by ABBV's VIEKIRA PAK (or die from having used it) before the FDA puts a Black Box Warning on the treatment? (Frankly, I'm surprised it doesn't already carry one.)
Don't get angry, PTSD Trader. It's pretty clear Realtor_k is caught in a terrible short position or is kicking himself for having sold too soon.
Be well.
Ted
I just saw this on the CELG Investor Village board. Can you explain in layman's terms?
Litigation alert
Towards the end of today the following stipulation was filed. It eliminates any question that Natco's proposed generic would infringement certain, but not all, of the patents Celgene is asserting. I don't know which of the patents are involved here, meaning whether they are the ones with long out expiration dates, or the ones more close in. The stipulation leaves defendants free to challenge these patents as invalid or obvious. Remember that by its motion regarding the Canadian deposition Natco is offering to give up any "unenforceability" challenge to these patents. The reason for this stipulation is not given. One guess is that defendants don't have any viable way to argue for non-infringement and they are concerned about exposure for attorneys' fees, per that very recent Supreme Court decision. But that is just a guess. What's interesting is that they are making this concession even before the contested meanings for the Markman hearing are decided. It is possible that the terms up for the Markman don't operate in the claims of these patents, so the Markman arguments can't help the defendants with infringement exposure for these patents. Again a guess.


STIPULATION AND [PROPOSED] ORDER REGARDING INFRINGEMENT
Plaintiff Celgene Corporation (Celgene) and Defendants Natco Pharma Limited
(Natco), Arrow International Limited, and Watson Laboratories, Inc. (collectively, the
Defendants, which for purposes of this stipulation also includes Watson Pharmaceuticals, Inc.,
Actavis Inc., Watson Pharma, Inc., and Anda, Inc.), by their undersigned counsel, hereby
stipulate and agree that:
WHEREAS Celgene represents that it owns United States Patent Nos. 6,045,501 (the
’501 patent), 6,315,720 (the ’720 patent), 6,561,976 (the ’976 patent), 6,561,977 (the
’977 patent), 6,755,784 (the ’784 patent), and 8,315,886 (the ’886 patent) (collectively,
the Celgene Patents);
WHEREAS Natco represents that it filed Abbreviated New Drug Application (ANDA)
No. 201452 seeking approval to engage in the commercial manufacture, use, and/or sale of
generic 5, 10, 15, and 25 mg lenalidomide capsules (Natco’s ANDA Products) before the
expiration of the Celgene Patents;
WHEREAS Defendants proposed to enter a stipulation regarding their infringement of
the Celgene Patents;
Case 2:10-cv-05197-SDW-MCA Document 304 Filed 05/07/14 Page 2 of 4 PageID: 9417


NOW THEREFORE, the parties, their successors, and assigns hereby stipulate, and will
not contest before this Court or any court on appeal, that:
1. If approved by the FDA, the distribution of Natco’s ANDA Products in the United
States would constitute infringement of each asserted claim of the Celgene
Patents, specifically, claims 1 and 3-9 of the ’501 patent; claims 1-5, 7-8, 11-19,
21, and 23-28 of the ’720 patent; claims 1, 3-6, 8, 10-13, and 15 of the ’976
patent; claims 1-7, 9, 11-21, 23, and 25-30 of the ’977 patent; claims 1-7, 9, 11-
21, 23, and 25-30 of the ’784 patent; and claims 1-7 of the ’886 patent
(collectively, the Asserted Claims).
2. Nothing herein shall be construed as precluding, restricting, or limiting discovery
concerning the validity of the Asserted Claims, including, but not limited to,
secondary considerations of nonobviousness.
3. Nothing herein shall be construed as precluding, restricting, or limiting
Defendants’ obligation to provide discovery concerning ANDA No. 201-452, and
to comply with L. Pat. R. 3.6(j).
Thanks, Daniel. I appreciate the quick and insightful response.
Ted
Thank you, Mr. Ravicher. This is one of the best overviews of the situation I have seen in the financial literature.
If possible, would you address the matter of 'unclean hands' on the part of the generic company as well as their attempts to hide a critical witness (the ex-CELG employee who stole the drug from Celgene on their behalf) from Celgene's legal team?
Ted
Don't mention it.
Ted
I don't see any big mystery here. If you click on the link, you see the Confidential Treatment Order granting an extension of the previously granted confidential treatment of Exhibit 10.57 attached to the 10-K/A filed March 3, 2009. If you look at the Exhibit filed with that 10-K/A, you'll see that the confidential treatment relates to specific financial terms under the company's license of technology from the University of Michigan. This is very standard practice to prevent potential competitors and sublicensees from learning the specific deal terms, which could give them a competitive advantage. The request and grant of an extension simply suggests that the licensed technology is still of interest and that the company still believes (and the SEC agrees) that there is still value in protecting this information.
Ted
We all get the picture, SS113. You don't like the company or the president. I don't think you could make it any, well, simpler.
Thanks for your opinion(s).
Ted
All of Vical's programs are based on the same core technology, which is their patented method of delivering genetic material (DNA or RNA) into living cells in the body. Once delivered, that genetic material is designed to cause production of the specific protein it encodes. Some applications use DNA (typically in closed loop form called plasmids) in a simple saline solution. Others use DNA plasmids in a lipid or polymer formulation. Some are injected into muscle. Some are injected into tumor lesions or other tissues. The delivery location, formulation and specific gene encoded within the plasmids determines which protein will be produced, in what quantity, for what duration, and in what location within the body. After that, the produced proteins will cause the specific biological or physiological effect for which they are selected. In the case of a vaccine, for example, the encoded protein would be one from the target pathogen. The desired physiological effect would be to develop an immune response against that protein to provide advance protection against the pathogen bearing that same protein.
In the case of Allovectin, the selected protein(s) were designed to trigger an immune response against the cancer cells prevalent at the injection site. In the case of the AnGes angiogenesis treatment, the selected proteins were designed to induce production of new blood vessels at the injection site.
So while the underlying gene delivery mechanism is the same, the encoded proteins really have unique mechanisms which differentiate the products.
No. And much to early to speculate.
Ted
Inept! They have no dedicated CFO, as I pointed out above. The original filings never should have been made in error.
Ted
Well, one good thing is that we're not going to have to wait very long (relatively speaking) to learn the results of the herpes vaccine trial.
Ted
Indeed.
I simply asked the question "What's up with Vical?," Monzie. And I did raise the question in the Comments section above regarding how the purchases were tagged (P vs. A). Regardless of whether or not people read the Form 4's (and 4/A's) as did you and I, I think the matter was a valid topic for airing on Seeking Alpha.
That said, like you, I was surprised the stock held up as well as it did when the Form 4/A's were issued.
Ted
Remember, the CFO departed April 1, 2013 (from the From 8-K, March 15, 2013):
"On March 15, 2013, Jill M. Broadfoot notified us that she was resigning as the Company’s Senior Vice President, Chief Financial Officer and Secretary. On the same date, we entered into a separation agreement with Ms. Broadfoot. Pursuant to the terms of the separation agreement, Ms. Broadfoot’s last day of employment will be April 1, 2013 and she will be entitled to receive severance benefits consisting of continued base salary payments and the payment of health insurance premiums for a period of 12 months, plus a payment equal to her cash bonus paid in the previous year. Ms. Broadfoot will also receive accelerated vesting on all her unvested stock awards as if she had remained employed by the Company for 12 months from the date of termination. In addition, the post termination exercise period for Ms. Broadfoot’s stock options will be extended to 12 months. In exchange for the severance benefits, Ms. Broadfoot provided the Company with a general waiver and release of claims. The Company’s obligation to pay the severance benefits will also be subject to certain confidentiality, non-solicit and non-competition obligations."
http://bit.ly/1atx2yE;FilePath=013>;File...
VJ became the acting CFO. I think this was a case of someone not being familiar with the forms and their proper completion. An honest but totally unnecessary mistake for a company to make.
Ted
Read the amended SEC Form 4/A's...the price was $0.01.
Ted
Here are the amended Form 4/A's
http://bit.ly/1aFNIDw
Not hard to get it right the first time! Really a botched job, to be sure!
Ted
The military trial data has not been released.
Ted
Still, it was coded 'P,' which is confusing. Again, if it was linked to a bonus, this may explain the coding.
Questions have been raised as to whether or not the transactions were coded properly, as I noted below. You will note they were coded as 'P.'
Transaction Codes
Each transaction listed on the Form 4 filing has a transaction code:
General Transaction Codes
P – Open market or private purchase of securities
http://bit.ly/1ajrSWm
If these had been options that were exercised, with only the taxes paid, they should have been coded "A:"
Rule 16b-3 Transaction Codes
A – Grant, award, or other acquisition
These 'grants' may have been in lieu of cash bonuses, which is why they may be coded as they were. If that's the case, it's still 'real' money (i.e., instead of receiving cash, he received stock).
Here's the applicable footnote for the 'purchase:'
Explanation of Responses:
( 1) Shares were acquired pursuant to a restricted stock grant and generally vest one-third on the first anniversary of the grant, with the remainder vesting quarterly over the remaining two years.
http://bit.ly/1dQI8v9
Note this for the last item in the filing:
( 6)
The right to exercise the above stock option is tied to performance-based objectives relating to the timing of patient enrollment and positive data release for the Company's Phase 1/2 HSV-2 clinical trial. Mr. Samant's salary remained unchanged at 2013 levels and he received no cash bonus.
So, VJ has a lot riding on the outcome of the HSV-2 trial.
Ted
Yes, they exercised grants and purchased the shares for the full price.
What surprises me is why they laid out the money. Why not simply award themselves gobs of options at the beginning of the year (valued at $0 or the current price) and keep their money in other instruments...unless it was urgent to start the clock running on long-term capital gains now.
By the way, it is possible the transactions were miscoded on the forms. Here is VJ's:
http://bit.ly/1dQI8v9
The first transaction is coded 'P,' which is for an open market purchase.
But here is the relevant footnote:
Explanation of Responses:
( 1) Shares were acquired pursuant to a restricted stock grant and generally vest one-third on the first anniversary of the grant, with the remainder vesting quarterly over the remaining two years.
The remainder of the transactions were for tax purposes, as you say.
Here are the Form 4 codes:
http://bit.ly/1ajrSWm
Perhaps the transaction should have been coded 'A.'
Ted
By the way, James Singer still holds 8,670,000 shares.
Ted