At the end of each trading week, Hillbent scans the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our ETF Trends Report to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

PRELIMINARY FACTS

There seems to be a lot of speculation on the chances of Spectrum Pharma (SPPI) being acquired over the coming months. I personally don't think it will happen, but there are a few companies that could be interested. Bayer (BYERF.PK) will always be mentioned because of the fact they sell Zevalin in Europe, but Bayer did just divest two oncology drugs to Genzyme (GENZ), Fludara and Leukine, which makes me think that oncology is not where they want to focus their company. Allergan (AGN) should also be mentioned because of their partnership of bladder cancer drug EOquin with Spectrum, the drug is in phase three trials. If AGN really believes the drug is a winner, then why not try to own 100 percent.

Then there are companies like Onyx (ONXX), Abraxis Bioscience (ABII) and OSI Pharma (OSIP) who have an solid oncology drug on the market, but have struggled to get a second oncology drug through their pipeline and on to FDA approval. Then there are companies like Cephalon (CEPH) and Genzyme who have been very aggressive in in-licensing drugs or acquiring oncology drugs and companies. Or how about companies like Seattle Genetics (SGEN) or Regeneron Pharma (REGN) who have late stage oncology drugs in their pipeline who could use SPPI salesforce to jumpstart the transition into a commercial stage biotech.

This post contains a fresh list of stocks which have experienced massive buying. I believe the stocks listed in this post are worthy of adding to the stock watch list. As stated at the bottom of this post, I have chosen three stocks which I may be speculating with in the weeks to come.

As stated in previous blog posts, I'm a firm believer of stocks which have had significant moves higher on big volume. Some of these stocks will sell off, and some will continue to move higher, it is important to use caution when purchasing and use discipline when selling.

Q2 2009 Earnings Call

July 23, 2009 17:00 pm ET

Last month at the ASCO meeting, Curagen (CRGN) presented results for its lead drug, CR-011, in breast cancer and melanoma patients. CR011 had activity in both indications, however, most of the drug’s value should be ascribed to the breast cancer program, which represents a huge commercial opportunity and better chances of approval.

As I previously wrote, the significance of the breast cancer trial is not only in the clinical activity of CR-011, but more importantly, the ability to identify patients who are likely to respond to the drug. By defining the right target population, Curagen could substantially improve chances of approval, shorten development time and enjoy high market acceptance.

Click here for Part 1

Seattle Genetics – Another step towards approval

The ASCO annual meeting, one of the most important events in the pharmaceutical industry will take place in Orlando next weekend. With over 4,000 abstracts to be presented this year, separating the wheat from the chaff is difficult, but below is an incomplete list of intriguing trials that deserve investors’ attention.

Pfizer- personalized medicine at its best

Below is a summary of updates to the BioMedReports.com database of over 200 entries included in the FDA and Clinical Trial Calendars. The FDA Calendar includes companies with pending new drug, biological agent, or medical device new product decisions at the FDA sorted by their PDUFA decision deadline dates while the Clinical Trial Calendar encompasses pending clinical trial results (with a focus on late-stage, Phase 3 trials), pending new submissions to the FDA (e.g. NDA, BLA, 510k, PMA, sNDA, sBLA filings), and pending re-submissions to the FDA for complete response rulings by the agency which require more information before an approval can be granted.

Cell Therapeutics (CTIC): As previously announced in late February, CTIC is closing its Italian operations starting Monday 5/18 and has reached an agreement with the employee union on a severance package. The agreement relates to a reduction of the Company's total headcount in Italy by 56 positions in the immediate months and is expected to save CTI approximately $14 million in annual operating expenses.

For years investors have debated whether the big money is the smart money.

The basic premise is the big money (the mutual, pension, and hedge funds) will buy into a “hot” sector. And continue buying into it as long as it keeps going up. The ongoing buying pushes prices up. As a result, the big money looks like the smart money most of the time.

When identifying possible sell/short opportunities (torpedoes), The Applied Finance Group (AFG) starts by running a screen using its proprietary Sell Criteria variables starting with Economic Margin. Economic Margin is a measure of corporate performance that identifies how profitable a company is by measuring how much the company earns above or below its cost of capital. In addition to corporate performance, AFG looks to identify those companies that are unattractively priced using our valuation model. Lastly, AFG evaluates how well companies run their business using its Management Quality score, identifying companies that have management teams that destroy wealth.

The 20 firms listed below all meet AFG’s Strong Sell Criteria. In addition, these companies all earn less than their cost of capital which means they earn a negative Economic Margin and all of these companies have a Z-Score (Altman Z-Score) or risk of bankruptcy in the next 2 years, that fall in the at-risk range. AFG has a track record of identifying winners and losers in the market.

Click here for Part 1.

Regulation and competition

Micromet (MITI) intends to launch a pivotal study for blinatumumab as consolidation therapy in ALL patients next year, starting from Europe with a likely expansion to North America. Due to the small market size and the aggressive nature of the disease, the trial should be relatively small and short. For example, Genzyme’s (GENZ) Clolar, which is approved for the treatment of pediatric ALL, got approved based on a single arm 49 patient trial, with objective response rate as the primary endpoint. Although it is common to see approvals based on tumor response in settings where there are no available treatments, the situation with blinatumumab is more complex.

Q1 2009 Earnings Call

April 23, 2009 05:00 pm ET

The past six months have not been kind to microcap biotech stocks, as it is hard to find a lot of love in today’s market for tiny, high risk, cash burning biotech companies. Honestly, who can blame investors for throwing stocks that offer a distant dream with minimal success rates and heavy spending? Surprisingly (or not), the negative sentiment also presents unprecedented opportunities in the microcap arena, as some microcaps are making tremendous progress, which is not yet reflected in their stock prices.

Q4 2008 Earnings Call Transcript

February 5, 2009 5:00 pm ET

In my previous article, I discussed the pharmaceutical industry’s race after approved drugs and late stage agents with proof of concept in humans. I mentioned Rigel’s (RIGL) lead drug, R788, as a likely target for collaboration due to its impressive activity, the huge addressable market and the fact it is an oral drug. For the past year, Rigel’s management has been consistently and rigorously claiming it will have a partnership in place during the first quarter of 2009. Although the company has had more than one opportunity to change this forecast, it stuck by its original statement. For example, when new safety data got published last year and worried investors sent the stock down 50% in two trading sessions, many believed that the imminent deal was not going to materialize. To their surprise, Rigel reassured investors the time frame for a partnership remains intact, explaining that none of the recently published data was actually new to potential partners. Then, Rigel appeared in countless investor conferences, the last of which was only last month, promising investors a licensing deal is forthcoming.

Last week, the company announced it no longer expects to have a deal by the end of March. Instead, it intends to wait until it has results from two ongoing trials, due this summer. Deciding to wait until more data is available makes a lot of sense, providing the data is good. Typically, the further a drug gets in clinical development, the higher its value in the eyes of potential partners. The problem is not the decision itself, but its timing, as this kind of decision could have been made long ago. So what led Rigel’s management to suddenly change its mind after a year of expectations build up?

This is the Third Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.

The other funds we've already covered include: