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NEW INVESTMENTS: PLUG POWER (PLUG) - INTELGENX (IGXT)

|Includes: IGXT, Plug Power, Inc. (PLUG)

A week or so ago I was asked what stocks we were investing in lately and why. Since some are not primarily driven by patent enforcement I wasn't necessarily planning to talk about them but for those interested here is what we are dipping our toe into. There is much more information available on these stocks and our attempt here is simply to state our quick thoughts and impressions. This is by no means to advocate anyone following suit only what we have been drawn to. (Repost from Blog

PLUG Power (PLUG): This is a company that we intend to own (perhaps trading around a core position) throughout the year and that happens to have quite a large stable of patents. In recent days and weeks PLUG has traded as high as $4.90/sh on news of new customer orders and positive guidance for 2014 and as low as $2.22, in large part on the basis of a news vacuum and perhaps the overall market downdraft. The companies that are becoming PLUG customers are best of breed...companies like Kroger, Fed-Ex and Walmart and PLUG has telegraphed new orders to come, some are to be announced this quarter. PLUG is in the hydrogen fuel cell business which was thought to be gaining steam many years ago but turned out to be a bit of hype and wishful thinking, clearly a bit ahead of its time in terms of adoption. It appears that the interest in and adoption of PLUG products has now turned the corner and the market is obviously beginning to pay attention. We think that PLUG will have trading volatility throughout the year since it is such a heavily followed stock and the expectations for revenue growth and profitability have been ramped up. On March 13th CEO Andy Marsh is again expected to address investors in one of a series of investor updates expected throughout the year. He has stated that in that he will guide for the remaining 2014 quarters in terms of both revenue and EDITDA. Should make for an interesting call.

IntelGenx Technologies (IGXT): This little company has a PDUFA date of February 3, 2013 (obviously not much time to take advantage of this if you are so inclined) for it's anti-Migraine drug which is based upon the underlying agent in Merk's Maxalt Drug which achieves approximately $650M in U.S. sales. The bigger issue here, and the reason we bought the stock and will be holding a significant position through the FDA decision Monday, is that they have developed a patented technology called Versafilm. Versafilm basically allows them to put already approved drugs onto orally dissolving film strips that are apparently (among other benefits such as convenience, not needing water and so on) fast acting. The thing we like about this is that approval in our opinion validates the platform and makes this company a solid takeover target. They already have agreements with big Pharma and there is every reason to believe that dozens of high profile drugs could be applied to this technology. Since they have taken the 505(b)(2) path to regulatory approval (and is the path that would be used in future approvals) which is a far less costly and time consuming path, it is pretty easy to see a bigger pharmaceutical wanting to take these guys out at some point after approval. One interesting thing to note is that the Ex-CEO and his wife recently sold 10% of their holdings (they still hold 9M shares) which caused a major shakeout in the stock. What made us even more bullish is the way the stock immediately popped right back up on strong volume after the shakeout. Those buyers who bought on the way back up are obviously not the day-trader crowd. While we expect approval given the results of the required FDA safety and bioequivalence studies we certainly have no crystal ball and FDA approval can sometimes be a tricky thing. Given what we have seen speculated we put the downside risk at about .50 and the upside opportunity as much as $2. We note an NDA for the next drug in this company's pipeline, based on the underlying agent in the blockbuster ED drug Cialis, is likely to be filed later this year. IGXT closed trading yesterday at .90.

These are our opinions only. Do your own due diligence or consult with a trusted financial adviser before investing in these or any other equities.

Disclosure: I am long PLUG, IGXT.