A quick recap of some of the stocks we pointed out a while back and some additional thoughts:
PLUG Power (PLUG): Everyone is talking about this company now so we don’t have a lot more to add. We originally said this was a stock that could jump considerably at any time (that turns out to have been an understatement) and that we were planning to trade around a core position throughout the year. We think that remains a great option. If you bought PLUG when we first mentioned it you are looking at gains in the 65% range at today’s prices. There is still room for growth here so staying patient is not a bad move. We note an upcoming investor call scheduled for 3/13/2014 which should be very informative. We also understand that news of an additional deal is expected near term. We have also been following Fuel Cell (FCEL) and think that it too has great potential and may even have a little further to run in the very near term than PLUG.
On a related note there is a tiny company out in Santa Barbara, Hypersolar Inc. (HYSR), that we think bears keeping a close eye on and that seems to have caught some investors’ attention over the past many days. As the market turns to the rapid adoption of Hydrogen powered fuel for fuel cell technology this little company, in a partnership with University of California at Santa Barbara (UCSB), is working on what just might be the holy grail in this space: a technology to produce renewable hydrogen using sunlight and water in a process akin to photosynthesis. Hypersolar seems to have had more than one breakthrough in its efforts thus far and at a market cap of just $10M there is little doubt that considerable interest exists on the part of numerous companies operating or investing in this space in what Hypersolar is working on. We have opened up a first position in HYSR but note that it is a penny stock in the truest sense of the word, currently trading at about .04. Normally these type of companies scare us but we like their cornerstone relationship with UCSB and the technology is clearly quite promising. We applaud the fact that they had enough foresight to have been working on this for years – the timing could not be better. Definitely a stock to watch this year as the hydrogen fuel cell power space expands.
Chelsea Therapeutics (CHTP) – Like most investors here, we are anxiously awaiting news of either a partnership or perhaps even a buyout. The stock is currently trading at levels we saw just prior to approval so frankly we don’t see a lot of downside here. Instead, we think an upside move is quite probable.
IntelGenx (IGXT) – This stock has been very strong in the aftermath of what was a reasonably positive CRL from the FDA on their Migraine film. News came Monday that they had submitted a response to that CRL so we now await the FDA and the determination of the classification of that response (two or six months). Recently we also learned of the positive bioeqivalence results of IGXT’s pilot study on their Erectile Dysfunction film. As we have said before we think this will be an outstanding year for IntelGenx with the potential for exponential growth.
As always do your own due diligence and/or consult with a trusted financial adviser before investing in these or any other securities.
Good morning. A few short notes about companies we have discussed recently at length. Sometimes there is time sensitivity with these equities so if we see that we will mention it but nonetheless we fully expect people will do what they do on their own time. If any of these stocks interests you I would encourage you to dig a little deeper. In general we’re not going to recommend a stock that is just going to pop and then flatline (we can’t prevent it if that happens but we surely don’t look for that). I don’t play that game and I assume many if not most of you don’t like to play that game either. That is why you won’t see us mentioning a gold mine or oil field discovery in an area no one has ever heard of and that Google can’t even locate on a map. That is not to say that these stocks, or any stock for that matter, won’t trade in a range because they will. If you have a short term mentality then you will surely respond accordingly. So here are some things we see on the horizon.
PLUG Power (PLUG): CEO Andy Marsh will host a conference call on March 13, 2014 where he has promised to guide for all 2014 quarters including ebitda projections. There is no question that the activity and orders for this company have heated up considerably. In short, this is simply not the same company of even six months ago. Much of that has to do with the adoption of hydrogen fueled power by some of the biggest companies on the globe. The other part has to do with PLUG making their services one stop shopping. No one wants to deal with five vendors to get and service power options. When we first mentioned PLUG the stock was trading in the $3.35 range. It traded as high as $4.90 within the past couple of months and we expect that we may see new 2014 highs set in fairly short order. While I don’t want to oversell PLUG I can say that I feel that a completely repurposed valuation is taking place. PLUG recently completed an Asian sales trip for which the market has not yet received an update. Additionally, according to Mr. Marsh we expect one other major turnkey announcement by the end of this quarter. I do believe there is some time sensitivity to this one as it will come as no surprise to wake up one morning to news which might allow this to get away from you.
Chelsea Therapeutics (CHTP)- As we expected, Chelsea received FDA approval for its NOH drug Northera. Had you decided to sell on the news from when we first mentioned it you would have made 60% or better. If you held some or all of your shares then you are waiting for news of a partnership announcement or perhaps a buyout. Shares pulled back yesterday on a Seeking Alpha article which seemed to dim prospects of market penetration, adoption by the medical community and so on. People need to understand that there is no other option for this condition and there is no limitation of prescription which is what was feared, not by us but from numerous quarters spreading FUD. One strategy I see is that of averaging down or adding if you held or opening a new position if you sold. I see a partner or a buyout in the future and I take some of the analyst opinions that I have read in that vein as instructive. While some have complained about what they consider to be lack of communication from the company, I am actually heartened by it in this age of over-communication. There is no need for hand holding here folks. I assume (and yes it is an assumption) that CHTP management is in serious discussions regarding its next steps and has been well before they gained FDA approval for Northera. The stock is now trading at pre-approval levels so we consider it to be a pretty strong buy. Like PLUG, there is time sensitivity here as we think that news of a partnership or buyout may be imminent.
IntelGenx (IGXT)-we mentioned this stock just the other day so not much to add other than we are pursuing a strategy of gradually adding (stockpiling might be the best word) to our position here. This is a stock that we can clearly see a 4-5X return on by the end of the year for reasons stated in previous posts. The future for IntelGenx (providing they too don’t get bought out which I wouldn’t make a strong bet against) is extremely bright in our view.
Best of luck in your trading this week – as always do your own due diligence and/or consult with a trusted financial adviser before investing in these or any other securities.
This morning brings news of a positive Bioequivalence Study on IntelGenx’s Erectile Dysfunction drug (comparable to Cialis – importantly this is not considered a new drug) for which we expect a 505(b)(2) NDA filing at some point this year. This is the second indication that could well prove to be a blockbuster.
Earlier this month IntelGenx received a complete response letter (CRL) on its dissolvable oral film (Versafilm) for Migraine – not due to safety or because new studies were requested by the FDA but because of marketing and potential third party manufacturing issues. The company had filed an amendment to the application which had reportedly not been reviewed by the Agency at the time of the CRL. IntelGenx has not yet responded to the FDA but it seems better than 50% they will receive a class one response which means it would be re-reviewed in a little as two months (and even class two is only six months). As we said at the time it was as positive as a CRL gets in our view. And now we have this new result of the pilot bioequivalence study on the latest of what could be a long line of popular drug indications delivered by IGXT’s Versafilm method. Trading @ .78 or so this morning we believe this is an ideal entry time and price. The next catalyst is likely to be the response to the FDA on the Migraine drug which could come at any time (the company said weeks in its press release at the time).
We were not expecting this news so soon but now that we have it, it only confirms our opinion that IGXT will be a sleeper Bio of 2014. In six months the mid-$2 level might even seem cheap. To provide a little perspective, if the Migraine and Erectile Dysfunction indications can provide $1b combined in revenue (which is not out of the question) and IGXT receives approximately 25%, that provides an underlying share price for IGXT utilizing a sales multiple of three (and it could be higher) of $10.50 or about 13X today’s price.
We are not guaranteeing anything but we really see nothing but upside for this little company. Please review our previous postings on the subject and as always do your own due diligence and/or consult with a trusted financial adviser before investing in this or any other security.
It has been a long winter for holders of Worlds stock but in just the past 5 sessions the stock is up well over 50% on some pretty decent volume. We have received inquiries (one last night asking why there was so much volume and price appreciation yesterday) about whether this move is somehow related to a decision in the Massachusetts case, perhaps speculation that Judge Caper’s MSJ ruling will favor Worlds. We knew yesterday (from a Pacer filing) that mediation had been agreed to in the case that Activision Publishing had filed against Worlds Inc. and Worlds Online Inc. in California. As we said when that case was filed we never thought it had merit and was done only to apply pressure to Worlds. So the $64,000 question – or perhaps something far more than that – is how does that action in California relate to Massachusetts?
When you combine elements such as the size of the stock appreciation on no news (at least that emerged prior to yesterday) with the move to mediation it does bring about a variety of story-lines that are possible. It seems to some degree simplistic to believe that these events are all independent and the timing is nothing more than coincidence. While they certainly could be I’m not a big believer in coincidence when it comes to these types of investments.
As Always please do your own due diligence or discuss with a trusted financial adviser before investing in this or any other security.
Good morning. We have seen much bandied about in recent days regarding the potential approval of Chelsea Therapeutics’ NDA candidate for NOH, Northera. The level of frothy discourse on both sides (some persuasive, some less so) has reached the fever pitch normally associated with binary events where a big move up or down is expected. By now we think that many if not most have made their bed and placed their bets. Obviously we have thought quite a bit about this investment given what is not an insignificant position. So here are some final thoughts today, really in no particular order.
Labeling: The most important thing here is the ability for doctors to prescribe. If the FDA says that efficacy can’t be confirmed beyond 1-2 weeks (and we are not saying it will) that is not “restricting” prescriptions beyond two weeks… big difference. There is NO OTHER TREATMENT for NOH and SAFETY WAS NOT CITED AS A REASON FOR DENIAL by the recent ADCOM. There is no other treatment option on the horizon either. Therefore cutting people off at two weeks when the drug has been selling for a decade and more in Japan is ludicrous and quite frankly extremely unfair for the tens of thousands who could see benefit from Northera. From what we have been able to gather a label restricting use to 1-2 weeks would something of a precedent and we just don’t see that for an Orphan indication where safety has not been highlighted as a concern. It should be noted that while the recent panel generally felt that efficacy could not be proven after a couple weeks there was little to demonstrate that it could be disproven either. That is pretty big thing that no one seems to be discussing.
The ADCOM Panel: Forget for a second that this drug has gone through two successful ADCOM panels, the most recent being an overwhelming 16-1 vote for approval. About half of the same people were on both panels and three votes moved from “no” or abstain to “yes” in the most recent one. In our view it would be a slap in the face to these panelists to make them show up, pour though evidence, debate and make determinations under a great deal of pressure and then tell them on second thought we have a different opinion…again. While this could of course happen, we simply have more faith in the agency and the work that Chelsea has done and their interaction with and feedback from the FDA to this point.
The 401 Study: This study, already underway by Chelsea, may be something of a signal. Studies cost a lot of money to fund and they involve a tremendous amount of time and effort. It is our supposition that the FDA takes a solid look at the “need” landscape when making these decisions. Again, there is nothing on the market and Northera is considered generally quite safe. What is less known at this point is whether Northera can stand the test of time…literally. Therefore, knowing that Chelsea is likely to need a partner to fund what is called the most ambitious study for the NOH indication, the FDA has the opportunity to serve the present need by allowing Chelsea to move forward conditionally (or not be we are guessing conditionally) while at the same time attracting a partner who will help launch Northera and importantly participate in funding the 401 Study. It is quite literally the embodiment of a win-win (as it is incredibly hard to see the downside of such a decision here) and of course should the 401 Study not perform as the agency and Chelsea agree it should, then certainly restrictions could follow.
These are our thoughts and observations only. As always do your own due diligence.