Daily Archives: January 22, 2007

Hewlett-Packard Short Interest Rises

The short interest in HP (HPQ) for January rose over 5 million shares to 35 million. Concerns about CEO Mark Hurd’s stock sales during the company’s back-dating investigation or the potential of slower revenue at the big tech company may be worrying investors.

Hurd said that his stock sales was unrelated to HP’s probe and that he had clearance from company attorneys. Whether this will satisfy the Congressional committee looking into the matter remains to be seen.

HP has also stated that its revenue should surpass $100 billion this year, That will require a strong IT market and robust sales of the company’s servers, PCs and printers. Any stumble would be bound to hurt the company’s stock.

There is the matter of the stock price. At $42, it is up well over 100% over the last two years while rivals like IBM (IBM) are nearly flat.

The air is thin up there, and there is a long way to fall.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: January 22, 2007 – 6:10 am in Short Interest

Europe Markets 1/22/2006 Vivendi Up, British Air Down

Stocks:  (BCS)(BP)(BAB)(BT)(PUK)(RTRSY)(UN)(VOD)(BAY)(DCX)(DB)(DT)(SI)(SAP)(ALU)(AXA)(FTE)(V)

Markets in Europe were higher at 5.55 AM New York time.

The FTSE was up .5% to 5,266. Barclays was up .7% to 752. BP was up .9% to 548.5. BT was up 1% to 313.25. British Airways was down 1.7% to 535.25. Prudential was up 3% to 720. Reuters was down .4% to 445.75. Unilever was down .2% to 1411. Vodafone was up 1.2% to 150.

The DAXX was up .2% to 6,757. Bayer was down .5% to 43.68. DaimlerChrysler was up 1.4% to 49.48. DeutscheBank was up 1.1% to 106.15. Deutsche Telekom was down .1% to 14.62. Siemens was up .2% to 78.33. SAP was up 1.3% to 38.31.

The CAC 40 was up .4% to 5,637. Alcatel-Lucent was down .8% to 11.11. AXA was down .5% to 33.04. France Telecom was down .4% to 21.91. ST Micro was down .8% to 14.28. Vivendi was up 1.3% to 32.48.

Data from Reuters

Douglas A. McIntyre

Posted on: January 22, 2007 – 5:58 am in International Markets

Toyota’s Toy Car

Toyota (TM) has told the Financial Times that it is working on a series of processes to build cars at a much, much lower cost. The company is targeting the costs of design and materials to drive down its cost per vehicle.

But, the big Japanese car company may want to focus more on quality than cost savings, at least of the time being. Toyota has just recalled 533,000 trucks and SUVs after recalling 766,000 vehicles last year.

Sometimes cheap gets expensive.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: January 22, 2007 – 5:44 am in Autos

Media Digest 1/22/2007 Reuters, WSJ, NYTimes, Barron’s, FT

According to Reuters, Citigroup (C) will buy the ABN AMRO Mortagage Group which makes loans in the US.

Reuters writes that Philips Electronics (PHG.AS) beat estimates when its announced its most recent quarter.

Reuters writes that IBM (IBM) will renew its software rivalry with Microsoft (MSFT) by introducing products for social networking at businesses.

The Wall Street Journal writes that Sun (SUNW) and Intel (INTC) have been negotiating a deal for the largest chip manufacturer to sell the server company its products. Sun had used Intel rival AMD (AMD) exclusively.

The WSJ also writes that Toyota (TM) and Ford (F) have indicated that they may want to deepen ties but it would not be a link-up like the equity deals of the 1990s.

The WSJ writes that Kimberly-Clark (KMB) will start to market "Kleenex laced with a mild pesticide to fight cold and flu viruses" to ward off generic competition.

The Wall Street Journal also writes that the new CEO of Sanofi-Aventis (SNY) is prepared to speak more openly about experimental drugs in its pipeline.

The New York Times reports that some technology companies are increasing their support for open source operating system Linux. IBM (IBM), Intel (INTC), and Hewlett-Packard (HPQ) are supporting moves to make the software more mainstream in businesses.

The FT reports that independent record labels will start selling music on News Corp (NWS) social network site MySpace.

Barron’s reports that the buzz around WiMax is increasing with research firm Canaccord Adams naming WiMax company AirSpan (AIRN) as its "Best Idea".

Douglas A. McIntyre

Posted on: January 22, 2007 – 5:35 am in Press Digest

Asia Markets 1/22/2007 China Mobile Up, Yahoo Japan Down

Stocks:  (CAJ)(FUJ)(HIT)(HMC)(NIPNY)(NTT)(DCM)(SNE)(TM)(CHL)(CHU)(CN)(PCW)(HBC)

Markets in Asia were higher

The Nikkei rose .7% to 17,424. Bridgestone rose 1.9% to 2665. Canon rose .2% to 6450. Fuji Film rose .2% to 4730. Hitachi rose 3.5% to 822. Honda fell .8% to 4770. NEC rose .7% to 608. NTT rose .7% to 618000. Docomo rose .6% to 189000. Sharp rose .8% to 2006. Softbank fell 2.1% to 2555. Sony rose .9% to 5710. Toshiba rose 1% to 808. Toyota rose .1% to 7990. Yahoo Japan fell .8% to 48500.

The Hang Seng rose 2.2% to 20,772. Cathay Pacific rose .8% to 21.6. China Mobile rose 4.3% to 73.85. China Netcom rose 5.3% to 19.3. China Unicom rose 2.6% to 10.32. HSBC rose 1.7% to 145.4. PCCW rose .2% to 4.71.

The KOSPI rose .2% to 1,363.

The Straits Times rose 2.4% to 3,145.

The Shanghai Composite rose 3.6% to 2,933.

Data from Reuters

Douglas A. McIntyre

Posted on: January 22, 2007 – 5:15 am in International Markets

Sears Isn’t Ignoring the Retail Operations After All

From The Peridot Capitalist

Critics of the Sears and Kmart turnarounds have long argued that if Sears Holdings (SHLD) Chairman Eddie Lampert ignored the retail business by cutting capital expenditures and marketing expenses, the company would begin to die a slow death. Well, the skeptics have proven to be very wrong, as shown by the stock’s move from $15 several years ago to nearly $180 today.

After the bell on Wednesday we learned that Sears has hired John Walden, an eight-year veteran manager from Best Buy (BBY), to become Chief Customer Officer, with core responsibilities including customer-focused strategies and new business development. Such a move certainly doesn’t seem to imply that Lampert and Co. are not focused on the retail operations.

This is not to say that Sears will become Target (TGT) or Wal-Mart (WMT), because the window for that opportunity has long been closed. However, if they can earn similar profit margins to other large retailers over the next several years, the earnings power of the company will be much higher than it is today.

Full Disclosure: Long SHLD at time of writing

http://www.peridotcapitalist.com/

Posted on: January 22, 2007 – 4:59 am in Research

Goldman and Its Commodity Indices: Conspiracy or Just Good Indexing?

From Ticker Sense

Since oil’s initial decline last Summer, conspiracy theorists have been questioning the motives behind Goldman Sachs’ move to lower the weightings of various energy components in its commodity indices.  Prior to the mid-term elections, some claimed that the lowered weight of gasoline was a ‘favor’ from Hank Paulson to the Republican Party in exchange for making him Treasury Secretary.  Then in January, Goldman rebalanced energy again, which led to a further reduction of its weighting in the Commodity index.  Although, we wonder how the January move can be considered a “conspiracy”- if it was another favor, it came a little bit late since the elections were long past.

Oil_price

Rather than labeling these moves on Goldman’s part as a conspiracy, it was more likely just a case of good indexing.  After all, Goldman is considered by many to be the largest hedge fund on the planet with some of the best traders.  Maybe Goldman was just being prudent by lowering its energy weightings as energy was beginning to become too large a part of its index.  While we realize that the Goldman index is widely used as a benchmark, no one individual or firm (even Goldman) is bigger than the market itself.  If Goldman were to make a move that was truly out of step with the market, investors would more than likely find themselves a more pertinent benchmark.

http://www.tickersense.typepad.com/

Posted on: January 22, 2007 – 4:57 am in Research

Best and Worst Performing Stocks Year to Date

From Ticker Sense

The tables below highlight the best and worst performing stocks in the Russell 3000 over the past 5 days, the past 3 months, and year to date.

1week122

3mo122

1year122

http://www.tickersense.typepad.com/

Posted on: January 22, 2007 – 4:56 am in Research

TXN: What is TI Smoking To See 20 pct Handset Unit Growth? (TXN)

By William Trent, CFA of Stock Market Beat

TI sees 2007 global cellphone unit sales up 20 pct | Technology | Technology | Reuters.co.uk

Global sales of mobile phones are expected to grow to between 1.1 billion and 1.2 billion units in 2007, up as much as 20 percent from about 1 billion units sold last year, a Texas Instruments (TXN.N: Quote, Profile , Research) official said on Friday. “We are optimistic on the growth momentum of low-price mobile phones,” Terry Cheng, the president of Texas Instruments Inc. (TI) Asia, told Reuters on the sidelines of a seminar in Taipei. TI is the world’s biggest cellphone chip maker.”The company has shipped large amounts of chips for low-price mobile phones since November and December last year, which will help boost our business significantly this year,” he said.

Um… shipments in November and December boosted last year’s business. You aren’t allowed to count them twice. And as to market growth, they seem way too high.

In October Merrill Lynch forecast about 950 million units for 2006 and less than 10% growth in 2007. That takes you to maybe 1.05 billion. That was also in line with an industry forecaster’s predictions.

At least we’ll give credit to TI for going out on a limb.

The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: Union Pacific (UNP) put options; Air Products (APD) put options; Nasdaq 100 (QQQQ) put options; FedEx (FDX) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Three Five Systems (TFS); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Starbucks (SBUX) call options; Landstar (LSTR) put options; Ceradyne (CRDN) put options; Dell (DELL) put options; Plantronics (PLT) put options;

http://stockmarketbeat.com/blog1/

Posted on: January 22, 2007 – 4:54 am in Semiconductor

The Monday Edition- Economic Outlook From Bonds – Fed Focus – Earnings – Bank of Japan

By Yaser Anwar, CSC of Equity Investment Ideas

In this week’s institutional newsletter I’d like to talk about: 1) Deciphering The Economy Through Bonds, 2) Fed & Earnings Focus and 3) Bank of Japan’s Actions

Bonds- Deciphering The Economy

  • Tighter corporate spreads have been at odds with fundamental indicators in recent months, such as: worries about higher inflation, slower growth and the inverted yield curve (which is a precursor to economic hardship). Furthermore, an important factor such as: record new issue supply in the high-yield credit market have not softened the market as many had expected.
  • Nor have deteriorating upgrade/downgrade credit rating ratios of the investment grade and high-yield corporate sectors covered by Moody’s and S&P. Instead, risk appetites do not appear to have waned, highlighted by historically tight spreads, increasing appetite for junk bonds (read: WSJ article).

A few reasons I can think of are-

  • 1) Global liquidity continuing to fuel demand for US$ denominated debt instruments from foreign institutional investors.
  • 2) Default rates remain near a record low (at approx. 2%) while credit ratios overall are strong despite the continued M&A (reached $135.98 billion in 06, a new record- According to TF) or LBO transactions (which are usually financed with debt, triggering credit rating agency downgrades, thanks to leverage which is shouldered by the balance sheets).

Fed Focus

  • Fed officials remain focused on inflation and according to the Fed Futures, the odds of a Fed rate move in either direction in 1H look dim. In my view, factors such as: a maturing business cycle, less accommodative financial conditions overseas, and the potential for moderating consumption trends (due to further declines in the housing market and the impact on the labor pool), will slow margin expansion and allow inflation to drift lower over time (drop in oil should help too).
  • However, we need to keep in mind that even with the drag in housing and autos, inflation has only been able to moderate mildly. This is the Fed’s worry and should the contracting sectors of the economy stabilize (latest NAHB figure showed housing somewhat improving), inflation is likely to pick up.

Earnings Focus

  • Through January 19th, 77 companies in the S&P 500 index have reported earnings for Q4. "According to Thomson Financial: Of these 77 companies, 57% have reported earnings above analyst expectations, 19% have reported earnings in line with analyst expectations, and 23% have reported earnings below analyst expectations.
  • In a typical quarter (since 1994), 60% of companies beat the estimates, 20% match estimates, and 20% miss estimates. Over the past 8 quarters, 67% of companies beat the estimates, 14% matched estimates, and 19% missed estimates."
  • Trucking Industry, which is closely watched for clues about the economy, so far has been the main contributor to companies announcing negative results pre-announced.

Global Macro- Bank of Japan

  • As you know, BOJ left the interest rates unchanged. Policymakers admitted that the economy and consumer prices have been somewhat below their initial October forecasts, they continue to expect the economy and prices to move generally in line with their forecast in the coming quarters.
  • The BoJ believes core CPI, much like their economic assessment, is expected to "develop broadly in line with the outlook". While the BoJ admits, “consumer prices have so far deviated slightly downward from the projection, partly reflecting the drop in crude oil prices,” policy makers still expect consumer prices to develop generally in line with their projection.
  • I expect GDP to have expanded around 2.8-3% QoQ in Q4 of 06. If so, the upcoming release of this data will likely shift the majority of the Board toward a rate hike at the next meeting.

http://www.equityinvestmentideas.blogspot.com/

Posted on: January 22, 2007 – 4:52 am in Research

GE Capital: Rewriting Derivatives Accounting

From AAO Weblog

It’s been a while since one of these showed up: a derivatives accounting restatement. This morning, General Electric Capital filed a non-reliance 8-K on in its 10-Ks and 10-Qs for the years and for each of the quarters in the years 2005, 2004, 2003, 2002 and 2001, and for each of the first three quarters of 2006. That’s a lot of territory; it goes back to the first application of Statement 133. According to the amended 2005 10-K, it amounted to a decrease in earnings from continuing operations of $421 million over that five year span. Balance sheet effects: deemed immaterial.

Cause of the restatement? “… a material weakness in internal control over financial reporting, namely, that we did not have adequately designed procedures to designate, with the specificity required under SFAS 133, each hedged commercial paper transaction.”

From the sound of the 8-K and the 10-K, GECC and the auditors believed that the documentation governing the hedging instruments were specific enough to support the accounting treatment used; the Office of the Chief Accountant disagreed. The SEC continues to investigate GE Capital’s application of SFAS 133 and hedge accounting, according to the filings.

http://www.accountingobserver.com/blog/

Posted on: January 22, 2007 – 4:50 am in Accounting

Friday’s Top Biotech and Medical Stocks

From BioHealth Investor

Biotechnology

VANDA PHARMACEUTICAL [VNDA] +10.30%
EMERGENT BIOSOLUTION [EBS] +9.20%
BOSTON LIFE SCIENCES [BLSI] +8.03%
LEV PHARMACEUTICALS [LEVP.OB] +6.96%
ALFACELL CORP [ACEL] +6.37%

Diagnostic Substances

RG GLBL LIFESTYLS [RGBL.OB] +25.35%
OSTEOLOGIX INC [OLGX.OB] +7.96%
ICAGEN, INC. [ICGN] +4.84%
ASPENBIO PHARMA INC [APNB.OB] +4.59%
ISTA PHARMACTLS [ISTA] +4.23%

Drug Delivery

NOVADEL PHARMA INC [NVD] +4.84%
PENWEST PHARM CO [PPCO] +3.87%
PETMED EXPRESS INC [PETS] +3.29%
EMISPHERE TECH [EMIS] +1.82%
INSITE VISION INC [ISV] +1.35%

Drug Manufacturers

PLANET TECHS INC [PLNT.OB] +16.67%
SIGA TECH INC [SIGA] +10.26%
EXEGENICS INC [EXEG.OB] +8.70%
INYX INC [IYXI.OB] +4.99%
DUSA PHARM INC [DUSA] +4.05%

Medical Appliances & Equipment

ENDOCARE INC [ENDO.OB] +14.29%
EDAP TMS SA ADR [EDAP] +10.96%
ARRHYTHMIA RES TECH [HRT] +10.04%
THERMAGE, INC. [THRM] +6.82%
EXACTECH INC [EXAC] +6.28%

Medical Instruments & Supplies

ALPHATEC HOLDINGS [ATEC] +17.15%
NEPHROS INC. [NEP] +8.20%
LEMAITRE VASCULAR [LMAT] +6.70%
QUANTRX BIOMEDICAL [QTXB.OB] +6.43%
HEMOSENSE INC. [HEM] +6.10%

Medical Laboratories & Research

NATL DENTEX CP [NADX] +1.55%
ERESEARCHTECHNOLOG [ERES] +1.49%
PHARM PROD DEV [PPDI] +1.41%
NEOGENOMICS INC [NGNM.OB] +1.21%
QUEST DIAGNOSTC [DGX] +1.08%

http://www.biohealthinvestor.com/

Posted on: January 22, 2007 – 4:49 am in Biotech

Friday’s Top Biotech and Medical Stocks

From BioHealth Investor

Biotechnology

VANDA PHARMACEUTICAL [VNDA] +10.30%
EMERGENT BIOSOLUTION [EBS] +9.20%
BOSTON LIFE SCIENCES [BLSI] +8.03%
LEV PHARMACEUTICALS [LEVP.OB] +6.96%
ALFACELL CORP [ACEL] +6.37%

Diagnostic Substances

RG GLBL LIFESTYLS [RGBL.OB] +25.35%
OSTEOLOGIX INC [OLGX.OB] +7.96%
ICAGEN, INC. [ICGN] +4.84%
ASPENBIO PHARMA INC [APNB.OB] +4.59%
ISTA PHARMACTLS [ISTA] +4.23%

Drug Delivery

NOVADEL PHARMA INC [NVD] +4.84%
PENWEST PHARM CO [PPCO] +3.87%
PETMED EXPRESS INC [PETS] +3.29%
EMISPHERE TECH [EMIS] +1.82%
INSITE VISION INC [ISV] +1.35%

Drug Manufacturers

PLANET TECHS INC [PLNT.OB] +16.67%
SIGA TECH INC [SIGA] +10.26%
EXEGENICS INC [EXEG.OB] +8.70%
INYX INC [IYXI.OB] +4.99%
DUSA PHARM INC [DUSA] +4.05%

Medical Appliances & Equipment

ENDOCARE INC [ENDO.OB] +14.29%
EDAP TMS SA ADR [EDAP] +10.96%
ARRHYTHMIA RES TECH [HRT] +10.04%
THERMAGE, INC. [THRM] +6.82%
EXACTECH INC [EXAC] +6.28%

Medical Instruments & Supplies

ALPHATEC HOLDINGS [ATEC] +17.15%
NEPHROS INC. [NEP] +8.20%
LEMAITRE VASCULAR [LMAT] +6.70%
QUANTRX BIOMEDICAL [QTXB.OB] +6.43%
HEMOSENSE INC. [HEM] +6.10%

Medical Laboratories & Research

NATL DENTEX CP [NADX] +1.55%
ERESEARCHTECHNOLOG [ERES] +1.49%
PHARM PROD DEV [PPDI] +1.41%
NEOGENOMICS INC [NGNM.OB] +1.21%
QUEST DIAGNOSTC [DGX] +1.08%

http://www.biohealthinvestor.com/

Posted on: January 22, 2007 – 4:49 am in Biotech

IBD Weekly Top Ranked Medical Stocks

From BioHealth Investor

The following list represents the top ten medical stocks ranked according to Earnings Per Share and Relative Strength by Investor’s Business Daily (1/20/06)

scores out of 100 (last week’s rank, change in score):

1(1) Arrhythmia Research (HRT) EPS=95 RS=99
2(2) Mindray Medical (MR) EPS=99 RS=94(+1)
3(4) Immucor (BLUD) EPS=96 RS=96
4(5) Wellcare (WCG) EPS=95 RS=96(+1)
5(3) NightHawk Radiology (NHWK) EPS= 99 RS=90(-3)
6(6) Palomar Med Tech (PMTI) EPS=99 RS=90
7(7) Celgene Corp (CELG) EPS=98 RS=90
8(-) American Bio Eng (AOB) EPS=87 RS=99
9(-) Icon PLC (ICLR) EPS=93 RS=93
10(8) Digene Corp (DIGE) EPS=97 RS=87(-3)

http://www.biohealthinvestor.com/

Posted on: January 22, 2007 – 4:47 am in Biotech

Biotech & Medical Venture Deals Roundup

From BioHealth Investor

by Adam Rubenstein

NovaVision (Boca Raton, FL) a non-invasive device that may restore vision loss in stroke and traumatic brain injury patients has raised $20M in Series C. The deal was led by Chicago Growth Partners and included Johnson & Johnson Development Corp., Oakwood Medical Investors, Tullis-Dickerson, Noro-Moseley Partners, Crossbow Ventures.

Juvaris BioTherapeutics (Pleasanton, CA) an oncology and anti-infective vaccine platform technology closed on $6M of a $12M Series A led by Kleiner Perkins.

Fluidigm Corporation (San Francisco) a producer of integrated fluidic circuits for the life sciences raised $37M in a Series E financing. The round was lead by Cross Creek Capital the private equity affiliate of Wasatch Advisors, Inc

Pacific Biosciences (Menlo Park, CA) a company focused on DNA gene sequencing, has raised approximately $50M in Series D funding. The financing was led by Maverick Capital and included by return backers Alloy Ventures, Kleiner Perkins and Mohr Davidow Ventures.

InteKrin Therapeutics (Palo Alto, CA) a clinical stage biopharmaceutical company focused on products for diabetes, metabolism and obesity has secured $23M in Series B funding. The financing was led by Sofinnova Ventures and included Orbimed Advisors, Vivo Ventures, and return backer Sears Capital Management.

Sequoia Pharmaceuticals (Gaithersburg, MD) drug developer focused on the treatment of drug-resistant HIV infections, has raised $35M in Series C funding. The deal was led by Wellcome Trust and existing investors Healthcare Ventures, Sofinnova Partners and Aberdare Ventures. The round was also joined by MedImmune Ventures.

Semafore Pharmaceuticals (Indianapolis, IN) a drug discovery and development company focused on small molecule modulators of the PI3 Kinase (PI3K) & PTEN cell signaling pathway has raised $9.5M in Series B funding led by Twilight Venture Partners.

Proprius Pharmaceuticals (San Diego, CA) a drug developer focused on rheumatology and autoimmune diseases, has raised $11M in Series A funding led by Atlas Venture and joined by Forward Ventures, CDIB BioScience Venture Management along with return backers Fog City Fund and Windamere Venture Partners.

Horizon Therapeutics (Palo Alto, CA) a late stage biopharmaceutical company focused on development of drugs for pain relief has raised $15M in Series B funding. The deal was lead by Scale Venture Partners, and joined by return backers Sutter Hill Ventures and Pequot Ventures.

Variation Biotechnologies (Ottawa, Canada) a maker of vaccines for infectious diseases, has raised US$35.7M in Series A funding. The deal was lead by Clarus Ventures with participation from Arch Venture Partners and 5AM Ventures.

SunTen Phytotech (Taipei, Taiwan) a botanical drug development company, has raised $10M in Series B funding led by PacLink Capital, Taiwan Global Biofund Venture and 3V SourceOne Venture Capital.

Symphony Medical (Laguna Hills, CA) develops proprietary biopolymer and cellular-based biologic therapies to effectively treat chronic and post-operative atrial fibrillation and other cardiac conduction abnormalities, has raised another $11.2M in Series B funding. Participants include Domain Associates, Johnson & Johnson Development Corp., Morgenthaler Ventures, Triathlon Medical Ventures and Guidant Compass Group.

Conatus Pharmaceuticals (San Diego, CA) a drug developer focused on liver disease, has secured $6.62 million of a $27.37M Series A round. Participants include Aberdare Ventures, Bay City Capital, Advent International and Hale BioPharma Ventures.

http://www.biohealthinvestor.com/

Posted on: January 22, 2007 – 4:46 am in Biotech

Tiny Biotech Javelin Pharmaceuticals Looking to Crack Pain Killer Market

From BioHealth Investor

by Andrew Vaino

Javelin Pharmaceuticals (JAV) is a tiny biotech focused on drug delivery. Their lead compound is Dyloject, an injectable form of pain-killer diclofenac. One of the problems with injecting diclofenac, a currently used non-steroidal antiinflamatory drug, is it’s just not very soluble in water; that is, you need to use a large volume to get it injected. By mixing diclofenac with isopropyl-modified -cyclodextrin, a circular carbohydrate molecule composed of seven glucose units, Javelin is able to achieve a higher concentration of diclofenac. I should note I have some bias here, as cyclodextrins (along with adamantane) are among my very favorite molecules.

Higher concentration makes for less disruption in delivering the drug intra-muscularly, and speeds the time it takes the drug to start working. Faster relief from pain is never a bad thing. Dycloject has been submitted for regulatory review (MAA) in Europe. Unfortunately, the European regulatory body is less transparent than the FDA is setting dates when decisions such as this will be rendered. Dycloject is currently in a Phase 3 clinical trial in the US.

Last May the company began a Phase 3 study on an intranasal formulation of morphine. Again, the selling point here will be substantially faster absorption of the pain reliever. Anyone who has had any type of post-operative or dental pain can appreciate that minutes can pass like hours.

Javelin has also completed a Phase 2 study of use on intranasal ketamine for pain relief. This research was sponsored by the U.S. Department of Defense. If they can secure a contract in the future with the DOD it will mean big bucks, but this is in no way assured.

To be clear, these guys aren’t creating great new drugs, they’re taking well-known drugs and tweaking them a bit. While this approach doesn’t guarantee success, it’s always easier dealing with known drugs.

I think this is a good small company with some useful products. This stock is a bit on the illiquid side (average 10 day volume is just under 140K). The pain market can be a tough nut to crack, but at $20B in annual sales it’s also a pretty big
market. And remember, they’re not trying to introduce new drugs, just modified forms of existing drugs. None of Javelin’s drugs is likely to be a blockbuster, but that’s ok. It’s a small company, with a market cap of $200M. News of approval in Europe, or a positive result from either of their Phase 3 clinical trials, will give the stock a nice spike.

This company has a weak balance sheet and will incur greater and greater expenses as they proceed with their two Phase 3 studies. With the stock near its all-time high, and with no possibility of revenue in the foreseeable future, it’s a safe bet there will be a follow-on offering of stock in the near future. My take is after the inevitable drop in price on this dilution will be a good time to buy.

http://www.biohealthinvestor.com/

Posted on: January 22, 2007 – 4:44 am in Biotech

Doctor Claims Americans Paid $150M for Stem Cell Treatment Abroad

From BioHealth Investor

by H.S. Ayoub
BioHealth Investor.com

The FDA issued a warning letter to Dr.Alfred T Sapse of Stem Cell Pharma, Inc., a Las Vegas company, alleging that the doctor and the company had violated federal law by injecting placental stem cells into patients without prior approval.

According to the letter Dr.Sapse overlooked the injection of stem cells into at least 16 patients in an attempt to treat Multiple Sclerosis, Muscular Dystrophy, and other disease conditions. The doctor however claims that more than 40 patients have so far undergone the procedure.

He also failed to carry out proper testing, handling, and processing of the placental tissue used to harvest the stem cells. He worked with a local hospital to obtain the placental tissue, and a local surgeon to carry out the injections. He refuses to identify the parties.

The doctor also allegedly refused to allow an investigator with the FDA to inspect patient records of the procedures back in July of 2006.

Charging as much as $5000 per procedure, the Romanian opthalmologist claims on the company’s website that the injections have shown a 70 percent imporvement in the patients’ conditions.

The company also provides a service for patients looking for stem cell transplants outside the U.S.

Here is a list of the various costs of the procedure:

Dominican Republic $30,000
Tijuana (Mexico) $20,000
San Jose (Costa Rica) $25,000
Bankock (Thailand) $30,000
Habana (Cuba) $20,000
Russia/China $20,000
Seoul (S. Korea) $90,000
Germany $250,000+.

The company also claims that Americans have already spent about $150 million to receive the procedure in various foreign nations, and that amount will increase to $1 billion over the next 5 years as patients become more aware of these clinics.

In an exclusive interview with ABC 13 Action News, Dr.Sapse claims that the patients were all dying with little hope of recovery. After the FDA warning, and it is only a warning, the doctor has halted all work and will submit all paper work for review.

All the patients that were hoping to receive the injections soon, will now not be able to.

It may take several years before any stem cell transplantation becomes legal in the U.S., accodring to Dr.Sapse.

Shares of stem cell companies, Geron (GERN), StemCells (STEM), Aastrom (ASTM), ViaCell (VIAC), and Thermogenesis (KOOL) were all mixed with little movement on Friday.

http://www.biohealthinvestor.com/

Posted on: January 22, 2007 – 4:41 am in Biotech

Abbott or GE – who is smarter?

By Vitaliy Katsenelson, CFA

I am not a buyer of Abbott Labs(ABT) at this price, as the margin of safety has been depleted by the latest stock appreciation.  But I like its latest transaction with General Electric (GE). Abbott proved to be a shrewd buyer and seller.  It played Johnson & Johnson (JNJ), Guidant (GDT) and Boston Scientific (BSX) masterfully and positioned themselves to be the ”stealth” winner any way that the JNJ/Guidant or Boston Scientific/Guidant acquisition turned. 

Diagnostic segment that Abbott is selling to GE for $8.5 billion generates revenues of $2.5 billion and has a 10% EBIT margin, putting a multiple of 34 times operating profits – that’s a nice fat premium – very smart on Abbott’s part.  In GE’s defense, it could probably drive some costs out of this business once it combines it with the rest of its medical business.

http://www.contrarianedge.com/

Posted on: January 22, 2007 – 4:39 am in Conglomerates

Explanation of Enterprise Value

Posted by David Polonitza

The following article provides a detailed definition of enterprise value. To determine the proper value of a company, I try to develop an appropriate intrinsic value for a company using its financial statements. Once this step is complete I will compare the company’s intrinsic value to its enterprise value, trying to find a large enough discrepancy between the two to warrant a possible investment.

Link to Article

http://polonitza.blogspot.com/

Posted on: January 22, 2007 – 4:38 am in Research

Key Issues For This Week (Jan 22 to 26, 2007)

These are the biggest issues for the play book this week as far as US investors are concerned.  There are literally a few hundred companies reporting earnings, and this week and next week will be a non-stop barrage of earnings.  These are the key earnings and political-economic issues on deck, or at least these are the ones that you can expect to take the largest amount of news coverage.

1/22 MONDAY
Texas Instruments (TXN) consensus $0.38/$3.4 Billion; As goes Texas Instruments, as goes the chip cycle for all the gadgets that fit in your hand.  This will give the feel for cell phones (already deemed weak because of price wars), PDA’s, MP3 players and the other gadgets.

Pfizer (PFE) $0.42/$12.25 Billion.   Is it 3,000 or 4,000 that will find out about their job layoffs? This will mark the first (actually the second) of the layoffs in big pharma.  We’ll also get to hear about the pipeline for the first time in 6-weeks since the last blow-up in the hugely expected heart drug. 

1/23 TUESDAY
Bank of America (BAC) consensus $1.18/$18 Billion; Maybe we’ll hear if they are really trying to raise the deposit base ceiling as it was already indicated by outside reports.

Yahoo! (YHOO) consensus $0.13/$1.22 Billion; Panama has been out a month roughly and Semel has managed to hang on.  Semel is still and will remain one of the 10 CEO’s that need to go, and the stock has been trading more like a buyout candidate or like a restructuring candidate than it has a search winner.  We’ll see, but all the secondary calls will be on Google after the Yahoo! numbers.  And what about the larger and larger percentage of TAC (Traffic Acquisition Costs) to total revenues? At what point does that become an issue too?

J&J (JNJ) consensus $0.79/$13.7 Billion; with consensus EPS growth for 2007 expected to be 8% to $4.04 and revenue growth expected at 5% to $56.1 Billion, we’ll have to see if they say the ongoing mega-mergers are still a part of the company. 

Advanced Micro Devices (AMD) consensus $0.10/$1.72 Billion; they already warned and we already know the Intel & AMD processor price war is still going.

State of the Union: President Bush delivers one of his last pertinent State of the Union speeches, but with all the Presidential candidates already having thrown in their names the real focus is already going to be toward how the candidates react and act during and after his speech.

1/24 WEDNESDAY
eBay (EBAY) consensus $0.28/$1.67 Billion; it’s up big off last year’s lows and they rallied on the news of their last price hike instead of falling and being criticised like the previous price hikes.  Even Meg Whitman has managed to get out of the hot seat, so we’ll have to see.  It has actually slid off recovery-highs by 10% so this one’s a coin toss.

Qualcomm (QCOM) consensus $0.42/$2.05 Billion; as a reminder they usually beat because of how they do their conservative guidance mid-quarter.  If this turns out to be another disappointment on 2007 guidance then the younger Jacobs might be one step closer to needing to go, although when he was named on the list of CEO’s he was still noted as having quite a bit of time before throwing him to the wolves.

McDonalds (MCD) consensus $0.61/$5.675 Billion; Chipotle is gone and Boston Chicken is being set up to go. It’s up roughly 30% since summer and up about 75% in 18-months.  It’s been too good of a ride to call the top, but how much more can they keep posting these monster same-store-sales growth numbers and then keep following up with stronger and stronger earnings?  This one has been amazing and surprising even to the bulls.

1/25 THURSDAY
AT&T (T-NYSE) consensus $0.59/$21.3 Billion, but earnings hardly matter since the merger just closed.  Now it all points toward our first real combined guidance for 2007 to 2008 and the cost savings and capital expenditures (Cap-Ex). As AT&T reports, perhaps the largest thing to watch now is the cap-ex plans for 2007 and beyond now that BellSouth, AT&T, and SBC are all under the AT&T name.  This will also formalize more of the Cingular plans.

Microsoft (MSFT) consensus $0.23/$12.05 Billion.  Sure you’ll have Zune and Xbox360 numbers, but everyone really only cares about Vista and new projections for 2007 and 2008.  The street is expecting a lot with the stock close to multi-year highs, so ahead of time with three trading days it seems to expect the critics to be more convincing than the cheerleaders.

Ford (F) earnings expected -$0.97/$34.5 Billion, estimates vary greatly and it doesn’t really matter.  If you can find someone very optimistic here, then he must be named Pangloss.

Existing Home Sales for December; 6.25 million annualized estimate; this may move housing stocks the most even though it’s "used homes" instead of new homes as this is the first outside government recorded evidence of December housing outside of what the builders have really said.

AeroVironment Inc. (AVAV) IPO; this is the one Cramer touted on Friday from Goldman Sachs as the one to watch.  This one was going to do well on its own, but now Cramer has possibly added even more premium to it.

1/26 FRIDAY
Durable Goods for December expected approximately 3.0%; new Home Sales for December expected approximately 1,050,000 annualized.

Caterpillar (CAT) consensus $1.34/$10.5 Billion; Cramer said as goes CAT and its outlook as goes the economy, we’ll see.  As a reminder, they usually give conservative guidance.

Jon C. Ogg
January 22, 2007

Posted on: January 22, 2007 – 4:05 am in Uncategorized