Daily Archives: September 11, 2007

Halo 3: T-Minus Two Weeks (MSFT, GME, TTWO, ATVI, ERTS)

Master_chief_picIn just under two short weeks the gaming event of 2007 will take place: Microsoft’s (NASDAQ:MSFT) Halo 3 hits the shelves.  Halo 3 will launch on September 25, 2007, and this will be a key date for investors that watch video game publishers and sellers alike. 

With September 25 falling on a Tuesday you can bet that schools (and tech support departments) around the U.S. are probably going to have record absentees.  "I can’t come to school today, because I have Arbiter’s flu and the Covenant just has me worn out."  Sure, certain public beta demos have been out for testing and for introduction for a while, but this game already has recorded 1 million copies in U.S. pre-sales and it’s a safe bet that almost every Xbox 360 owner will buy a copy of this game between now and early 2008. 

It’s not really released how many copies of each version were sold or are being made available, but here is what is coming out:

  • The LEGENDARY edition for $129.99 with a collectible helmet case and bonus disks with supplemental content.
  • The Halo 3 Limited edition for $69.99 will have a hard sleek metal cover and a bound collection of information and art plus a bonus disk.
  • The standard edition for $59.99 is likely to be the biggest seller.
  • Of course there is also the OFFICIAL STRATEGY GUIDE for $19.99.
  • For the true enthusiasts, there is even the Xbox 360 Halo 3 Special Edition Console for $399.99.

After the recent Xbox recall gaffe, the Bungie games and Xbox unit needs a blockbuster.  This was the year that the entire Xbox venture was supposed to become profitable, but the charges took care of that.  Also, what about that darned Halo-based movie (and is this a real pre-preview)?

GameStop (NYSE:GME) has to be happiest about one thing: there’s no Chinese lead paint in video games.  Take-Two (NASDAQ:TTWO) already got its bad news out of the way after it delayed its release of the new Grand Theft Auto franchise game until 2008.  Now it looks like it will just be Halo 3 that creates a vacuum for other gaming companies in a couple weeks.

If you are Activision (NASDAQ:ATVI) or Electronic Arts (NASDAQ:ERTS), you might want to wait until after the first week of October before making any major release announcements.  Companies that make video game announcements around that time will not get heard.  GameStop Corp. (NYSE:GME) shares closed up 2.8% today at $50.18, just over 3% from the all-time highs of $51.99.

Hopefully this will help Microsoft (NASDAQ:MSFT) finish its own fight.  Microsoft’s stock should no longer be called "Mister Softie."  It’s new nickname should be "Master Chief."  If you want all the last minute news on it, you can access the Xbox.com site here.

What would a spin-off of Bungie and Xbox be worth to Microsoft shareholders?  It doesn’t matter because it almost certainly won’t happen, but it would be an interesting exercise.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

*IMAGE PROVIDED BY BUNGIE STUDIOS.

Posted on: September 11, 2007 – 5:46 pm in Video Games, , , , , , , , ,

Cramer’s Tight End Fantasy Stock Picks (T, ED, EPD)

On tonight’s MAD MONEY, Jim Cramer continued his ‘fantasy football draft pick’ methodology in picking stocks for a portfolio that will withstand a recession.  Tonight after a strong market he wants to review a portfolio of tight end picks.  These will stand firm and are still on offense and score touchdowns occasionally (upside, with high dividends that protect).  Here are his three picks:

  • AT&T (NYSE:T);
  • Con Edison (NYSE:ED);
  • Enterprise Partners (NYSE:EPD).

In the prior segment he gave his "wide receiver picks" that are the aggressive big scoring stocks.

Last night he gave his picks that were not defensive, but still the leaders as the quarterback.  But before that he gave his solid Defensive linemen picks that are defensive stock picks, and four of those were in our own LIST OF 17 DEFENSIVE STOCKS that we modified last Friday morning.  Sixteen of those seventeen stocks closed up today.

I use baseball analogies quite frequently, but if you aren’t American or if you aren’t a football fan these shows this week are probably a challenge to watch.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

Posted on: September 11, 2007 – 5:27 pm in Cramer, , , ,

Jim Cramer’s Fantasy Football Stock Picks (VMW, RIMM, AAPL, ISRG)

On tonight’s MAD MONEY, Jim Cramer continued his ‘fantasy football draft pick’ methodology in picking stocks for a portfolio that will withstand a recession.  Tonight after a strong market he said you need some Offensive players with scoring ability.  Here are his wide receiver picks that keep popping up in the media that make the biggest plays (capital growth):

  • Research-in-Motion (NASDAQ:RIMM), one of the ‘New Four Horsemen of Tech’ with subscribers rising rapidly and hardware sales going gangbusters.
  • Apple (NASDAQ:AAPL), also one of CRAMER’S TOP PICKS FOR 2007.  iPhones and Macs are selling unbelievable well.
  • Intuitive Surgical (NASDAQ:ISRG) is his pick in Medical Tech for the DaVinci robot.
  • VMware (NYSE:VMW) as the rookie of the year after an explosive IPO and leader in Virtualization.

Last night he gave his picks that were not defensive, but still the leaders as the quarterback.  But before that he gave his solid Defensive linemen picks that are defensive stock picks, and four of those were in our own LIST OF 17 DEFENSIVE STOCKS that we modified last Friday morning.  Sixteen of those seventeen stocks closed up today.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

Posted on: September 11, 2007 – 5:17 pm in Cramer, Defensive Stocks, , , , , , ,

AMD Claws Back

AMD (AMD) did the unexpected. It added market share during Q2. AMD gained 2.5 percentage points of the worldwide microprocessor market last quarter, iSuppli Corp told Reuters.

AMD’s gain, made amid declines in average selling prices, was due to increased shipments of microprocessors for notebook and desktop PCs and server computers used by businesses.

iSuppli voiced one word of caution. The price war between AMD and Intel (INTC), which lost the share that its smaller rival gained, is still in full swing. In other words, gross margins are bad.

Douglas A. McIntyre

Posted on: September 11, 2007 – 4:05 pm in Semiconductor, ,

Texas Instruments Guidance Solid, But Not Like Intel (TXN, INTC)

Texas Instruments (NYSE:TXN) released its mid-quarter update today with a tighter range and here are the updates:

  • Total revenue between $3.56 billion and $3.72 billion, compared with the prior range of $3.49 billion to $3.79 billion;
  • Semiconductor revenue between $3.36 billion and $3.50 billion, compared with the prior range of $3.29 billion to $3.57 billion; and
  • Education Technology revenue between $200 million and $220 million, consistent with the prior range.
  • TI expects EPS from continuing operations between $0.49 and $0.53, although that includes a $0.02 gain on the sale of its semiconductor product line associated with DSL customer-premises equipment which was closed in July.

Back in JULY with earnings, it gave the following guidance: 

  •     * Total TI, $3.49 billion to $3.79 billion;
  •     * Semiconductor, $3.29 billion to $3.57 billion; and
  •     * Education Technology, $200 million to $220 million.
  •     * Earnings per share to be in the range of $0.46 to $0.52.

This also follows yesterday’s analyst downgrade note on Qualcomm (NASDAQ:QCOM) out of American Technology Research that said Texas Instruments would be winning Motorola (NYSE:MOT) business away from Qualcomm in the second half of 2008.

Shares have traded as low as $28.24 and as high as $39.63 over the last 52-week. Shares closed up 1.4% at $35.72 in normal trading today, and that follows an $0.08 decline on Monday.  So far it appears traders wanted more now that Intel (NASDAQ:INTC) raised its guidance yesterday.  Shares are initially down 1% in after-hours at $35.36. 

In school terms this would be a PASS, but not with honors.

Jon C. Ogg
September 11, 2007

Posted on: September 11, 2007 – 3:50 pm in Earnings, Semiconductor, , , ,

The 52-Week Low Club

King Pharmaceuticals (KG) One of the company’s patents found to be invalid. Down to $12.59 from 52-week high of $22.25.

Korn Ferry (KFY) Earnings and employment outlook not doing executive search firm any good. Down to $17.45 from 52-week high of $27.13.

New York Times Company (NYT) Stock get bad rating from Banc of America. Down to $20.21 from 52-week high of $26.90.

Applied Digital Solutions (ADSX) Majority holder of VeriChip (CHIP) who implantable chip technology creates cancer in animals. Down to $.88 from 52-week high of $2.82.

Smart Modular Technologies (SMOD) Chip maker offered disappointing preliminary fiscal fourth-quarter and 2007 results. Down to $6.86 from 52-week high of $15.89.

Active Power (ACPW) Power transport solutions shares just keep sliding. Down to $1.28 from $2.94.

Himax Technologies (HIMX) CFO of Taiwanese semiconductor-company named in class action suits. Drops to $3.53 from 52-week high of $7.10.

Douglas A. McIntyre

Posted on: September 11, 2007 – 3:47 pm in HI/LOW, , , , , , ,

Cisco Clarifies Its Palm Relationship (CSCO, PALM, RIMM)

In corporate America there are many developments and deployments that never make it public because they are minor events to the company that day.  But sometimes even a slight change in technology use or adoption in one company can have ripple effects that play out against another company or an entire sector over time.  Last week we ran a piece titled “Palm’s True Loss: Cisco as a Client” that discussed Cisco Systems’ (NASDAQ:CSCO) changing from Palm Treo smartphone devices.  The good news for Palm (NASDAQ:PALM) is that Cisco Systems is not dumping the Palm Treo smartphone, or at least not entirely. 

What is happening is that as part of the mobile workforce plan, Cisco is offering a variety of smartphone devices to choose from.  This is after a one and a half to two year upgrade after first noticing Cisco’s mobile workforce in summer of 2005 with Palm Treos attached.  Cisco users in this latest upgrade cycle were offered a choice of the Nokia E61i (not the regular Nokia E61 as stated in prior article), Motorola’s Q phone, Samsung’s BlackJack and i600, RIM Blackberry and the Treo 650.   

So the Palm Treo is not completely out of the picture.  Research-in-Motion’s (NASDAQ:RIMM) is in there after all, and that makes sense considering the deployments that have worked on a cross-over basis with both companies and the related networks for some time.  Discussions with contacts inside Cisco did not indicate that Blackberry was a choice initially.  A communication from Molly Ford, one of Cisco’s PR managers, did indicate that Cisco IT continues to talk to a widerange of handset manufacturers about their future roadmaps and test devices foraddition to the internal certified range of devices, including Apple, HP, HTC,Motorola, Nokia, Palm, Samsung and RIM.   

Molly Ford also indicated that Palm worked very hard over the last couple of years to provide Cisco IT with support for its fleet and that Cisco would have no problem in picking a Palm device in the future.  So it appears the good news is that Palm is not being canned entirely.  But the choices in smartphones have increased. 

While it is not public what percentage of employees are changing devices, personal contacts have noted that it isn’t just a few here and there.  If this was the brand of a ballpoint pen or which personal ISP was being used, it wouldn’t even be a discussion. These smartphone devices are such a topic of conversation among business people and random airport travelers that any new device introductions can matter.  If this was Acme Router Co. making this change it would not be an issue.  But this is Cisco, and the company indirectly influences many technology decisions and directions outside of its own efforts.  This can create some added ripples that otherwise would not have come up.

Neither of the above points would be noted if it wasn’t for seeing this directly and hearing about it so frequently from personal and professional contacts.  Wall Street and all of its minions have become techies whether they like it or not, and this carries over into almost every field with mobile sales and support staff.  Almost on every business (or pleasure) trip from New York to Chicago to California it seems the latest smartphones are a topic of conversation.   I won’t bore you with other such examples and references that have been shared by my contact base, but that’s more than just conjecture.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

Posted on: September 11, 2007 – 2:46 pm in Consumer Electronics, Internet, Telecom, Wireless, , , , , , ,

OPEC To Raise Oil Supply By 2%

OPEC has decided to raise oil production by 2% to meet winter demand.

According to The New York Times: "OPEC representatives said they were aware that excessively high prices might put a dent on a world economy that is already suffering from a weak housing market in the United States." But oil only ticked down slightly and still traded above $77.

In all probability, oil traders see the move as symbolic at best. The market still faces potential disruptions in production in Mexico, Venezuela, and Nigeria. And, a number of refineries are currently off-line for refurbishment. In addition, it is still hurricane season in the Gulf of Mexico.

In other words, OPEC did not do anyone a favor.

Douglas A. McIntyre

Posted on: September 11, 2007 – 1:32 pm in Oil & Gas

Mobile Search Ads Poised To Explode: Good News For Carriers (VZ, T, S), Content Firms, Google (GOOG)

From Silicon Alley Insider

Revenue from U.S. mobile search advertising will soar from $33.2 million this year to $1.4 billion in 2012, at a compound annual growth rate of 112%, says Princeton, N.J.-based research firm The Kelsey Group. If the market is anything close to that, that’s good news for a number of mobile players, each of whom wants a piece of the pie:..continued here

Posted on: September 11, 2007 – 1:09 pm in Uncategorized

Many Housing Stocks Still Hitting Lows (CTX, DHI, KBH, LEN, RYL, MHO, BECN, BLDR, MAS, XHB)

Stock Tickers: CTX, DHI, KBH, LEN, RYL, MHO, BECN, BLDR, MAS, XHB

After a mid-day review of 52-week lows, there was one obvious group that makes this list now more frequently than it does not: HOMEBUILDERS.  Related companies are also on the list of usual suspects as well.

**denotes hit intraday 52-week lows but may be above now

Centex (CTX)              $25.88; prior low $26.03
DR Horton (DHI)        $13.58; prior low $13.61
KB Home (KBH)        $26.43; prior low $26.55
**Lennar (LEN)          $25.61; 25.50 prior low (today low $25.34)
**Ryland (RYL)           $25.19; prior low 24.92 (today low $24.90)
**M I Homes (MHO)   $14.82; prior low 414.81 (today low $14.65)   

Those with related activities that saw intra-day lows under the prior 52-week low ar as follows: Beacon Roofing Supply (BECN), Builders Firstsource (BLDR), and Masco (MAS).

About the only good news is that the SPDR S&P Homebuilders (AMEX:XHB) shares are actually UP on the day now with the broader markets.  XHB shares are up 0.8% at $22.81, and its 52-week range is $22.59 to $40.03.  This ETF is being led by some of the large suppliers that serve the industry rather than by the homebuilder components themselves.  Toll Brothers (TOL) and Pulte Homes (PHM) are actually up on the day.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

Posted on: September 11, 2007 – 11:45 am in Housing, , , , , , , , , ,

Yahoo! Will Be Hurt By Online Ad Trend

Barron’s looks at research from Pacific Crest showing that online ad revenue growth will slow to 25% in Q3. The figure includes both search text ads and display. The firm’s previous forecast was 30% for the period.

Since Yahoo! (YHOO) gets the majority of its advertising from display and that portion of the market is growing more slowly than search, the company faces a challenge to do well this quarter. But, as second blow, Pacific Crest points out "While Panama is working operationally, we believe that the limited search volume relative to Google (GOOG) leaves [advertisers] unmotivated to spend more on Yahoo.”

It would not be surprising to see several brokerages lower their Q3 expectations for Yahoo!.

Douglas A. McIntyre

Posted on: September 11, 2007 – 11:32 am in Internet, ,

Laptop Units Up But Dell Slips (DELL)

Barron’s was good enough to point to a new survey from DisplaySearch. It covers laptop sales for Q2.

Notebook sales rose 40% in Q2 this year compared to the same quarter in 2007, up to over 24 million units.

But, sales of Dell (DELL) notebooks were slower than the industry as a whole, moving up only 10% to 3.4 million units. The company still held second place overall with a global share of 14.1%.

Hewlett-Packard’s (HPQ) increase over last year was 77% to 4.7 million units, a global share of 19.5%.

The figures indicate that a turnaround at Dell still may well be several quarters away. Laptop sales are out-pacing desktops at most PC companies, but Dell continues to lag.

Douglas A. McIntyre

Posted on: September 11, 2007 – 10:55 am in PC Companies, ,

Institutional Buyer Sheds Light on Dendreon (DNDN)

An interesting event happened yesterday in the form of an SEC Filing on Dendreon (NASDAQ:DNDN) that ran the stock.  In a fed-filing from yesterday it was disclosed that BNP Paribas Arbitrage SA held 6,961,101 shares of Dendreon stock.  That equates to an 8.18% stake.  If you review the June 30, 2007 holders, this will put BNP Paribas at roughly double the holdings held by Barclays (largest holder previously).

This filing actually lists the transaction date as JULY 25, 2007, so there is a full six weeks of look back here. If that form is accurate on the ownership date, shares are higher now than on the trade date.  Also last night the company filed its form 424B3, which allows holders of the 4.75% convertible senior subordinated notes that were placed on June 11 and July 11, 2007 to resell notes and common shares.  This is actually a common event and does not necessarily mean any such sale is pending.

Other than its breast cancer Phase I data from last month, this one has been fairly quiet on the news front of late.

Yesterday there were some 13.68 million shares that traded hands and shares rose 5.6% from Friday’s close.  Shares are up another 1.5% today at $8.25 and it has already traded over 6 million shares in less than two hours of being open.  The stock did briefly put in a near-term high of $8.48 today, but have come back in.  The $8.30 to $8.35 had been the prior intra-day levels that acted as intraday highs in both July and August.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

Posted on: September 11, 2007 – 10:24 am in Biotech, , ,

News Corp And Apple: Mad But Not Stupid

News Corp (NWS) will not pull its shows from the Apple (AAPL) iTunes platform the way NBC did.

"Right now we have a perfectly good relationship with Apple," COO Peter Chernin told Reuters. "But let me say this, we’re the ones who should determine what the fair price for our product is, not Apple."

That tells the market two things. The first is that News Corp must be making money on the partnership. Murdoch & Co. are not running a charity.

And, it also says that Apple has been forewarned. News Corp’s patience with the current pricing model won’t last forever.

Is anyone listening?

Douglas A. McIntyre

Posted on: September 11, 2007 – 9:53 am in Media, ,

Price Cut Spikes Up Apple iPhone Sales?

Piper Jaffray’s Gene Munster, who makes a living walking through AT&T (T) stores counting Apple (AAPL) iPhone sales says that the recent $200 price cut has increased unit sales by 300% from 9,000 a day to 27,000 a day.

According to Business 2.0, Munster thinks the improvement will move down to a sustained 50% increase. There is no way to confirm that number or tell whether it is close to accurate.

Apple will still have to do better than a 50% increase to offset the $200 price drop.

End of the math lesson.

Douglas A. McIntyre

Posted on: September 11, 2007 – 9:47 am in Consumer Electronics, ,

Companies That Management Can’t Fix: Warner Music

Now that results for the first half of the year are out, 24/7 Wall St. is revisiting its features on companies that management cannot fix. These firms have lost the ability to be turned around no matter who runs them. They become candidates for sale or liquidation, but the odds that they can do much with their current share prices is very low.

Warner Music Group (WMG) shares have fallen from a 52-week high of $27.24 to $10.92. As a large music publisher, its business model has been ruined by the digital download business.

The Wall Street Journal describes the secular decline of the WMG’s industry: "Piracy of songs over the Internet and the shift in buyers’ preferences from physical sales to new forms of digital music are a continued challenge for the music industry. Though Nielsen SoundScan data show first-half digital tracks sales surged 48.5% from a year ago, compared with a 19.3% drop in CD sales, the overall slide in sales of CDs has far eclipsed the growth in sales of digital downloads, which were supposed to have been the industry’s salvation."

According to The Associated Press, the trend away from the CD is accelerating: "A total of 229.8 million albums were sold in the U.S. between Jan. 1 and July 1, according to Nielsen SoundScan figures released Wednesday. That’s a 15 percent decrease over the same period last year. Meanwhile digital tracks sales increased 49 percent to 417.3 million this year."

WMG now operates in a world controlled by Apple (AAPL) iTunes and piracy. Apple has little incentive to offer digital downloads at high prices. It is in the business of making profits on iPhones and IPods. Pricing is an issue for content owners. NBC recently pulled out of iTunes over pricing issues, but WMG does not have a deep-pocket parent like NBC does in GE (GE).

It is sunset at Warner Music and the question now is what management will do to the company. It can only cut costs so much.

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

Posted on: September 11, 2007 – 9:25 am in Media, , ,

IPO FILING: ArcSight, Inc., A Data Security Play (ARST)

ArcSight, Inc. has filed to come public via an IPO and has proposed the sale of up to $74.75 million for filing purposes.  The company will take the proposed ticker "ARST" on NASDAQ.  The filing lists Morgan Stanley and Lehman Brothers as lead underwriters, and lists Wachovia and RBC Capital Markets as co-managers.  ArcSight in short is a data security play.  More detailed data can be found on the compan’s website http://arcsight.com/.

Read More »

Posted on: September 11, 2007 – 9:11 am in IPOs, Internet, , ,

TradeKing Looks At Its Place In Brokerage Industry

TradeKing CEO, Don Montanaro, has been around. He started at Quick & Reilly which was famous as a pioneer in customer service at discount brokerage firms. And, the lessons he picked up there have stayed with him.

24/7 Wall St. has a chance to talk with Montanaro and Roberto Donovan, the firm’s VP of client experience. TradeKing has done unusually well in the Barron’s and SmartMoney surveys of discount broker customers, and Montanaro attribute much of that to the firm’s willingness to offer online service like live chat and telephone support, which some firms have dropped.

TradeKing has also developed the equivalent of social networking for customers. They can post blogs at the tradeking.com site and share their portfolios online.

The firms also offers sophisticated analytics packages and has just added MarketGrader to that list. 24/7 Wall St. uses that software, which is also available on Barron’s, for some of its analysis. The platform has the advantage of upgrading its ranking on 5,800 stocks quickly when news comes out on a rated company.

One of Montanaro’s beliefs is that customers get what they pay for. Discount broker fees have dropped and some brokers are even offering "zero commission" packages. TradeKing says that its skill is in attracting customers who want a good deal of care, something that is not available from every competitor.

Strong customer service is not inexpensive. That is the risk TradeKing takes. But, it appears to be paying off nicely.

Douglas A. McIntyre

Posted on: September 11, 2007 – 8:55 am in Brokerage Firms

VMware, Already An Acquirer (VMW, EMC)

VMware (NYSE:VMW) is not wasting any time and not resting on its laurels.  The virtualization leader has been public not even one month yet.  The company today announced at its VMWORLD CONFERENCE 2007 that it has acquired Dunes Technologies, a company that provides IT process orchestration software for virtual environments. Financial terms and conditions of the deal were not disclosed.  This is a bit more aggressive than we would have expected last week, but this company has a whole lot of market cap to catch up to in the form of numbers and results.  This probably won’t be the last deal it ever makes.

Raghu Raghuram, vice president of products and solutions at VMware: "Dunes has developed a powerful orchestration platform that will allow us to automate the entire virtual machine lifecycle from requisition to de-commissioning, while complementing existing VMware management and automation solutions such as VMware Lab Manager and the recently announced VMware Virtual Desktop Manager."

Dunes Technologies was foundedin 2001 has been financed and developed under the leadership of Affentranger Associates.  The company is based in Lausanne, Switzerland with offices in Stamford, CT.

Shares of VMware are up another 2.4% pre-market at $78.60.  EMC (NYSE:EMC) shares are up almost 1% at $19.33 pre-market.  This has been one incredible post-IPO story.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

Posted on: September 11, 2007 – 8:20 am in Mergers and Buy Outs, Software, , , , , ,

Amgen: Today’s Review Critical For Anemia Reimbursements (AMGN)

Amgen (NASDAQ:AMGN) has a huge day ahead of it.  The biotech giant is presenting data today on the appropriateuse of Erythropoiesis Stimulating Agents in Chronic RenalFailure patients to a joint meeting of U.S. Food and DrugAdministration advisory committees.  We noted just last week how this chance of increased reimbursement rates could create a major catalyst for the shares.  We even compared the similarities in the scope for shareholders to the past blow-up and recovery witnesses at Biogen-Idec (NASDAQ:BIIB), although the actual events were different circumstances.

The company is presenting data that shows these are safe when used appropriately and will explain the critical roles these agents play in managing anemia in CRF patients.  It will also review some of the potential risks in recent trials.  Amgen will also lay out the need for an appropriate hemoglobin level and will show the importance of an ongoing trial to redeuce cardiovascular events.  The company alsoidentifies areas for future study and will present data that suggests patient response is a stronger risk factor for poor outcomes than ESAdose.

Some analyses have shown that higher ESA doses are associated withpoor outcomes. But Amgen noted that it is difficult to determineif higher doses cause worse outcomes, or if higher doses are observedin patients who are poor responders because of worse health status.  The company is also saying that certain ‘hyporesponders’ that have poor response have a greater burden of illness and a greater risk or mortality and a patient’s underlying health may be a better predictor than use of these drugs alone. The FDA already has a black box safety warning on all ESA labels as of now.  It will also address its TREAT trial that will investigate survival advantages in a 4,000 patient study  to determine the impact of anemia therapy on mortality andcardiovascular morbidity in patients with CKD and type 2 diabetes.

As far how idely these have been used, this is the top-reimbursed area in drugs from Medicare and Amgen claims over 2.2 million Chronic RenalFailure patients have used its Aranesp or EPOGEN.  A vote is not likely until much later in the day and the outcome is still not at all certain.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

Posted on: September 11, 2007 – 7:44 am in Biotech, , , , ,