We have some very unusual developments that came late in the week that we want you to keep on your watch lists for the coming week.  We also included the big events coming down the pipe for next week.  Morgan Stanley (NYSE: MS) is of ongoing interest.  Genzyme Corp. (NASDAQ: GENZ), Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), Dendreon Corp. (NASDAQ: DNDN), Opexa Therapeutics, Inc. (NASDAQ: OPXA) are all of special interest this next week.  Other key issues to watch will be Berkshire Hathaway Inc. (NYSE: BRK-A), Fred’s Inc. (NASDAQ: FRED), GSI Commerce Inc. (NASDAQ: GSIC), Applied Materials Inc. (NASDAQ: AMAT), Wal-Mart Stores Inc. (NYSE: WMT), Leap Wireless (NASDAQ: LEAP), and MetroPCS (NYSE: PCS).

Morgan Stanley (NYSE: MS) will be the brokerage firm of choice to watch, following all the rumors of a John Mack exit as CEO to the role of Chairman.

Genzyme Corp. (NASDAQ: GENZ) is on suicide watch.  The market has forgotten to remind Genzyme that it’s a bull market again.  We said last week that it was on the verge of hitting 52-week lows.  It did…. Here was our BioHealthInvestor.com analysis, and that is what is hurting the stock.  The market is trading Genzyme as though another big shoe is going to drop.

Two rumors were around this week that we took note of in Biotech-Land. Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) rose over 6% Friday, but the volume of 2.7 million shares was not indicative of an imminent deal.  Options were active, with 5,285 of the AUG $7.50 CALLS traded vs. open interest of 6,880.  The other one worth noting was Cubist Pharmaceuticals Inc. (NASDAQ: CBST) as it had some loose buyout rumors this last week as well.  The stock is an old favorite of ours for the possibilities of a buyout with its Cubicin and treatments for hospital-borne diseases and infections.

Berkshire Hathaway Inc. (NYSE: BRK-A) NYSE: BRK-B) did very well on earnings, if you use the Buffett calculation of including gains.  Earnings were $3.3 billion or $2,123.00 EPS and revenues were $29.6 billion.  Non-GAAP earnings not including gains were $1,147.00 EPS.  Thomson Reuters had a figure of $1,238.00, but the estimates are operations estimates rather than the gains and losses estimates.  The results included a large derivatives gain as well.

Fred’s Inc. (NASDAQ: FRED) was a Barron’s winner.  The weekly financial bible gave it a very positive article with some noting that it could go from $12 to $16 and one noting that it trades at roughly half the multiple of peers.

GSI Commerce Inc. (NASDAQ: GSIC) is likely to have a 10 million share secondary offering this week. Approximately 81% of the shares being sold are by backer Softbank and by its affiliated holders and insiders.  In short, its 24+ million share float is about to get a lot larger and it will be of little to no benefit to GSI itself.  Amazingly enough, shares held up all week and closed out at $18.44 (just under teh $18.75 high of the last 52-weeks).

We doubt anything is imminent here on this front, but we want everyone to consider the notion that Leap Wireless (NASDAQ: LEAP) and MetroPCS (NYSE: PCS) could reconsider a merger after that failed merger from 2007.  This is on the heels of a Sprint and Virgin deal, and this merger might come from need rather than greed.  Both companies had very poor showings after earnings this last week.

A tiny company called Opexa Therapeutics, Inc. (NASDAQ: OPXA) signed a stem cell technology sale agreement with Novartis A G (NYSE: NVS) that could ultimately be ten-times larger than the company itself.  This one closed up over 300% higher, that is three-hundred…. on the deal.  It is still just a $2.03 stock, but this one just got on the map as over 7.9 million shares traded hands.

Earnings season is winding down and we have a few key stocks left:

• Applied Materials Inc. (NASDAQ: AMAT) is due with earnings on Tuesday with estimates around -$0.08 EPS and $955 million in revenues.
• Also on the same day we get earnings from cult stock Dendreon Corp. (NASDAQ: DNDN).  The Dendreon earnings themselves won’t matter, it is the increased cash expenses and if we get any new status on its FDA path to the approval of PROVENGE for a last line of defense against prostate cancer.
• Wal-Mart Stores Inc. (NYSE: WMT) is also on deck on Thursday with estimates of $0.86 EPS and $103.1 billion in revenues.

Another house keeping issue for Uncle Sam…. the FOMC has a two day meeting on August 11 and August 12 with a decision on rates at roughly 2:15 PM EST on the 12th.  With a current 0.00% to 0.25% target range, there is effective a zero-percent chance of a rate hike according to Fed Fund Futures.  But the same Fed Fund Futures look for a minimum of 0.25% in December and those Fed Fund Futures get pretty close to calling for an almost certainty of 0.50% Fed Funds by Feb. 2010.

Lastly, we’d make an alert to our readers that on Monday we will be running a huge story at BioHealthInvestor.com on the recent heating up of the drug wars.  The diabetes drug war that is.  There have been a ton of fresh developments just in the last week and this goes much deeper than our original “next $170 billion opportunity in blockbuster drugs” we did for eight of the top diseases and conditions affecting America.  This one is solely around the diabetes and obesity treatments coming down the pipe.

JON C. OGG
August 8, 2009

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