VFC's Stock House: Don't Let These Five Speculative Plays Slip Below The Radar
As the broad market sets record highs, potential bargains may still be prevalent in the speculative world. VFC's Stock House offers five speculative stocks to consider.
In a Thursday report, VFC's Stock House identifies five speculative companies developing products, devices or treatments that could alter the scope of their respective sectors over the coming years. A full version of is available at: http://VFCsStockHouse.com
FluoroPharma: Volume First, Exposure Next - Share Price And Results To Follow?
In regards to FluoroPharma, VFC's Stock House emphasizes the shifting healthcare trends that could help this company flourish. Additionally, emphasis is focused on the increased trading volume of late, and what that could mean for future trading.
A summary is provided below:
Trading volume for FluoroPharma Medical (OTCBB: FPMI) has continued on a relative uptick during the early portion of 2013 thus far, based chiefly on the encouraging initial results returned from ongoing Phase II trials involving the company's positron emission tomography (PET) technology that may already be proving superior to the current market standards. As volume has increased, however, the share price has not, which could be an indicator of accumulation ahead of expected catalysts.
With its PET technology, FluoroPharma has developed a pipeline of imaging agents designed for the efficient detection and assessment of various forms of coronary artery disease (CAD) and certain types of cancer. Shifting industry trends towards prevention and early detection - from the current standards of emphasizing treatment - favor FluoroPharma's entrance into this market, and even more so when considering that early detection of CAD utilizing PET technology is also a growing trend. Both of FluoroPharma's front-line agents, CardioPET and BFPET, are currently engaged in Phase II trials as imaging agents for CAD and ischemic and infarcted tissue within the myocardium in chronic CAD patients, respectively. Encouragingly, both have also already returned evidence of superior performance to the current standards, a key factor in speculating as to why shares look to have been under accumulation during the latter portion of the first quarter this year.
Results from these trials are expected to start leaking out as soon as during the second half of 2013, another factor in considering as FluoroPharma as a potential short term catalyst play, while also entertaining its prospects as a long term accumulation play.
As volume increased when the already-realized trial updates became publicly available, increased exposure from the investing community has started to follow, too, and it looks like more of that exposure can be expected over the coming months. Zacks issued an assessment on the company earlier this year that was accompanied by a price target of roughly three times the current FPMI trading levels. Another sign that FluoroPharma is ready for an exposure spike came last week when it was announced that the company's President & CEO would present at the 10th Annual Small Cap Equity Conference in early May in New York City.
A volume boost has already set the stage for FluoroPharma as a potential 'volume before price play' and exposure is often the next step in the process. Assuming that FPMI does pan out into a 'volume before price' story, then it could also be expected that the share price will follow, especially if additional trial updates warrant the increased attention and market cap boost. Therefore, it's worth keeping an eye on this company and it's stock over the near term while the longer term catalysts play out.
Over the long term, continued positive results indicating that FluoroPharma's PET images provide a more clear and concise analysis of a patient's condition could place the company on the map in this category and return investors very significant rewards. FluoroPharma's current market cap - while justified in terms of its speculative nature - may hardly be justified in terms of overall market potential. Already the PET imaging market is measured in the billions of dollars, while PET for use in detecting CAD - the current focus of the company's development - is turning into a billion dollar market in itself. Needless to say, with this company's market cap barely a fraction of its overall market potential, assuming continued positive results, then the potential for swift and significant price gains are possible, possibly in line with the Zacks recommendation.
As is always the case with developmental picks such as this one, investors will identify the potential for cash raising events to stall any rally that materializes around catalyst-based events or price spikes. Such considerations should always be noted and are a large reason why utilizing a strategy that includes 'trading shares' - which allow an investor to trade the volatility around catalyst events - while also building a long term position, for those who wish to see the full story play out. Such a strategy often allows an investor to come out ahead - or on house money - by the time the end-game is near.
In the case of FPMI, the company should have enough cash on hand to last through another trial update, but bear in mind that developmental companies can be expected to raise funds at any point they see fit, which often comes at the risk of dilution to shareholders - hence the strategy of putting 'trading shares' to work along the way.
With volume on the rise and exposure expected to also increase as the ongoing Phase II trials continue to unfold, it's worth keeping FluoroPharma on the radar.
Assured Pharmacy Shareholder Letter Outlines Potential
In regards to Assured Pharmacy, VFC's Stock House dissects the company's recent shareholder letter and applies the company's words to short and long term prospects:
Although to a more modest degree than the above-mentioned FluoroPharma, Assured Pharmacy (OTCBB: APHY) has also experienced an uptick in its trading volume and - based on industry trends and expansion plans - holds significant potential to appreciate in value over the coming months and quarters. With the abuse and misuse of prescription medications rampant in today's society, Assured is quickly setting the standard in the growing genre of personalized pharmaceutical services, which - through more stringent regulation of medications and prescriptions - will help to alleviate the risks of abuse. Assured also works closely with doctors and gears its services towards the early identification of what works best for a particular patient, in a manner more personalized than current standards - and in a manner that alleviates the threat of another Lindsay Lohan riding the train of prescription drug abuse pain.
Thus far, the company has built a foundation of four 'boutique' pharmacies geared towards the treatment of patients suffering from chronic pain and a shareholder letter issued this week highlights the booming growth of its targeted industry and plans for expansion that could place Assured's services into the mainstream of shifting trends, while making its name known on a national level by year-end 2013.
While the early successes of Assured's existing locations provides a solid foundation from which to move forward, the company expects even more growth during the course of the year with an additional six locations slated for grand openings. A store in Colorodo is expected to open next month, according to the latest financial report. In order to ensure a business model that can replicate the success of the Kansas location, in particular, company officials are already networking with local physician groups in the new prospective locations to ensure an early patient base - and hopefully profitability - from the start. Additionally, the company is enhancing its already-stringent distribution methods to further cement its reputation for quality, efficient and safe pharmaceutical services as the new locations are opened.
Although the potential is there for Assured to eventually set the standard for personalized pharmaceutical care, investors should still understand the competition that exists from existing big players in the market, such as Walgreen (NYSE: WAG), Rite Aid (NYSE: RAD), CVS (NYSE: CVS), and even Wal-Mart (NYSE: WMT). The primary difference, however, is that these names emphasize convenience over service, whereas today's patient base is following the trends of the healthcare sector as a whole, which is emphasizing efficiency and safety. That's where Assured could be set to capitalize heavily. While patients are herded through isles of candies, cards, magazines and snacks (and even beer for the big game in many states), which encompass the majority of the floor space at the above-mentioned pharmacies, Assured can quickly gain market share with the help of those doctors and patients looking for quality.
Another key item that investors should note from the shareholder letter is mention of the difficulties that Assured has had in securing financing for its early endeavors. The past few years have not exactly provided the best environment for developmental or still-emerging companies to thrive, but Assured has managed to survive thus far and - as mentioned above - plans significant expansion through the course of the year and also claims an excessive backlog of patients, for which the company will need to raise cash in order to treat.
While additional means of funding should be expected as the expansion picks up steam, however, Assured has taken some measures that could help to alleviate the stresses behind attracting investments. The first major item to note is that the company now trades on the OTCQB, an uplisting from the pinks and a platform to which a new investor base could be attracted. Additionally, an uplisting the AMEX or NASDAQ is also on the "near-term" horizon, according to the shareholder letter, another eventuality that could attract yet more committed investor interest.
To achieve listing on those big boards, however, the company may need to meet higher share price and/or market cap levels, which puts a huge emphasis on the growth expected to be achieved with the upcoming expansion.
In the case of speculative investments, investors are forced to entertain the risks and rewards associated with such investments. As noted above, utilizing a 'trading' strategy with a handful of trading shares with which to play catalysts while potentially building a position for the long term, too, could help to alleviate the risks, but not eliminate them. Still considered a new start-up, there is no guarantee that patients and doctors will jump on the industry trends and choose efficiency and safety over convenience, while securing funds may continue to be a challenge. Although hints at profitability exist, the company is still returning losses. That said - and with the risks entertained - the best bargains in the speculative market are often found before the story becomes one of noted success; henceforth, the rewards are the greatest when a story is found before the majority of the investing community finds it.
As industry trends shift in its favor, Assured Pharmacy and its investors could be positioned to capitalize on upcoming catalysts and milestone events that could place the company on the national stage.
Like FluoroPharma, APHY could be an 'under the radar' play positioning as a nice speculative story for the year 2013.
Quiet AntriaBio Could Quickly Start Making Some Noise
AntriaBio has been relatively silent since inception, but pending results could quickly put this company on the map - and alter the landscape for future basal insulin treatment:
AntriaBio, Inc. (OTCBB: ANTB) made some noise earlier this year when news circulated that the company's once-a-week basal insulin shot, AB101, could eventually replace the current standard of care - currently comprising of daily shots - in a market measured by the billions of dollars and currently dominated by Sanofi-Aventis' Lantus and Novo Nordisk's (NYSE: NVO) Levenir. AB101 was acquired by AntriaBio in bankruptcy court - after millions had already been put into its development - and news that human trials were imminent resulted in a price spike that returned more than a double in price. As the broad markets rallied, however, and interest on the speculative sectors remained low, ANTB shares have drifted back towards their fifty-two week lows and may have presented investors with another solid speculative opportunity, considering the trial catalysts still pending.
AB101 looks to capitalize on one of the fastest-growing trends in the healthcare sector, namely the boom in diabetic care. Other companies, such as SanuWave Health (OTCBB: SNWV) and Mannkind Corporation (NASDAQ: MNKD) have also enjoyed share price success this year based on their own unique approaches to the booming industry, but AntriBio's once-daily injection could turn into the holy grail for patients who have been subjected to daily injections for years, hence the interest on the upcoming human trials, which can return results as soon as later this year. Given that the above-mentioned once-daily (at least) industry standards, Lantus and Levenir, pull in over eight billion dollars annually (combined) the potential for swift appreciation of the ANTB share price is possible, assuming successful trials. Should AB101 reach the later stages of development, then those in at the very early stages could be returned very notable gains, but it's still early for many investors - even the more speculative ones - to look that far ahead.
Concentration now is on the most imminent milestone events, although due attention could be given to the long term story in the peripheral vision.
Of the imminent milestones, AB101 is expected to hit the clinical stage over the near-term, following a successful round of pre-clinical development, according to a recent presentation posted to the AntriaBio website. The company will initiate trials in Russia first, where the costs of conducting such trials are significantly lower and where patient recruitment is known to be up to ten times higher than in the US and Europe. In the meantime, however, AntriaBio will move forward with the FDA IND process while development in Russia continues. With early human data available from the Russian trial available, it's possible that the data could help to expedite the initial IND process in the United States,too. At which point AntriaBio plans to follow the course set by many other developmental companies and look for regional and/or multi-national partners that could potentially help fund development, according to recent company presentations. Such a strategy could help to alleviate investor concerns of excessive rounds of dilutive financing deals that often accompany the pipeline progression of early-stage companies.
That said, the threat of such cash-raising events always exists in this sector, hence the benefits of entertaining the combined trading and accumulation strategy mentioned above.
As the clinical stage positions at the starting block, the catalysts to expect this year include the initiation of the Russian trials, interim and/or actual results and comments referring to the initiation of the IND process in the United States. Company and investor presentations could also include discussions of the pre-clinical data and the potential impact that AB101's once-daily advantages could have on the multi-billion dollar market which it targets. If clinical data starts to return success and as the speculative investing community digests AntriaBio's potential, then volume could pour in to levels that would justify share price increases that could approach the 52-week high levels seen earlier this year.
In building a pipeline of potential - so as not to be known as a 'one trick pony' - AntriaBio is also establishing a long-acting Glucagon-like peptide-1, known as AB201, which is approaching the pre-clinical stages. AB201 would also present a major upgrade as the current standard of care as a once-monthly replacement for what is already on the market.
Numerous industry veterans have been brought on board to helm the developmental stages of AntriaBio's pipeline, all of whom have an established history of bringing small biopharmaceutical start-ups through the point of commercialization. Additionally, multiple members of the management team have histories which involve bringing developmental start-ups to the point of mergers and acquisitions, a point not likely to go un-noticed by those speculative investors looking more towards the near-term catalyst potential. Given recent comments regarding using human data to land regional partners, M&A may be the course of action expected by investors moving forward.
AntriaBio's pipeline is still in the very early stages, but as mentioned at points above, those that find their way into a story early have the potential to reap the biggest rewards over the long run, and ANTB could offer ground-floor potential that could shape the future of basal insulin delivery. As always, the risks should be entertained, including the above-mentioned financing risks, while concerns of trial failures always dominate the sector.
With numerous catalysts pending over the course of the year and with a product that could change the face of a multi-billion dollar industry, it may be worth not letting this story slip too far below the radar, whether it be for purposes of a short term trade or a long term hold - or potentially both.
Sunshine's Dip Below Five Emphasizes Speculative Opportunity
As recently discussed, Sunshine Heart (NASDAQ: SSH) may be positioned to evolve into one of the better 'but the dips' plays of the year. A recent stock offering dropped shares from over the six dollar mark to below five, but the current stages of development of the company's C-Pulse Heart Assist system, designed to treat Class III and ambulatory Class IV heart failure - and market potential of the product - defy SSH's still-highly-speculative market cap. Even more so when considering that the European medical authorities have already granted the device a CE Mark approval, too, and the company could start receiving revenue from sales and/or reimbursement over the near-term.
The pricing of the offering was $5.25, above the levels where shares currently trade.
As a brief recap for those that may be taking their first look at the company, let's take a quick snapshot of the target market: According to statistics posted by the National Institutes of Health (NIH), heart failure is an all too common condition where the heart becomes unable to pump a sufficient supply of blood to meet the demands of the body. The condition is progressive, effecting over five million people in the United States alone, and leads to over a quarter million deaths per year. Over 1.5 million of these cases fall into the category of Class III heart failure - the ambulatory Class IV category adds even more to that total - where current treatments may temporarily relieve a patient's symptoms, but are not fully capable of controlling the effects or symptoms, or of even halting the progression of the condition.
Completed studies to date have indicated that implantation with the C-Pulse could provide superior results to the standards already on the market, leaving Sunshine with an ample opportunity to steal significant share of this multi-billion dollar industry, should C-Pulse advance to the commercialization points. In addition to potentially superior results in treating heart failure, C-Pulse also holds the advantage over competitors that its device is implanted outside of a patient's blood stream, unlike devices by firms such as Heartware International (NASDAQ: HTWR) and Thoratec (NASDAQ: THOR), for example. Devices implanted within the blood stream increase the risk of contamination, while the procedures behind their implantation - since they 'touch the blood' - are also considered much more highly-intrusive than that of the C-Pulse. Another key benefit to being implanted outside of the bloodstream is that it allows for more quality-of-life conveniences, such as the ability to disconnect the device when needed or necessary, during showering, for example.
Although this company has already received its share of attention, especially when shares touched highs near the twenty dollar mark last year, Sunshine may have again slipped below the radar as the broad markets sit at or near their record highs. While slipping even lower than the price of the recent offering, yet continuously returning milestone events that hint at eventual success, SSH is another one to keep on the speculative map. The recent offering dropped the share price down another notch, but all things considered, the company is sitting on a healthy cash pile and could quickly become a buyout/partnership story if the US trial resembles the encouraging results already realized.
D-Day For Titan
With a key catalyst pending, Titan is not one to ignore:
Titan Pharmaceuticals (OTCBB: TTNP) may represent one of the most successful speculative stories of all time. During the course of its pipeline development (including periods where it traded on the AMEX as TTP) the spikes and dips continuously returned double, triples - and even more at times - before the failure of one its lead pipeline candidates failed dropped shares to a penny a handful of years ago. A rejuvenated pipeline based on the prospects of Probuphine and the subcutaneous, controlled-release ProNeura technology, however, has revitalized the company and its share price, while returning investors huge rewards along the way. Shares currently sit at levels of a near-triple, too, in just over a few months time.
A new chapter in this company's development has emerged, though, which could prove to be the most significant milestone reached by the company ever. The FDA is slated to decide within days the fate of Titan's approval application for Probuphine in the treatment of opioid addiction. Multiple trials have proven the treatment effective and an FDA advisory committee recommended its approval in a recent vote. All indications point to approval.
Some speculate, however, that concerns over REMS for Probuphine may delay approval, while others speculate that the FDA may request additional data in regards to dosing before granting the green light for commercialization. Few believe that Probuphine will be denied approval. Those playing this imminent catalyst may take up a couple of strategies, the first being accumulating before the catalyst in order to bank the expected approval gains. Others believe that REMS may delay - not deny - the vote, in which case investors may expect a temporary pullback into which to buy for the next D-day that would then be presented by the FDA.
Regardless of the outcome of this month's decision, an eventual approval is likely. For the record, Titan is one of my personal bests over the years and am sitting this decision out, but will buy back in, should the decision be to delay approval and the share price drops a bit as a result.
While attention is paid to the broad market highs, however, don't forget about those companies with imminent catalyst getting read to unfold, such as those mentioned above, including Titan Pharmaceuticals.
Should Titan receive the nod, the company will be a demonstration of how years and years of patience, trials and tribulations could finally pay off for a company, its investors, and those that will benefit from a new product or treatment hitting market.
Disclosure: Long FPMI, ANTB, SNWV, APHY, SSH.
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