Stories to Watch in the Business World This Week

Stocks and stories for the week…

AVNR: It’s worth keeping an eye on Avanir Pharmaceuticals (AVNR) again with the stock trading well off its 52-week high after a slower than expected launch of Nuedexta, the company’s treatment for pseudobulbar affect (PBA) approved by the FDA in late 2010. PBA is not a life threatening condition by any means, but a rebound in sales could be in order as analysts had previously expected Nuedexta to eventually rake in $350-$500 million annually. Also boding well for the drug’s future, the European Medicines Agency (EMA) has recently announced the acceptance of Avanir’s filing to put the drug on the market in Europe.

In looking for a rebound in price while the long side of the Avanir story shapes up, however, there are factors that might not make the going so easy. Impax Laboratories filed suit a few months ago challenging Avanir’s patents relating to Nuedexta, and Avanir in turn filed a patent infringement lawsuit against Impax. While the legalities and the lawsuits have weighed heavily on the stock, the lack of insider support has also left investors feeling somewhat vulnerable.

Aside from Nuedexta, Avanir has additional pipeline products in the works, ensuring that the company is not viewed as a ‘one trick pony’ should Nuedexta fail to reach expectations, but it’s also due noting that nothing else is imminently close to market. The first patient in the company’s PRIME trial for AVP-923 in the treatment of central neuropathic pain in patients with multiple sclerosis (MS) was only just recently enrolled .

With shares setting new 52-week lows to close last week, keep an eye on this one as a potential rebound play; or even as a potential buyout candidate , should someone see the long term potential of Nuedexta.

AMRN: Although shares of Amarin Corporation (AMRN) jumped by over six percent during Friday’s trading, this might still be a beaten down stock that will be worth watching. Shares flew towards twenty dollars earlier this year on positive trial news and talk of a potential buyout , but the bottom fell out when a buyout never materialized and investors were given the impression that Amarin intends to ‘go it alone’ with AMR101 for the treatment of high triglycerides.

Amarin still pops up on most of the ‘potential buyout’ lists for the biotech sector, and now the stock is starting to get some attention as a potential rebound play as well.

With so many high profile launches hitting the market with a thud over the past year, Amarin may be well better off being acquired or landing a big time partner , but the highly successful Phase III trials that led to the initial spike in AMRN share price are indicative of the drug’s potential on the market.

Keep an eye on this rebound play.

NFLX: In keeping with the theme of potential recovery and buyout stories, how about Netflix (NFLX)?

The Netflix calamity continued last week as the stock closed Friday at just under sixty four bucks, well off its highs for the year of over three hundred dollars. A few questionable decisions regarding service pricing led to the ultimate downfall of this company’s share price, and the pricing of some convertible debt led to an even further drop, but the foothold that Netflix has in the DVD-by-mail and streaming video arenas has many believing that the company won’t be kept down for too long.

Expansion into the international market is on the horizon for Netflix, and it also seems likely that many of the millions who bailed ship during this year’s confusing pricing and business strategies will start trickling back to the service, if not for any other reason than a lack of adequate competition. With the Christmas season among us, and consumers in the spending mood, the rebound in customer numbers could come as early as this quarter.

On the other hand, the company that essentially put Blockbuster out of business may be in danger of having allowed potential competitors to close the gap.

Amazon (AMZN) comes to mind as a company whose business plan has moving into the digital media market on the front burner, and you can bet that the beaten-down price of NFLX has potential buyers salivating at the thought of picking up the company’s subscriber base for a fraction of what it would have cost just months ago.

That said, it’s been the seaon of the short trader of late, and as quickly as they fall, they can rebound.

Given Netflix’s past history, potential to re-acquire lost subscribers and renewed positive media coverage, this one might not be kept down for too long.

SIRI: The talk of a Liberty Media takeover of SiriusXM (SIRI) led to a pretty volatile week for the satellite radio service provider leading into the Thanksgiving holiday. The situation is far different now for the Liberty/SiriusXM marriage, however, as back when the ‘partnership’ was consummated, Liberty saved SIRI from the brink of bankruptcy. Now, SiriusXM can be considered a company on the up-and-up as another round of record revenue is in the books with the holiday shopping season upon us once again – with consumers that are willing to spend money, according to early ‘Black Friday’ reports.

This year SiriusXM also has its new 2.0 platform available to attract new customers, and previous year-end guidance is still expected to be met.

With free cash flow still improving , the company can concentrate resources to staying ahead of its potential competitors while also paying down debt early, a strategy employed in earlier quarters.

Always exciting, this is still one to watch with the buyout talk abounding and holiday shopping season leading to additional subscriber growth.

LPTN: Judging by last week’s price volatility and increased volume – given that it was a holiday week – Lpath (OTCBB: LPTN) could be starting to get noticed for its ImmuneY2 technology that generates antibodies to target bioactive lipids. This technology inhibits the growth and spreading of various diseases and inflammatory/auto-immune disorders and Lpath is the only company to have yet taken it so far along in development.

Lpath’s successful strategy of actively targeting bioactive lipids landed the company a powerhouse partner in the name of Pfizer (PFE), who has already committed millions to the development of iSONEP for the treatment of Wet AMD and also retains a first right of refusal for Lpath’s second lead product candidate, ASONEP for the treatment of cancer.

Milestone events are also on the horizon, as the company has recently announced the first dosings of two proof-of-concept trials for iSONEP (PEDigree to measure iSONEP as a treatment for retinal pigment epithelium detachment (“RPE detachment” or “PED”), and Nexus as a treatment for Wet AMD) and also has plans to initiate a Phase II for ASONEP in 2012.

Big things may be in store for this small company, which has thus far been trading below the radar while holding technology that makes it the category leader in lipidomics-based antibody therapeutics; a category gaining attention enough to have Pfizer jumping on board very early early in the game.

Worth watching as this story becomes uncovered.

NBY: At a time when large portions of the population are becoming resistant to the long-used standard-of-care antibiotics, NovaBay Pharmaceuticals (NBY) may be worth keeping an eye on as it develops its own resistant-proof substitute that is being primed to enter into numerous, very lucrative markets.

NovaBay’s technology, according to studies to date, essentially mimics white blood cells and offers a shelf life far superior to that of current antibiotics – and does so without the threat of a patient becoming resistant to the treatment, as is increasingly common these days with antibiotic treatment.

Milestone trial events are expected to unfold over the next few months as NBY continues to measure its technology’s effectiveness in Phase II trials in the fields of urology, dermatology and opthalmology.

As those trials progress, a commercial launch of NeutroPhase as a treatment for chronic wounds is planned for 2012, having already received the necessary 510k clearance from the FDA.

In the field of dermatology, NovaBay has already landed Galderma SA as a partner for the treatment of the highly contagious skin infection, Impetigo. Having already completed a Phase IIa trial, a Phase IIb is planned to commence within months and a Phase III is being prepped to initiate towards the end of 2012, assuming positive results.

Although a clinical trial missed its primary endpoint for the treatment of adenoviral conjunctivitis, NBY’s NVC-422 demonstrated efficacy in treating the Epidemic Keratoconjunctivitis (EKC) infection during the same trial. To confirm these results a larger-scale Phase II trial is set to begin early in 2012, with results due about a year later.

In other milestone news, first results from an ongoing Urinary Catheter Blockage and Encrustation (UCBE) trial are due to trickle in during the early parts of 2012, with more to follow.

The current pipeline development stages has NovaBay on track to have a product on the market next year, with potentially three Phase IIIs ongoing in 2013. The pending short term milestone events, combined with the longer-term outlook, should start putting this one on some radar screens.

SIGA: Siga Technologies is a beat-up company with a very beat-up share price right now, evidenced by a sub-$2 price after trading as high as nearly sixteen dollars within the past 52 weeks.

At the crux of the SIGA slide are actions being taken by Sen. Claire McCaskill (D-Mo.), as outlined in a recent LA Times article , that question the legitimacy of the contract award granted Siga earlier this year to provide the nation’s biodefense stockpile with the smallpox antiviral, ST-246.

The Siga story has been marred by numerous potential conflicts-of-interests, and enough lawsuits to make Johnnie Cochran dizzy. With shares beaten down to below the two dollar level, as they are now, this one becomes even more of a potential rebound play and/or buyout candidate.

Although still not FDA approved, the Siga antiviral technology could look pretty attractive to a potential buyer right now, especially given the potential biodefense governmental contract awards that may materialize from around the globe.


OVIT: Going from relatively no volume to some volume is not actually a monumental feat, but OncoVista (OTCBB: OVIT) has been realizing some increased attention as the time draws closer to the expected resumption of a trial that had previously been put on hold.

The company’s technology is geared towards developing personalized, efficacious cancer treatments based on specific biomarkers to detect metastatic tumors. The most advanced product, Cordycepin (OVI-123), is being tested in Phase I/II trials for treatment in patients with refractory leukemia. Worth keeping an eye on OVIT as any influx of trading activity could lead to a quick increase in share price.

Keep in mind the highly speculative nature of the stock, however.

HGSI: How low will it go? Seven bucks is a far cry from Human Genome’s (HGSI) 52-week high of over thirty bucks, but the slow Benlysta launch and failure of a buyout by GlaxoSmithKline (GSK) to materialize have investors feeling blue about this one for the holidays.

That said, the lower it goes, the better the rebound may be and the headlines have been slowly turning in favor of this stock that has quickly been beaten down.

JWN: You know the economy is in the toilet whent the well-off aren’t spending, and a good judge of whether or not the well-off (or their significant others) are spending is by looking at the returns of the high-end retailers such as Nordstrom (JWN).

While trading not to far away from its annual highs, thanks to a steady dose of solid returns, Nordstrom continues to give the market hope that the worst of the economic turmoil is behind us. We knew it was bad a few years ago when JWN was in the tank along with everything else, but if the early ‘Black Friday’ numbers of 2011 are any indication, there might not be anything to worry about this year.

Keep an eye on Nordstrom numbers – when affluent aren’t enjoying their high-end products, then it’s time to worry.

AMZN: Although the headline screams that this year’s numbers “lag” last year’s for online shopping on ‘Black Friday’, the body of the article reads that online shopping jumped 24.3 percent. The continued trend towards online shopping helps the likes of Amazon (AMZN), one of the more dominant online players, especially as this company is expanding its boundaries and looking to make moves into streaming media as it expands its eBook portfolio, putting it at the forefront of the next generation of journalism and casual reading.

If nothing else, the consumer move to online shopping keeps people safe from getting pepper-sprayed at Wal-Mart, hey?

Disclosure: Long SIGA, OVIT, HGSI.

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