Up 32% This Year, This Health Stock Is Set To Really Take Off

[John Thomas]

The first rule of running a biotech company: Don't run low on cash. Once investors smell a cash squeeze coming, they'll hammer shares mercilessly.

That was the painful lesson learned by the executives at Dynavax Technologies (Nasdaq: DVAX). Though DVAX was pursuing the development of a very promising new vaccine, the company was burning through more than $15 million in cash every quarter and was at risk of not making it to the FDA finish line. Shares, which traded around $5 in October 2012, skidded all the way to $1.

The good news is that the company shored up its balance sheet late last month, and shares have finally begun to rebound. And, with a few breaks, DVAX looks poised to rise from a recent $1.45 to $3, $4 or even $5.

Little Company, Big Target Market
DVAX has spent years developing Heplisav, which is a vaccine for hepatitis B, a disease that currently afflicts 240 million people around the world, according to the World Health Organization.

Though there are existing vaccines on the market, DVAX believes that Heplisav offers the promise of earlier and better protection with fewer doses than current vaccines.

It appeared it was going to be smooth sailing through the FDA approval process until late last year. The FDA seeks two virtues from any new drug: higher efficacy and a comparable or improved safety profile compared to existing drugs.

On the first count, the FDA gave a resounding thumbs-up, as an advisory panel voted 13-to-1 in favor of the drug's increased effectiveness. But the FDA also decided that DVAX had not sufficiently proved that Heplisav was safe.

The FDA did not say that Heplisav was unsafe, only that the clinical trials thus far couldn't conclusively prove that the drug was safe. And the company has been scrambling ever since to deliver better data, essentially conducting a completely new Phase III clinical trial. For much of 2013, DVAX has been designing that new trial, and the company recently said that it will get underway in a few months.

Although that Heplisav trial will not be completed until sometime in 2015, management is likely to deliver interim results throughout 2014, which should serve as catalysts for the stock.

Meanwhile, Heplisav is also in front of the European Medicines Agency (EMA), and the company is expected to respond to the EMA's final information queries later in the fourth quarter and in early 2014. European approval of Heplisav would quickly push this stock toward the $2.50 to $3 mark, and shares would likely move higher from there as U.S. approval starts to come into focus.

So, what would this stock be worth if DVAX receives both European and U.S. approval for Heplisav?

The current hepatitis B vaccine market is around $700 million, led by vaccines offered by GlaxoSmithKline (NYSE: GSK) and Merck (NYSE: MRK), which require three doses. But, according to DVAX, poor compliance is an issue, with only 30% of the people that should get all three required doses doing so. Also, the current vaccines have a slow onset of protection and aren't always effective, especially in people over 40, or those that also have other ailments such as diabetes.

DVAX's Heplisav, which provides more rapid protection, has also been shown to have high levels of efficacy in those who are less responsive to currently licensed hepatitis B vaccines, such as men, people who are obese, and smokers, as well as diabetics. This could lead to greater demand for DVAX's vaccine compared with others.

Moreover, Heplisav may come with a higher price tag than current vaccines. As a result, the $700 million market may expand beyond $1 billion if Heplisav gets approved.

Assuming a $1 billion sales base and 15% operating margins, DVAX would be poised for $150 million in annual profits. The company would likely be worth 10 times that peak profit forecast, or $1.5 billion. The company's current market value is below $400 million, so shares appear to have 200% to 300% upside if both the U.S. and Europe approve Heplisav.

Understand that these are rough estimates, and the ultimate market value will be easier to determine once the company's pricing strategies are better articulated. (More than likely, DVAX would be acquired by a large drug company before actual drug sales took place.)

For now, it's safe to say that the current market value sharply discounts future success, as shares are only starting to recover from the balance sheet issues discussed earlier. Notably, trading volumes now exceed 5 million shares in many sessions, up from around 1 million shares per day earlier this year, reflecting a dramatic increase in investor interest.

Another bullish sign is that since Nov. 6, shares have risen in every trading session (though they still remain well below the $5 levels seen a little more than a year ago). I think longer-term shareholders could see the stock move beyond the $5 mark, a more than 200% gain from current levels.

[John Thomas]

This will be an extremely light week of posting at TRB. Thanksgiving, while sometimes active for the markets, is always a quiet time in terms of client service, meetings and scheduled calls. In the meantime, I?ve got my work cut out for me on the following projects:

1. I?m finishing up my second book right now (I?m a co-author) for a spring release. I think people are going to love it, but it?s still in draft mode at the moment.

2. My team and I are working on the new firm?s official website and related material, which we?ve opted to take our time on rather than throw together just because the firm has been launched. Still have no idea what the finished product will come out like, I?m taking a backseat to Barry on that project for the most part.

3. I?ve picked up a couple of interesting speaking gigs I need to be ready for. One speaking engagement I?m particularly excited about is for the employees at a certain recently-public social media giant during the first week of December. I?m so psyched to meet and greet the troops and hopefully have helpful insights to share.

4. I?ve got a series of fun posts planned for the newest, hottest, most aggressive media firm on the web this winter. They?ve got a kickass audience, tens of millions of young professionals and creative-types hitting their posts every day. I really want to kill it for them.

5. We?re integrating a new performance-reporting and portfolio analytics engine for our advisory clients that we?re really excited about. The rollout is expected to take place next week, it?s taken about six weeks so far to build out and is widely believed to be the best in the industry. I think our clients are going to be really excited as they get access to it.

So that?s it from me for awhile. I?ll be making a couple of TV appearances this week and maybe I?ll put up a post or two, but if I?m not around now you know why. In the meantime, I?d suggest you take this time to read as little as possible about the markets, the economy, etc. It will all be waiting for you when you get back.

Enjoy, my friends, see you soon. ? JB

[John Thomas]

The performance of the Mad Hedge Fund Trader?s Trade Alert Service is still going ballistic, falling just short of a 60% gain for the year last week. Every new subscriber since September has seen 100% of their trades turn profitable. This is your classic ?shooting fish in a barrel? market.

I know guys my age aren?t supposed to be packing in 16-hour workdays. But it?s all worth it when I can level the Wall Street playing field for the individual investor.

Including both open and closed trades, the last 21 consecutive Trade Alerts have been profitable. I am rapidly closing in on old record of 25 successful Trade Alerts, made earlier this year.

The Trade Alert service of the Mad Hedge Fund Trader is now up 58.00% in 2013. The November month to date record is now an enviable 13.54%.

The three-year return is an eye popping 113.05%, compared to a far more modest increase for the Dow Average during the same period of only 32%.

That brings my averaged annualized return up to 38.8%.

This has been the best profit since my groundbreaking trade mentoring service was launched three years ago. These numbers place me at the Mount Everest of all hedge fund managers, where the year to date gains have been far more pedestrian. It seems that their shorts are killing them.

I took profits on my long position in Citigroup (C), which just achieved a major upside breakout, and then rolled the capital into the Financials Select Sector SPDR (XLV). I cashed in on a long position in the Australian dollar (FXA). I also took profits on short positions in the Japanese yen as it approached new lows for the year.

My remaining long positions in Apple (AAPL) and the Industrials Sector Select SPDR (XLI) are contributing daily to my P&L, thank you very much. I am also keeping my short in the Treasury bond market, and will double up on the next ten basis point backup in ten-year rates.
This is how the pros do it, and you can too, if you wish.

Carving out the 2013 trades alone, 74 out of 89 have made money, a success rate of 83%. It is a track record that most big hedge funds would kill for.

My esteemed colleague, Mad Day Trader Jim Parker, has also been coining it. Since April, his own performance numbers have just come back from the auditors, revealing that he is up a staggering 279%.

The coming winter promises to deliver a harvest of new trading opportunities. The big driver will be a global synchronized recovery that promises to drive markets into the stratosphere in 2014. The Trade Alerts should be coming hot and heavy. Please join me on the gravy train. You will never get a better chance than this to make money for your personal account.

Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes my Trade Alert Service and my daily newsletter, the Diary of a Mad Hedge Fund Trader. You also get a real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars. Upgrade to Mad Hedge Fund Trader PRO and you will also receive Jim Parker?s Mad Day Trader service.

To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? box on the right, and click on the lime green ?SUBSCRIBE NOW? button.

[John Thomas]

Now vs 2007

via Eric Peters at wknd notes:

?Show me something hairy, disgusting, distressed,? he said to Singapore?s top real estate deal-maker. And I laughed, having always wondered how my buddy conducted meetings. He runs one of America?s greatest family offices. And we travelled across Asia for 2wks, searching for investment themes, cheap assets, insights, talent. ?Nothing?s underpriced,? answered the deal-maker. So I asked if it felt like 2007? ?That was fueled by excessive debt, private equity, Lehman ? this mkt?s driven by cash, there?s no leverage, just cash, and behind it, more cash.?

Very well said.

The Fed wanted everyone to be flush with cash and now they are. In 2005, only 19% of all home sales were made with cash. Goldman Sachs says that, as of this summer, that number was 57%. Amazing.

Who needs debt when dollars are everywhere?

Sources:
wknd notes (sub required)
Nearly half of homes are purchased in cash (MarketWatch)


The Reformed Broker

Joshua Brown is a New York City-based financial advisor at Fusion Analytics. Josh helps people invest and manage portfolios. Clients range from individuals to corporations to retirement plans to charitable foundations.

_____________________

Top 50 Trending Stocks

Free Access - take a look at Today's 50 Top Trending Stocks and start trading like the smart money!

Reply With Quote Reply With Quote

[John Thomas]

via Eric Peters at wknd notes:

?Show me something hairy, disgusting, distressed,? he said to Singapore?s top real estate deal-maker. And I laughed, having always wondered how my buddy conducted meetings. He runs one of America?s greatest family offices. And we travelled across Asia for 2wks, searching for investment themes, cheap assets, insights, talent. ?Nothing?s underpriced,? answered the deal-maker. So I asked if it felt like 2007? ?That was fueled by excessive debt, private equity, Lehman ? this mkt?s driven by cash, there?s no leverage, just cash, and behind it, more cash.?

Very well said.

The Fed wanted everyone to be flush with cash and now they are. In 2005, only 19% of all home sales were made with cash. Goldman Sachs says that, as of this summer, that number was 57%. Amazing.

Who needs debt when dollars are everywhere?

Sources:
wknd notes (sub required)
Nearly half of homes are purchased in cash (MarketWatch)


The Reformed Broker

Joshua Brown is a New York City-based financial advisor at Fusion Analytics. Josh helps people invest and manage portfolios. Clients range from individuals to corporations to retirement plans to charitable foundations.

_____________________

Top 50 Trending Stocks

Free Access - take a look at Today's 50 Top Trending Stocks and start trading like the smart money!

Reply With Quote Reply With Quote

[John Thomas]

Here were the most read posts on TRB this week, in case you missed them:

Buy Wood.

The Inevitable Year-End Melt-Up

Feel better, everybody gets killed sometimes.

BAML: Here comes the big bank breakout

Jim Chanos on Taking Risks Early

[John Thomas]

Sunday links: trend starters

Quote of the day

Bob Lefsetz, ?If you want to start a trend, start with consumers, not businesses.? (Big Picture)

Chart of the day



Finance stocks are showing signs of life. (StockCharts Blog)

Markets

Why the stock market rally still needs to be respected. (Dynamic Hedge)

Another bear throws in the towel. (The Reformed Broker)

Q4 is for large caps. (Mark Hulbert)

Stocks have been the ?only game in town? for awhile now. (The Short Side of Long)

At least someone is making money on the short side. (Zero Hedge)

A fearless market prediction. (A Dash of Insight

[John Thomas]

Thanks for checking in with us this weekend. Here are the items our readers clicked most frequently on Abnormal Returns for the week ended Saturday, November 23rd, 2013. The description reads as it does in the relevant linkfest:

Jeremy Grantham?s latest provides fodder for everyone. (Kid Dynamite)
Ten high-conviction picks from the ultimate stock pickers. (Morningstar)
On finding investment ideas. (Aleph Blog)
REITs are on sale. (BCA Research)
Four costly ideas investors have paid attention to. (A Dash of Insight)
If you are going to take career risk, do it early in your career. (The Reformed Broker)
We are in the ?mature phase? of the bull market. (Dynamic Hedge)
The case for timber. (The Reformed Broker)
Ten lessons learned from ten years of investing. (Monevator)
Are these really reasons to be bearish? (Macro Man)


Thanks for checking in with Abnormal Returns. You can follow us on StockTwits and Twitter.



The post Top clicks this week on Abnormal Returns appeared first on Abnormal Returns.


Abnormal Returns

[John Thomas]

At the end of last month I brought your attention to the shares of a start-up oil and gas company, Bison Petroleum, which trades over-the-counter under the symbol BISN. That was around the time Bison Petroleum management issued an update on its plans to tap into its Wyoming oil prospect reserves?which became the catalyst for some notable buying interest in BISN shares, ultimately driving them to a new all-time top of $1.70. Congrats to all readers who jumped in and profited from the initial trade alert.

As I previously wrote in my original piece on BISN, Wyoming probably isn?t the first area of the country that comes to mind as a major player in domestic oil production. The fact is, however, that state has a long and storied history as a significant oil producer, with the renown ?Muddy Formation? discovery in the Bighorn Basin region of the state having already generated 3.1 billion barrels of oil to date.

Despite the massive amount of oil and natural gas that has already been produced in the region, estimates by the University of Wyoming put remaining recoverable Bighorn Basin oil reserves at over 2 billion barrels. Estimates also include the potential for 3.5 million additional barrels waiting to be tapped. In addition, the state?s natural gas deposits are estimated to be in the neighborhood of 2 trillion cubic feet.

What initially whet investors? appetite for BISN shares was the company?s October 30th update business update, when Bison management announced its plans to develop its two Bighorn Basin prospects, located within 10 miles of two giant oil-producing fields owned by Marathon Oil. Known collectively as the ?Independence Prospect,? Bison?s two leases include a 100% working interest and 80% net revenue interest in a total tract measuring 840 acres. Company estimates put potential recoverable crude for the prospect at north of 5 million barrels.

Included in the company?s update was an exploration plan for these leases complete with 2D seismic acquisition, a Seep Study, and 3D seismic to define optimized drilling locations in the targeted Lower Cretaceous Muddy Formation. The Independence Prospect is located along several of the existing structures marbling the area, which are cut by numerous faults. Bison expects the Muddy accumulations to be between 2,000′ to 6,000′ drilling depths, with well-spacing potential at 10 acres per well.

By focusing on historically proven basins and utilizing conventional drilling technology, Bison management believes it can achieve relatively low-cost production with substantially less capital risk than many of its industry peers. And I?m hopeful as well. Having its assets located so close to established industry infrastructure should dramatically reduce the overhead often required to transport oil and connect to a pipeline network. Bison also plans to evaluate the natural gas holdings on its acreage, which may result in a significant additional revenue stream.
In another development that may bode well for Bison, acquisition activity has been notable, with several established heavy hitters in the industry recently buying out mid-level Wyoming producers. Taken together, Breitburn Energy Partners and Linn Energy have recently made production acquisitions in the region of more than $1 billion. Other potential suitors with current production operations in the area include big-time players Chevron, Conoco-Phillips and Royal Dutch Shell.

Shares of BISN began actively trading over-the-counter at the end of October, with solid volume coming in throughout November. The company?s exploration and development plans, coupled with a bullish article on the company in the Oil Stock Journal, drove some steady buy-side interest?despite an ongoing decline in the open market price of crude.



A round of profit-taking kicked in on Friday, pushing BISN shares all the way back down to an intraday low of $0.81?with the entire oil and gas sector under sell pressure during the week. That?s when buyers stepped into the fray once again, bouncing BISN shares back to the $1.05 level where they currently reside.

One of the biggest battles for development-stage companies is trying to accurately determine how much demand there is for their products. In the case of American oil and gas companies there is no such fear. Oil production in the U.S. is on the rise, with domestic energy security one of the few areas where common ground exists on all side of the political spectrum. In fact, it?s estimated that by 2020, roughly half of all U.S. oil demand will be supplied domestically.

As a result, the spotlight should continue to shine on oil and gas production companies?both big and small?with the potential to help supply this growing demand in the years ahead. It?s always difficult to predict how the market will treat the share price of young start-up concerns like Bison, but good news from the company, accompanied by a bump in worldwide oil prices, might make the recent price pullback in BISN shares an attractive entry point for an aggressive investor.

As always, trade BISN and all stocks with care!

Warren Gates, Senior Analyst, Oakshire Financial

Related Articles

10/30/13 -- Tapping Into the Bighorn Basin Boom with Bison Petroleum (BISN)
05/22/13 -- Revisiting The Alaskan North Shore and Polar Petroleum Corp (POLR)
04/30/13 -- Four Reasons For OCTX
05/13/13 -- Getting Stronger with Tungsten
08/26/13 -- On the Lookout For A Gusher With NAMG
08/19/13 -- Getting in on the Ground Floor with PLCSF

Zemanta


The post Bison Forging Ahead With with Bighorn Plans (BISN) appeared first on Oakshire Financial.




more at Oakshire Financial

Reply With Quote Reply With Quote

[John Thomas]

Hugh Hendry is one of the brightest, most entertaining of the long-standing bears and this week he?s grudgingly flipped bullish.

?I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out,? Hendry said.

?I have been prepared to underperform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years? time.?

?I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends.?

?I may be providing a public utility here, as the last bear to capitulate.You are well within your rights to say ?sell?. The S&P 500 is up 30% over the past year: I wish I had thought this last year.?

?Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending.?

Is this capitulation emblematic of a market top, as Hendry jests above? Is he doing his followers any favors by turning bullish now, after a 40% growth rate in the market?s sentiment toward stocks (expanded PE multiple) backed by very little in the way of earnings, sales or economic growth? Is there anything to gain by such a late-in-the-game admission?

And what if he?s actually been right all along about how at risk everything is? What if future events play out just as he?d been predicting over the last five years after he gives in? Can he turn back? Can he resurrect the old playbook in time should the crash begin shortly?

This game is really hard, even for the smartest guys who play it, guys like Hugh Hendry who can get almost all of the facts right and yet still reach a precisely incorrect conclusion. And if that can happen to him, think about how difficult the prediction game can be for the rest of us.

Source:
Hugh Hendry Capitulates: ?Can?t Look At Himself In The Mirror? As He Throws In The Towel, Turns Bullish (Zero Hedge)

And here is Mr. Hendry in better times for the structural bears ? his greatest hits from the 2011 almost-apocalyptic Eurodebt Crisis: