|Illumina's huge drop plus other noteworthy healthcare news|
|By Vinny Cassano|
|Monday, 10 October 2011 07:10|
ILMN: As did Dendreon (DNDN) back in August, Illumina Inc. (ILMN) sent shockwaves through the biotech and pharmaceutical sectors last week after revising - if not altogether pulling - revenue guidance for this quarter and the quarters yet to come.
Shares closed down by 32% on the day Friday, but hit even lower during intra-day trading on volume that approached ten times the normal trading average.
The big shocker came after hours on Thursday when the company announced that it expected third quarter revenue to come in at $235 million, while most analysts were expecting close to $280 million. Additionally, the company declined to offer any future forcasts and withdrew any full-year estimates.
Illumina receives a large chunk of its revenue from government sources, a source that might be drying up somewhat as the US and European governments look to be on the brink of going broke.
Chief Executive of Illumina Jay Flately noted, "In the quarter, we saw what we believe to be an unprecedented slowdown in purchasing due to uncertainties in research funding and overall economic conditions, as well as a temporary excess of sequencing capacity in the market. We expect these conditions to continue through at least the fourth quarter, while the 2012-2013 U.S. budgets for [the National Institutes of Health] and other related agencies are determined.”
ILMN had already been trickling downwards since the summer when shares were well over seventy dollars, so considering that fact Illumina's drop is much more significant than just Friday's 32% decline.
A volatile ride should be in store for this stock, but with analysts bailing out themselves and revising forcasts, and with the short term chances of increased revenue looking to be unlikely, some more pain might be in store before things get better.
AMRN: Shares of Amarin looked to be set for a move higher during early trading on Friday, touching a high of $9.65 before closing the day at $9.15. The company has just filed with the FDA for the approval of AMR-101 for the treatment of high triyglycerides, but with a fair amount of time between the filing and an expected approval decision, it might be a bit too early to expect any serious rebounds in the AMRN share price that would again have it approaching the twenty dollar mark.
The wild card, of course, is any potential buyout.
Although rumors of such an event helped to spark the rally towards twenty earlier in the year, but as the rumors died down, so did the share price.
Any speculation about a potential partner or buyer could reinvigorate interest - and where's there's rallying interest, there's usually a rallying share price.
DNDN: Dendreon's early-week rebound had lost its steam by Friday where a day of down-tick trading saw DNDN shares close at just two cents above the low.
In addition to the lingering effects from August's share price collapse, Dendreon has also been taking a lot of heat and continued bad press regarding the reimbursement issues surrounding the expensive treatment, as well as from media outlets who look at Johnson & Johnson's (JNJ) recently-approved Zytiga as a potential death-blow for Provenge.
Dendreon's troubles have allowed Zytiga to gain steam in its commercial launch, they argue, as a more convenient and faster-acting treatment to Provenge, and it's possible that Provenge won't be able to recover.
That said, the quarter-over-quarter growth in revenue has still been solid, although far from the numbers that were predicted for this time in 2011.
November 2nd has been identified as the earnings date for Dendreon, so expect some shorts to cover by then - but if there are any more negative disappointments from the company, then there will most likely be another turn to the downside.
Of course, any encouraging surprises on the earnings front could spark a nice rally, although I will be more interested in how well the fourth quarter works out for Provenge sales. It's that fourth quarter, after all, that was advertised as being key to the Provenge growth factor.
One to watch for the next few weeks.
BVTI: Biovest International (BVTI), a subsidiary of Accentia Biopharmaceuticals (ABPI), took the opportunity last week to update investors on the regulatory path of BiovaxID, the company's cancer immunotherapy treatment for non-Hodgkins lymphoma.
Having emerged from bankruptcy during the depths of the recession, Biovest is looking to use additional data derived from longer term analysis of already-completed trials to get back on track and prepare for approval filings.
According to the update provided last week, the company has initiated contact with both the FDA and the European medical regulators to discuss the pre-filing process.
Look for updates throughout the remainder of the year regarding the upcoming meetings.
HGSI: Human Genome Sciences (HGSI) took a dive on Friday, negating some of its recent price gains following an encouraging sales report for Benlysta. Shares closed the day sitting 6% down right at twelve bucks.
Some investors might have been spooked by a report from the UK that the regulators over there had recommended not covering Human Genome's lupus-treating Benlysta under the national plan. Benlysta is partnered with GlaxoSmithKline GSK), a British powerhouse who has had these dealings with regulators before, so it's likely that the situation will be resolved, with some probable concessions on pricing from the side of HGSI and GSK.
Investor concerns regarding coverage in Europe are valid, given the broke state of the governments on that side of the pond, but I'd expect to see price reductions on the side of drug makers and marketers before seeing drugs completely denied coverage.
Like Dendreon's, HGSI's third quarter earnings report will be key, and investors will be taking note of any trends in Benlysta sales.
It's definitely a tough market to launch new drugs into, and these companies are just trying to keep their heads above water until a full turnaround is in effect.
TTNP: The market has shown no love to Titan Pharmaceuticals (TTNP) whose shares continued to slip last week and closed Friday another 5% down at $1.11.
Titan may have brought much of that slide on itself, as it's been slow-moving on the news front regarding the approval process for Probuphine after the company announced positive results from a confirmatory trial earlier this year.
A report from Bloomberg back in July discussing some takeover speculation has been about the only news that investors have had to digest lately, although there is a meeting set with the FDA for later this month regarding a pre-NDA Probuphine filing.
Titan, which also receives an 8% royalty on sales of the schizophrenia drug Fanapt - marketed by Vanda Pharmaceuticals (VNDA) and Novartis (NVS) - is a prime takeover candidate for Probuphine and its ProNeura drug delivery technology, especially at its current market cap, but investors likely would not be too happy with any premium at these prices.
I continue to like this one as an accumulate for the near-$1 prices, but it's been proven over the years that any spikes need to be sold into with some trading shares.
CELH: Volume says that no one is paying any attention to Celsius Holdings these days, and as such, some low-volumed trades have shares bouncing between fifteen cents (where CELH closed Friday) and near thirty cents.
The two million in earnings from the last quarter may not be deemed as much, but it is not much lower than the company's entire market cap right now and it's encouraging in the fact that it wasn't a huge drop from the previous quarter, as has been a pattern for Celsius Holdings over the years.
Not completely convinced that this is yet a turnaround story, but it's one to watch.
Expenses have been cut - although that has hurt the marketing capability - and it looks like headway is being made in the markets where Celsius has been proven to sell.
It's unreasonable to expect any price increases such as the one that saw the old Celsius stock (CSUH) jump from a couple of pennies to sixty cents, but any boost in sales numbers that boosts attention could lead to some nice percentage gains.
Keep in mind that money is a going concern, and who knows if Carl DiSantis will jump in again with his big wallet.
ACTC: Is Advanced Cell Technology (ACTC) stabilized at above fourteen cents? Watch the action, and buy the dips. Embryonic stem cell research could usher in the future generation of medicine, and companies engaged in such should all be watched.
GERN: Geron (GERN) has also failed to rebound much from its lows, but keep an eye on this one as well for its stem cell potential - and additional pipeline products.
Note: Both ACTC and GERN are mentioned in this late-breaking news article from the Wall Street Journal.
There may be some turmoil left, and all the politicians and news outlets are going to play that up during the election season, but things are not quite as bad as they were during the depths.
Due respect goes, of course, to those who are still finding a rough go of it.
Vinny Cassano is a regular contributor and the author of the popular stock investing blog, VFC's Stock House. Please see that site for full disclosures and information on the stocks covered in this report.