Bullish and bearish bio plays to watch Print E-mail
By M.E.Garza   
Wednesday, 07 March 2012 08:06
Shares of Obagi Medical Products, Inc. (Nasdaq:OMPI) have been on the move since we first told our premium subscribers to close attention for potential news there.

As provided in a letter to stockholders dated January 10, 2012, the company set up a "Rights Plan" designed to ensure that all of their stockholders would receive fair and equal treatment in the event a third party attempts to acquire a substantial interest in the Company’s common stock or attempts an unsolicited takeover of the Company.

We are hearing that there may be some important developments on this front. In other words, that there may indeed be an offer for an acquisition at a premium on the table and that more details may come during an investor conference call scheduled to take play at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) on March 8, 2012.

I will emphasize that these are rumors, but given the series of disclosures and news items related to the firm lately, they seem to carry some weight. As always, do your own due dillegence.

Obagi Medical Products Inc is a specialty pharmaceutical company that develops, markets and sells, and is the leading provider of proprietary topical aesthetic and therapeutic prescription-strength skin care systems in the physician-dispense market. It was originally established in 1988 with the creation of the Obagi Nu-Derm® System, developed by leading skin care experts. The company officially began its operations as Obagi Medical Products Inc in 1997.

Obagi's products are designed to improve penetration of prescription and cosmetic agents across the skin barrier for common and visible skin conditions in adult skin including premature aging, photodamage, hyperpigmentation (irregular or patchy discoloration of the skin), acne, sun damage, rosacea and soft tissue deficits, such as fine lines and wrinkles. Its products are designed to improve penetration of agents across the skin barrier for common and visible skin conditions in adult skin such as chloasma, melasma, senile lentigines, acne vulgaris and sun damage.

Obagi's product portfolio includes: Obagi Nu-Derm® System - formulated to improve the signs of aging at the cellular level; Obagi Condition & Enhance® System - address age spots, fine lines and wrinkles, hyperpigmentation (discoloration), erythema (redness) and future skin damage, while transforming the quality of skin on a daily basis; Obagi-C® Rx Systems - promotes skin rejuvenation from the inside out; Obagi Professional-C Serums™ - offer maximum daily antioxidant protection and greater penetration than other Vitamin C products; Obagi Rosaclear™ System - indicted for the signs and symptoms of Rosacea; etc. 

In other news, if you didn't catch shares of Galena Biopharma, Inc. (Nasdaq:GALE) on the way up, you may consider shorting the shares later in the week.

We also informed our premium subscribers that one of the reasons for the recent run up is a pending spin-off stock dividend.

In late February, the Galena Board of Directors announced a conditional spin-off stock dividend on Galena common stock of one share of common stock of RXi Pharmaceuticals Corporation, a subsidiary of Galena, for each outstanding share of Galena common stock. Many of the folks buying those shares may dump them as soon as the one-for-one spin-off stock dividend is distributed to Galena stockholders.

That will likely happen after the Record Date of March 8, 2012. That makes both stocks- but GALE particluarly- great short candidates at that point. In the meantime take a look Galena Biopharma's chart and decide if you might think its worth a risk to join the elevator ride up. The stock finally took a breather during Tuesday's terrible market day, but attempted to recover to the upside late in the day.

Galena Biopharma's technology is focused on cancer immunotherapy which aims at specifically activating cells of the immune system, especially the so-called cytotoxic T-cells (killer T-cells) to seek out and eliminate tumor cells while not harming healthy tissue. The company's product pipeline includes: NeuVax(TM) (E75), consists of the E75 peptide derived from HER2 combined with the immune adjuvant granulocyte macrophage colony stimulating factor (GM-CSF) indicated for the treatment of breast and prostate cancer; and Folate Binding Protein-E39 (FBP), a targeted vaccine indicated for preventing the recurrence of ovarian, endometrial, and breast cancers.

Those of you who may have you missed the news from Phase III player CEL-SCI Corporation (NYSE Amex: CVM) could be left behind when the stock begins to react. The company announced that it had finally paid off its outstanding convertible debenture-- the same semi-toxic financing that nearly killed the company a few years ago.

The firm had been making monthly payments of approximately $1 million per month to repay a $9 million convertible debenture which CEL-SCI had issued in connection with the settlement of litigation, but now CEL-SCI has eliminated the nasty debt and any of it's evil tentacle-like "associated preferential rights."

Some funds have started accumulating large blocks of the stock and technically speaking it may only be a matter of time before all that volume and positive news begins to manifest itself on the chart in different ways. The firm has raised much needed capital for their on-going Phase III trails and the fundamentals may be setting the table for their next leg up.  

“We are pleased that we have eliminated this substantial obligation and the associated potential dilution,” said Geert Kersten, Chief Executive Officer of CEL-SCI. “Our money is now being allocated to the greatest benefit of our shareholders, namely an expansion of our Phase III study by adding 10-15 additional clinical sites in four more countries.”

CEL-SCI's flagship product Multikine® is developed for the treatment of cancer. Multikine® is the first of a new class of cancer immunotherapy drugs called Immune SIMULATORs. It simulates the activities of a healthy person's immune system, which battles cancer every day.

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