Out Fox The $treet

NeoStem ( NBS ) might be a small biotech stock, yet it has numerous irons in the fire that could provide huge growth opportunities. Cell therapy has the potential to radically change how diseases are treated, and the company plans to be a leader in the area. The company develops therapies for chronic unmet medical needs around a significant IP portfolio and operates a revenue generating service division with expertise in contract manufacturing and cell banking. NeoStem has several opportunities including a cardiovascular program, a very small embryonic like (VSEL) stem cell technology, a T cell program, and a contract development arm that all provide ample abilities for success individually. The key is developing a least one division into a money-generating machine to enrich shareholders. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After reporting Q3 earnings, Savient Pharma (SVNT) plummeted back to $1 from the meteoric rise to nearly $3 during September. The stock has been stuck around that $1 level for the last two months. Will the new EU approval for KRYSTEXXA finally unleash the stock? The company is a specialty biopharmaceutical company focused on developing and commercializing KRYSTEXXA (pegloticase) for the treatment of chronic gout in adult patients refractory to conventional therapy. As written in previous articles (see here), the company was able to complete a restructuring that provided time to build the revenue base in the US. While all of those moves left the company better equipped to survive long enough for the promising new drug to thrive, Savient has yet to prove to the market that the drug will ever meet the original estimates. Will the lowered cost structure even be sufficient enough to survive? Read the full article at Seeking Alpha. Disclosure: Long SVNT. Read the disclaimer page f...

After reporting Q3 earnings, Savient Pharma (SVNT) plummeted back to a $1 from the meteoric rise to nearly $3 during the quarter. The company reported disappointing sales numbers for the promising gout drug and failed to break out one-time costs to provide investors a clearer picture of the 2013 earnings view. As written in a previous article, Savient Pharma: The Pharma Rising From The Dead, the company was able to complete a restructuring that provided time to build the revenue base. While all of those moves left the company better equipped to survive long enough for the promising new drug to thrive, Savient has yet to prove to the market that the drug will ever meet the original estimates. Will the lowered cost structure even be sufficient enough to survive? The company is a specialty biopharmaceutical company focused on developing and commercializing KRYSTEXXA (pegloticase) for the treatment of chronic gout in adult patients refractory to conventional therapy. Read the full artic...

Over the last year, Savient Pharma (SVNT) has undergone a disappointing sales launch of a promising drug, the hiring and defection to Dendreon (DNDN) of a big name CEO, and finally the lawsuit of a creditor for forced liquidation. Somehow during all of these crazy actions, the company was able to get the lawsuit dismissed, raise cash, and greatly right size the sales force to account for the slower launch of the new drug, KRYSTEXXA. All of these moves have left the company better equipped to survive long enough for the promising drug to thrive. The company is a specialty biopharmaceutical focused on developing and commercializing KRYSTEXXA (pegloticase) for the treatment of chronic gout in adult patients refractory to conventional therapy. Read the full article at Seeking Alpha. Disclosure: Long SVNT. Please review the disclaimer page for more details. 

Gilead Sciences (GILD) had been about a 5% weighting in our Net Payout Yields model. The company had been on a huge buyback plan making the stock very attractive for this model that focuses on stocks with high yields from the combination of net stock buybacks and dividends. Unfortunately with the recent Pharmasset (VRUS) buyout announcement, Gilead has strayed from the plan of rewarding investors with capital returns toward buying growth. Typically these deals don't workout for investors of the purchasing company. With the reporting of Q4 numbers , Gilead verified on the conference call that stock purchases have all but been eliminated as the company raised debt to buy Pharmasset. Via Seeking Alpha transcript : Robin L. Washington And, Geoff, relative to your share count, as we talked about with the acquisition, we did moderate and pretty much have spent our share repurchases after October of 2011. We will do moderate share repurchases in the near term to offset option d...

Savient Pharma ( SVNT ) - a small cap biotech trading 50% below the 52 week high with an approved FDA drug with blockbuster potential - provides an ideal risk/reward scenario. The approved drug also has orphan status, giving it a 7 year marketing exclusivity. Naturally, the stock wouldn't still fall into the small cap arena if everybody agreed on the blockbuster potential of Kyrstexxa. The drug is one of the first for gout in over 40 years and provides treatment of chronic gout in adult patients refractory to conventional therapy. It treats an previously untreatable disease, providing for a under-served patient base. This is why many analysts and investors are high on SVNT and the blockbuster potential of the drug. Read the whole story at Seeking Alpha . 

Barron's has a good summary of the Cephalon (CEPH) buyout announcement from yesterday. What's interesting and has kept us in the stock is that Valeant Pharma (VRX) traded up 12.8% today. This is unheard of for the bidder in a hostile deal to increase especially that dramatically. Apparently the market thinks the deal is very cheap with the analyst from Hapoalim Securities speculating on a significant increase in the bid of up to $86. Several of the analysts increased their targets on VRX suggesting that the cost savings and ability to borrow low cost debt makes this deal very appealing. The $300M in savings would be incredible for a $5.7B deal and essentially covers all of the interest payments. All of this points to a likely bump in the bid assuming the BOD at CEPH doesn't out right block the deal. An offer potentially in the $80s would likely be deemed attractive. It will keep us around for a while. Eventually though the potential upside might be limited and risk gre...

Interesting news after the bell today on Cephalon (CEPH). Valeant Pharma (VRX) went public with a $73 all cash offer to buy CEPH. The deal would be valued at $5.7B and represents a roughly 25% premium from the closing price. Naturally VRX claims a 29% increase from the 30 day trading average, but going back the last year CEPH recently traded at 52 week lows. Shareholders are likely happy to see an offer with the stock swooning of late, but anybody holding the stock for most of the year sure expected a higher valuation and isn't exactly happy. The claims by VRX are normal of hostile bids suggesting that the management of CEPH has done everything to prevent this deal even going so far as to make several acquisitions themselves in order to block the deal. Possibly valid, but this isn't a scorching high valuation. CEPH is a key holding in our Opportunistic funds, but honestly the investment has been slightly disappointing having a loss on the investment until this announcement...

Today Savient Pharma (SVNT) announced the initial shipment to specialty distributors and pricing of KRYSTEXXA. These are two major milestones for a biotech stock basically left for dead by the market after a failed auction process back in late October. Now the key will be how many vials of KRYSTEXXA at $2,300 a pop SVNT will be able to sell with a limited salesforce. Considering they had thousands of people wanting sign up for trials and those people are desperate for the drug the sell shouldn't be that hard. If you have been suffering from gout without any relief from existing drugs, this product should be able to sell itself. The stock has been flat since the initial selloff. It is currently hanging out in the low $12s and offers substantial upside as the negative analyst community finally clues in that management is more then capable to go it alone having gotten the drug to market by Dec 1st nearly a month after announcing the failed auction process and a little over 2 mont...

Cephalon (CEPH) again raised estimates for 2010 to $8.3 and provided guidance for 2011 of $8.55. Typically though, don't expect much action in the stock tomorrow. Although the stock remains incredibly cheap at a sub 8 PE, the market is concerned about drugs coming off patent and a slowing of growth. Its interesting listening to conference calls as analysts dig down into minute details. They seem to over analyze every bit of data and seem to miss the big picture that this biotech company has a great management team that continues to under promise and over deliver. CEPH now has $1.2B in cash and annual cash flow of around $1B though they do have $1B in debt. At a market cap of $5B the company could theoretically buyback 20% of the company just using the annual cash flow. That of course wouldn't be the best use of cash as I'd rather see them continue to buy up small biotechs with promising drugs that they can use their expertise to help bring to market. It is a great indic...

Savinet Pharma (SVNT) might be one of today's biggest losers, but it could be tomorrow's biggest gainer. SVNT announced that they have been unable to find a buyer at a suitable price for the company. The stock initially dropped over 50% to a 52 week low on the announcement. Was the move warranted? Regardless of whether SVNT is bought out, the company still owns an orphan drug, KRYSTEXXA, recently approved by the FDA for the treatment of severe gout cases where no other option exists. The intrinsic value of the company hasn't changed because they couldn't find a deal for an agreeable price. The only change is the value an investor can expect to receive in the short term. With the drop in price, I'm sure a significant amount of companies have called seeing if management would drop there price to a level likely very attractive with the stock currently trading in the $12s around midday. SVNT could be tomorrow's biggest gainer. While the news is disappointing t...

Our Opportunistic and Growth portfolios aim to capture excess returns, but not without some diversification. Limiting portfolio sizes to 20-30 stocks allows for diversification without getting to levels of diworstification. Hence, the portfolios have always had a few 'risky' biotech stocks. Based on the results of Savient Pharma (SVNT) the rewards have clearly outweighed the risks. See previous post. Oh why didn't I include SVNT in the Opportunistic Portfolio???? Regardless the Growth Portfolio has seen some nice out performance demand on the back of SVNT being up 33%. Also noticed that the other biotechs in those portfolios have been perking up of late. All 3 stocks have seemed alot cheaper then the risk involved. Rigel Pharma (RIGL) and Cephalon (CEPH) have seen bullish trading of late. Not being predisposed to investing in this sector, we just found the valuations too compelling. RIGL is a clinical-stage drug development company that discovers and develops novel, sm...

After Hours, the FDA finally approved the gout drug Krystexxa in what seemed like an eternity. Savient Pharma (SVNT) had originally gotten an FDA Panel recommendation by the count of 14-1 way back in , but final FDA approval was delayed in August 2009 principally due to manufacturing issues. Gout is a common type of arthritis in which deposits of uric acid build up around joints, causing pain, swelling and stiffness.Considering the general lack of modern drugs for gout it has been generally accepted that this drug would have little issue in being put to use by doctors. There is a huge market waiting on the approval of this drug. Though it seemed apparent that the drug would be approved today the stock has languished in the $15 range for months. It last traded up 20% to around $18 after hours. SVNT is a 2.7% position in the Growth Portfolio so Stone Fox has a keen issue in following the trading tomorrow.. Below are some details from analysts regarding buyout prices. Remember the c...

Prior to the opening Cephalon (CEPH) dramatically and surprisingly upped guidance by some 30%. CEPH didn't provide any details for the smashing results or provide full year guidance. The lack of details regarding the durability of these results is likely holding the stock down to minimal gains today. Regardless of the details, CEPH already traded at a forward PE of just over 8 so any news on beating estimates should send this stock soaring. The market continues to discredit positive news. Great opportunity to buy on the cheap. The company now anticipates that sales for the second quarter 2010 will be between $705-715 million , up from the previous sales guidance of $645-670 million resulting in basic adjusted income per common share for the second quarter 2010 of between $2.17-2.22 , up from the previous guidance of $1.65-1.75 . Due to the company's expectations regarding second quarter 2010 financial results, the company is suspending its previously issued full-year 2010...