Thursday, February 19, 2009

Celsius Holdings (CSUH.OB) Reports FY 2008 Results

The CEO of Celsius Holdings (CSUH.OB), Steve Haley, hosted a conference call on Thursday to discuss the company's 2008 operating results and offer an outlook for the company's future.

While the bad economy undoubtedly hurt sales over the last few quarters, the fiscal year results were not disappointing and the outlook for the future is starting to look bright.

Don't get me wrong, the company lost money, and they lost it by an almost two to one ratio (two bucks lost for every one earned), but those results alone do not tell the full story.

The growing company made $1 million more in 2008 than 2007 ($2.6 million vs $1.6 million), but the real ramp-up in sales may be coming in 2009.

The key note to take away from the year-end report is that 80% of the sales came from existing distribution. That means that the product is starting to stick and that is an indicator which I have been waiting for.

Aside from the existing distribution, the biggest deal that I have heard to date was GNC coming aboard and agreeing to stock Celsius. GNC, more than the Vitamin Shoppe, is the recognized leader in sports and nutrition sales and gives the Celsius drink instant credibility in the energy drink/weight loss world.

Mr. Haley also announced a partnership with Market America, a leading Internet marketing and sales organization that is geared towards One-to-one-marketing. This should have a significant impact on internet sales, but a Celsius promotion on the main web page of Market America is probably needed to significantly kick off sales from that medium.

Additionally, Celsius will soon be releasing two new products, both of which should steal some market share from existing products.

First, a Celsius powdered packet that the consumer can mix with water will add convenience to those that do not wish to carry around cans and bottles of the drink. Also, a Celsius 2oz. 'energy shot' will soon be available. Both great products to add to the market.

Other reasons for optimism:

It wasn't until fourth quarter of 2008 that radio ads played in the Northeastern target area and 2009 will see television ads added to the advertising strategy. The ad campaigns will bring much needed consumer awareness in the most populated region of the country.

The Green Teas were only available for a few months last year, but Steve Haley noted that they were catching on quickly and opening new avenues for shelf space.

The debt has been consolidated with Carl DeSantis' company and with that consolidation comes an existing credit line. A great deal to have under these terrible market conditions.

It looks like 2009 could be a pivotal year for Celsius and business should grow even more as the economy picks up in the second half of 2009, in my opinion. In the meantime, Celsius has demonstrated the ability to show growth even in the bad economy.

A member of Katie Holmes' entourage was spotted with Celsius and gave the product some free advertising and it wouldn't hurt if a few more stars, such as Paris Hilton, were spotted with Celsius instead of booze.

There is always the chance that the company will not make it, but with financing secured and new advertising about to take place, CSUH.OB is a great risk-reward investment.

Buying at these levels offers little risk, but the possibility exists for humongous returns over the next couple of years.

The recent selling pressure may be over. I've had a limit order in for a five cent buy all week and it has yet to be filled.

Up may be the only direction we go from here.

Celsius Catches on With Katie Holmes
VFC's 2009 Stock Picks
Comments from Celsius CEO Steve Haley
Comments from Celsius CEO Steve Haley, Part I

UPDATE To Insmed's $130 Million Payday

Last week I wrote about Insmed selling its Follow On Biologics platform to Merck for $130 million.

After reading the Press Release from the company, it looked as if Insmed only sold INS-19 and INS-20 to Merck.

However, from the 8k filed with the SEC, it becomes more apparent that Insmed has in fact sold their entire FOB platform.

Quoted directly from the 8K:

Insmed sold to the Merck subsidiary its INS-19 and INS-20 products and all related intellectual property for an initial payment of $2.5 million and, subject to the satisfaction of certain conditions, three additional monthly payments of $2.5 million each and (ii) Insmed agreed to sell, and the Merck subsidiary agreed to purchase, at a second closing, the balance of Insmed's Follow-On Biologics platform and the equipment and assets in Insmed's Boulder Colorado facility, for an additional payment of $130 million less any amounts previously paid to Insmed in connection with the first closing.

I still think INSM is a great long-term investment based solely on IPLEX, but the true value of the deal cannot be judged for years. The FOB pipeline will look to be a steal for Merck, in my opinion, years in the future so IPLEX will need to become a huge blockbuster to offset what Insmed has lost in future revenue from their FOB candidates.

In the meantime, Insmed is set for a while regarding financing and they can move ahead with their IPLEX program unabated, which is a great accomplishment for a biotech in this economy.

INSM is still great for the long term, IMO.

Monday, February 16, 2009

VFC's Stimulus Plan - Time to Jump Into the Financials and Other Great Deals as we Approach November Lows

After watching the stock market approach the November lows, I decided that now was the time to increase the BUY orders and to make a move which I've been hesitant to make until now- BUY financials.

When market initially crashed late last year, I stayed away from the financials and the auto stocks because there were too many safer bets out there that were sure to rebound with the market, whenever that time comes.

While the recession may be far from over and the President's plans to rescue the banks has not yet been unveiled, conditions have stabilized enough to delve into some financial stocks, in my opinion.

I have no qualms about taking risk in the market, because the best rewards come with the greatest risk, but I'm starting with this sector toes first and bought the Financial Select Sector SPDR ETF (XLF). This ETF encompasses most of the individual financial stocks that I was looking to buy, so the XLF purchase made my decision easier. Among the top holdings in XLF are JP Morgan Chase, Wells Fargo, Bank of America, US Bancorp and Citigroup.

Once the President unveils his plans for TARP II the sector could begin to see a rebound, if they like what they hear, and I wanted in before that happened.

In this market I've got a portfolio set for the long term (that's where XLF is going) and one for the short term. I believe that we've got the opportunity to buy the financials near the bottom right now and a few years down the road patient investors could be greatly rewarded.

Of course, there is still great risk in the sector because we do not know how the companies or the investors will respond to the Government conditions that will be placed on the industry after receiving so much Federal aid. In my opinion, it is a risk worth taking because if anything is certain in these economic hard times it's that the financials cannot fail. It may be a long time before they are as profitable as they have been for the past decade (or maybe not, Americans have a short memory), but they will recover.

To compliment XLF I also dropped a few shares of Citi (C) into the portfolio. It was a tossup between Citi and Bank of America (BAC) when I made my decision to buy Citi, but both are trading at levels that offer the potential for huge gains when this whole mess is sorted out. I did like the fact that Citi took the Government Credit Card contract away from Bank of America recently (because we know how our elected officials love to party on the Government cards) and I am one that believes that the Citi deal which pays the New York Mets $400 million dollars over 20 years is a good one. You can't get better advertising than that in the heart of New York.

A few other stocks that I am buying while the DOW drops below 8,000:

I took a flier on SIRI last week because I do not see bankruptcy coming. CEO Mel Karmazin is in a tight spot, but all the speculation that dropped the stock to a nickel was part of the game, in my opinion. It now looks like Liberty Media will step in and bail the company out.

Epicept (EPCT) is back down to my BUY levels in the sixty cent range. We should see nice gains with this one over the next year with Ceplene already approved in Europe.

Capstone Turbine (CPST) is also down into my screaming buy range. Capstone still has a great backlog of its microturbines and the company's low emission technology fits right in with this administration's plans of going green.

There's still more great deals out there in this down market and we should all be buying while we can. Contrary to the Political speak of late, this market will rebound and I'll be along for the ride when it does.

Great News For These Three Stocks
Insmed's $130 Million Payday
Dendreon's Early Results
Novadel, NVD
VFC's Bear Market Stock Picks Part I
VFC's Bear Market Picks Part II
VFC's Bear Market Picks Part III
VFC's Bear Market Non Picks Part
VFC's Stock Updates
VFC's Bear Market Picks Part IV; CRYP, CSUH.OB
VFC's Biotech Picks
VFC's Quarterly Updates
INSM Update, IPLEX Back In Action

Stock to Watch: SIRI


Thursday, February 12, 2009

Insmed's (INSM) $130 Million Payday

Previous Insmed Posts:
VFC's Follow-on Biologics Pick, INSM
INSM: Signs of Life
Insmed Update
VFC's Bear Market Picks, AGEN, MVL, INSM, CSUH.OB
IPLEX Update

Insmed, Inc. (INSM) announced today that they have sold thier portfolio of follow-on biologic therapeutic candidates to Merck & Co. for $130. This deal will close in March, at which time Insmed will receive payment in full from Merck, aside from a $10 million down payment that Insmed has already received. Included in the sale are Insmed's commercial manufacturing facilities located in Boulder, Colo.

According to the Press Release put out by the company this morning, the sale to Merck includes INS-19 and INS-20 which would indicate that Insmed will retain control of their less advanced protein based follow-ons, currently known as INS-21 and INS-22. Additionally, Insmed is developing INSM-18, an Oncology Program in early stages of development.

Although the company will most likely continue to develop INS-21, 22 and INSM-18, the development of Insmed's lead drug, IPLEX is the company's top priority. IPLEX has already been approved by the FDA for the treatment of short stature (no longer used to treat that indication due to a patent-dispute case in which Insmed lost), but is currently being tested for the treatment of other indications such as MMD and ALS. Iplex for the treatment of MMD has been granted Orphan Drug Status in the US.

In these tough economic times it is difficult for anyone to receive financing, especially small biotechs, so the fact that Insmed was able to secure $130 million without any dilution has got be perceived as a positive development by shareholders of the company. On the other hand (in my opinion), the long run will show that Merck got a steal by acquiring these two FOB candidates for the price that they did.

Realistically, this deal works out for both companies. Insmed was in dire need of cash to fund the advancement of IPLEX and Merck has added to their pipeline and will most likely be rewarded handsomely down the line.

While I believe INSM is still a good long term BUY under a buck, the stock will probably trade lower when the dust settles from this news.

The loss of the two FOB candidates hurts, but IPLEX is the real potential money maker for Insmed, and now they can concentrate on its development without the worry of running out of money any time soon.

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Tuesday, February 3, 2009

Dendreon Could Release Provenge Results by May

A few weeks ago, I labeled DNDN as one of my stock picks for 2009 based on the fact that results of their Phase III IMPACT trial for Provenge were due later this year. Recently it has come to light that the results of the IMPACT trial could come by the end of April, months earlier than previously expected.

Provenge (sipuleucel-T), a prostate cancer immunotherapy treatment and Dendreon’s lead product candidate, has a storied history marred in controversy and conflict.

In early 2007, Dendreon attempted to gain approval from the FDA to distribute and market Provenge in the United States. In April of that year, the FDA issued an ‘Approvable’ letter for Provenge, delaying the drug’s approval for years. Less than two months earlier, an FDA Advisory Panel had voted 17-0 that Provenge was safe and 13-4 that it showed efficacy. The Panel’s positive recommendation led to a sharp rise in stock price based on speculation that the FDA would follow the advice of their Advisory Panel (as they usually do) and approve Provenge. While many investors made huge profits as the share price spiked and prostate cancer patients around the country were given new hope about this novel new cancer treatment, many short sellers were caught by surprise and it was reported that many hedge funds and financial institutions lost big money.

The spike in share price did not last long. Once the ‘approvable’ letter was issued, the stock plummeted and that is when the controversy started.

Following the FDA's decision to deny the market of Provenge, conflicts of interest surfaced regarding two Doctors that served on the advisory committee. These two Doctors were adamantly opposed to the approval of Provenge and they seemingly played a significant role in keeping it from reaching market. One of the two Doctors, Howard Scher, had huge connections with Novacea, who at the time was working on a competing treatment to Provenge. A laundry list of additional conflicts of interest surfaced, most of which were not declared when he was appointed to the panel.

Lawsuits were filed as patients and investors alike lobbied heavily to get the FDA to at least conditionally approve the treatment immediately. The FDA's only concession was to conditionally approve Provenge if midterm results (released late last year) demonstrated that Provenge would meet the trial endpoints.

The midterm results, although encouraging, did not overwhelming declare Provenge a success, so we continue to wait for the final results which we now know will come sooner, rather than later. In the midterm results, Provenge achieved a 20% reduction in the risk of death compared to placebo; the point which the FDA indicated it would approve Provenge is 22%, definitely within reach, but no sure thing.

The midterm results do indicate that Provenge works, but the question is whether it works enough to convince the FDA that prostate cancer patients will be better off receiving Provenge than the chemotherapy alternative of Taxotere that brings about viscous side effects along with treatment. Many prostate cancer patients actually refuse Taxotere treatment because of the side effects.

If approved, Provenge would become the first cancer immunotherapy treatment approved in the United States. The world’s first cancer immunotherapy approval was Oncophage, a treatment for kidney cancer that was approved in Russia in April of last year.

Dendreon is also conducting two additional Provenge Phase II trials and also has a breast cancer treatment, Neuvenge (Lapuleucel-T) in the pipeline. According to the Dendreon website, Neuvenge trials are currently on hold as the company directs all efforts to the advancement of Provenge.

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