Monday, January 24, 2011

Stock Watch: GNBT, Gluskin Out; CLDA, Vilibyrd Approval; Vivus, Delayed

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GNBT:  Might be worth watching the wires for Generex news this coming week.  Shortly after it was announced that Mannkind's Afrezza received another setback from the FDA, Generex put out an 8K on Friday revealing that former CEO Anna Gluskin had effectively resigned from her standing positions at Generex and all associated subsidiaries. 

Gluskin had been removed from her  position as CEO back in late December when all eyes were on the then-pending vote for a reverse split of the GNBT common stock.  Since that time the Executive Vice President of Generex, Mark Fletcher, has been filling in as the interim CEO while a search for a permanent replacement took place. 

Friday's filing announcing the effective removal of Gluskin's association with the company has led to speculation that Generex, a company that has been slim on the news and updates this year, may be ready to issue a more significant announcement - such as the appointment of a new CEO. 

As I mentioned last week, with Afrezza development now relegated to the backburner for the time being, this could be a chance for Generex and Oral-lyn to grab some headlines, and the fact that Anna is out could be an indication that some fresh headlines are on the way.

That said, investors would be wise to keep expectations tempered; it's been a while since a relevant update regarding the Oral-lyn Phase III trial has been released and Generex could really do with a deep-pocketed partner coming on board and boosting the cash position, although the agreement (which is on hold until June now) to acquire a majority ownership of Global Medical Direct hints that the company may decide to go-it-alone in distributing its products.

The FDA's most recent rejection of Afrezza most certainly sets the stage for Generex to make up some ground in terms of timeline if the Oral-lyn trials are advancing as promised, but it also brings to light the fact that the FDA is hesitant to move away from the current standard of insulin delivery, which continues to be the needle. 

Just something to keep in mind.

For the short term, the Gluskin departure has some wondering if some other news is set to follow, which makes the sideways-trading GNBT a stock to watch this week.

Disclosure:   Long GNBT.

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CLDA:  Shares of Clinical Data Inc jumped by over two dollars (a 15% rise) in the after-hours on Friday when a late day press release announced that the FDA had approved the antidepressant vilazodone - brand name Vilibyrd - a potential billion-dollar product since its an antidepressant that does not affect the sex drive of the patient, as most antidpressants do; nothing depressing about that, hey?

Vilibyrd also did not lead to weight gain during trials, another side effect of already-approved antidepressants, but most would probably deal with a little weight gain anyway as long as their was no subdued desire involved.

Nonetheless, Clinical Data and analysts see the preferable side effect profile as potentially placing Vilibyrd ahead of the competition in the antidepressant class with some estimating peak sales of above $2 billion annually, pending additional approvals.

CLDA enjoyed a solid week of attention and volatility, and there could be more to come during the coming week.  If the after hours trading is a precursor, there could be some drastic price increases due come Monday, but it's always a good idea to at least be prepared for any eventuality in the biotech sector.  Recent trading patterns have actually seen shares fall after companies announce positive approval news.  The potential of Vilibyrd may keep that from happening here, but it's happened to company's with bigger products - Dendreon and Provenge come to mind - so an all-out chase of the rising price might not be the best course of action if the price spikes early in the week.

Of course, if follow-up news hits the wires, then all bets are off.

Worth watching.

Disclosure:  No position. 

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VVUS:  Back in October Vivus, Inc made headlines when stocks jumped on news that the FDA had requested additional information regarding the company's weight loss product, Qnexa.  Just three months later, shares took a sharp dive when the FDA again requested additional data for the same product.

In October it was looked at as a positive that the FDA seemed willing to approve Qnexa and did not outright refuse approval, however, this time the FDA is keying in on data surrounding the potential for birth defects for the offspring of those treated with Qnexa. 

Investors or traders looking to play the news in the now-term may have bailed out on Friday because it's possible that it could take Vivus up to five or six months to compile the data that was requested by the FDA, although the encouraging sign is that the FDA did not ask for additional trials.

The longer term prospects for Vivus are for the most part unchanged by the news, but any FDA delay will certainly bring in the sceptics, so the dip in price should have come as no surprise to the news.

Any further dip in price may spark some speculative buying by investors betting that the product will ultimately be approved, but weight-loss products could be a risky play these days as recent history has shown that they could potentially produce severe long term health risks.

Could be a volatile week for VVUS.

Disclosure:  No position.

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