Tuesday, December 30, 2014

Seeking Alpha: Tiny Aptose Biosciences Looks Worth A Closer Look

Right off the bat, Aptose Biosciences (NASDAQ:APTO) triggers a few warning signals. The company has been around a long time (since 1986), has had two name changes, and really hasn't accomplished much of anything. Now this biotech is targeting one of the more under-served areas of oncology and one that has seen many flame-outs (most recently Cyclacel (NASDAQ:CYCC). Coupled with a sub-$100 million market cap and a recent reverse stock split, a lot of the "beware of" biotech boxes are already checked.

One of the most dangerous phrases in investing is "it's different this time", but perhaps in the case of Aptose that is true. This company cleaned house a while back and brought in credible new senior management, naming the founder of Achillion (NASDAQ:ACHN) as its new CEO. The company also raised money and listed itself on the NASDAQ. Most importantly, though, the company has a drug in its pipeline that at least appears to have a credible mechanism of action in treating acute myeloid leukemia - a relatively common type of leukemia, but one that often has poor expected survival outcomes.

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Tiny Aptose Biosciences Looks Worth A Closer Look

Sunday, December 21, 2014

Seeking Alpha: Roche Loses A Little Luster Before Year-End

Even good drug companies have to cope with the fact that drug development is difficult and negative outcomes are more likely than clinical successes. Roche (OTCQX:RHHBY) has had plenty of wins over the year, and the company's presentations at September's ESMO meetings included some fantastic results, but the news on Friday was decidedly more negative for Roche as it reported surprisingly disappointing data from its MARIANNE front-line breast cancer study and saw yet another clinical failure in its non-oncology pipeline.

The disappointment of the MARIANNE study is tempered by the company's robust portfolio and deep immuno-oncology pipeline. Even so, the setback to Kadcyla takes some upside out of the story and the shares appear more or less fully valued at this point in time. I believe that the quality of Roche makes holding it still a worthwhile proposition, but investors with new funds to deploy should look around the space a bit first.

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Roche Loses A Little Luster Before Year-End

Seeking Alpha: Alnylam Pharmaceuticals Continues To Post Encouraging Results

Having written about Alnylam Pharmaceuticals (NASDAQ:ALNY) in early November, I thought I'd be done with covering the stock for a few months. Alnylam likes to make its analysts and shareholders work, though, and the updates from the company since then do merit further discussion.

Fortunately for shareholders, the updates are universally positive. Revusiran appears to be safe and while efficacy remains unknown, the company has launched the Phase III ENDEAVOUR study. Alnylam has also reported encouraging early-stage data on its ALN-AT3 hemophilia treatment, started a Phase I/II study for ALN-CC5, and has seen partner The Medicines Company (NASDAQ:MDCO) start clinical studies of ALN-PCSsc. Last and not least, the company has shifted its strategic and research priorities a bit, with three large areas of focus.

Much as I don't like the well-trod path on the sell-side of "the stock has reached my price target, so I'll raise my target", the changes in just the last month do prompt me to bump my fair value estimate higher.

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Alnylam Pharmaceuticals Continues To Post Encouraging Results

Saturday, December 20, 2014

Seeking Alpha: Economic Worries Weigh On FEMSA

Mexican consumer conglomerate FEMSA (NYSE:FMX) hasn't had a great 2014, as analysts and investors have continued to worry about the impact of new taxes and a sluggish economic recovery on Mexican consumers. Insofar as the things under FEMSA management's control go, however, 2014 has been a decent year and the company continues to offer a solid investment case as a good play on Mexico's economy and a long-term profitable redeployment of capital.

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Economic Worries Weigh On FEMSA

Seeking Alpha: Despite A Reminder Of The Risks, Senomyx Still Has Appealing Potential

Wall Street can be a harsh teacher (I have the grey hairs to prove it), so it's best to learn certain lessons with a minimal number of repetitions. One of those lessons is that it almost always pays to be skeptical when it comes to small development-stage companies that depend upon commercial launches controlled by larger companies.

Senomyx (NASDAQ:SNMX) has an interesting IP and technology portfolio for taste receptor-based food additives and a high-profile partnership with PepsiCo (NYSE:PEP). Optimism over the commercialization potential of an additive designed to reduce the sugar/HFCS content of sodas and other beverages sent these shares close to $13 this year, but then the market swept the legs out from under the stock on worries about a later-than-guided commercial launch from Pepsi and lackluster self-directed sales efforts.

I had been less bullish on Senomyx's near-term prospects than at least some of the sell-side, so the consequences of this six-to-nine month delay aren't as bad to my valuation. I still believe this is a high-risk/high-reward situation, but the commercial potential of products that can reduce the sugar or salt content of food and beverages, or enhance their savory characteristics is such that this is still a stock for aggressive investors to consider as a 2015 breakout story.

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Despite A Reminder Of The Risks, Senomyx Still Has Appealing Potential

Seeking Alpha: The Going's Getting Tougher, But ABB Is Still Going

Swiss industrial conglomerate ABB (NYSE:ABB) largely did what it needed to with its September capital markets day, reassuring investors that management is moving to fix the problems in the Power businesses, that automation remains in good health, and that capital returns to shareholders were a priority.

Since then, though, ABB has seen some adverse developments. Europe's economy, as reflected by metrics like Germany's PMI, has been looking soft and tumbling oil prices threaten a sizable end-market for the Process Automation business. Add to that that ABB was already being somewhat bold in projecting market-beating growth, and it is perhaps not so surprising that a lot of sell-side analysts have cooled on the shares.

There are certainly risks in front of ABB, but that is always going to be true for an international industrial conglomerate. ABB's plans to turn around the Power operations still appear credible and while automation orders from the oil/gas sector are at risk, lower oil prices could stimulate more capex investment and demand from customers in other end markets. All told, ABB still looks like a credible stock to own today for investors looking to gain international and industrial exposure.

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The Going's Getting Tougher, But ABB Is Still Going

Seeking Alpha: Despite A Share Price Slide, Commercial Vehicle's Plan Remains On Track

Institutional investors can be a notoriously fickle and impatient lot and Commercial Vehicle (NASDAQ:CVGI) shares have certainly fallen out of favor since the summer of 2014. Commercial Vehicle wasn't the only commercial vehicle-exposed company to see its stock slide, Cummins (NYSE:CMI) and Allison (NYSE:ALSN) also saw declines (albeit not as steep), but it looks as though the Street was unimpressed with Commercial Vehicle's mid-September Analyst Day and is less bullish on the long-term self-improvement prospects.

Admittedly, management's guidance that 2015 and 2016 will be years of investment instead of significant margin improvement was a little sobering. Likewise, I can understand if investors are worried that management is banking on agriculture equipment, a sector that many now expect to be in a multiyear bear market, as a major source of future growth. All things considered, though, not a lot has changed in my long-term fundamental outlook for the company and I continue to believe that $10 is a credible medium-range destination for the shares.

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Despite A Share Price Slide, Commercial Vehicle's Plan Remains On Track

Seeking Alpha: Philips Looks To Long-Time Laggard Volcano To Perk Up Its Healthcare Biz

It took a long time, but Volcano (NASDAQ:VOLC) finally found its buyer. Now the question is whether Philips (NYSE:PHG) can generate the growth and profits from Volcano's platform of technologies in intravascular imaging and therapeutics that Volcano's management never could. Investing more resources into image-guided therapeutics is not a bad call on the surface, but Philips must prove that it has moved past its legacy of below-average (if not outright poor) deal integration and must prove that the potential synergies between these two cath lab companies can win out over competitive threats from the likes of Boston Scientific (NYSE:BSX) and St. Jude Medical (NYSE:STJ).

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Philips Looks To Long-Time Laggard Volcano To Perk Up Its Healthcare Biz

Thursday, December 18, 2014

Seeking Alpha: Better Priorities Leading To Better Outcomes For Broadcom

Broadcom (NASDAQ:BRCM) has had to learn some hard lessons about growth for growth's sake. Chasing revenue growth for its own sake led the company to two sizable ill-fated (and overpriced) acquisitions, not to mention the fruitless investment of substantial monetary resources into the uncompetitive broadband business.

Chastened by its failures, Broadcom management has retrenched around its established strengths and reprioritized profitable growth. Lost, or at least obscured, in the fuss over baseband and the lingering concerns about wireless connectivity is a very strong business in switching and broadband, not to mention upside from IoT-oriented connectivity products. Broadcom isn't obviously cheap from a FCF perspective, but if Broadcom can deliver the margin improvements its management projects and if the company can stick to a Texas Instruments-like (NASDAQ:TXN) transformation, there could be long-term upside beyond $50.

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Better Priorities Leading To Better Outcomes For Broadcom

Seeking Alpha: Lundbeck Continues To Fight To Stand Out

The Danish pharmaceutical company H Lundbeck A/S (OTCPK:HLUYY) (LUN.CO) isn't going to resolve its challenges quickly. While I continue to believe there is a strong argument to be made that Lundbeck has developed a roster of differentiated CNS products that can stand apart from branded and generic competitors, the fact remains that the Street has yet to be convinced and the company is still facing significant near-term profit erosion from lost patent coverage on key drugs and significant investments to support drug launches.

Buying Lundbeck now remains a bet on the prospects that better clinical data for key products like Brintellix, Abilify Maintena, and brexpiprazole will translate into major sales and that compounds like Selincro and Northera will emerge as significant contributors in their own right. With base-case upside of around 25% and bull-case upside of more than 40%, I continue to believe it's a bet worth making for more aggressive investors.

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Lundbeck Continues To Fight To Stand Out

Wednesday, December 17, 2014

Seeking Alpha: Cyclacel Now An Exercise In Futility

If there's any lesson worth learning about biotech - other than that, somehow, Hemispherx (NYSEMKT:HEB) will manage to convince a new crop of investors that its experimental compound Ampligen actually has some use - it's that trying to play long odds with micro-cap oncology biotechs rarely works out. Cyclacel (NASDAQ:CYCC) shares had already been pricing in a much lower than normal expectation of success for a Phase III cancer drug, but even those expectations have proven too optimistic.

With Tuesday's announcement that sapacitabine is unlikely to meet its primary endpoint in the Phase III SEAMLESS study of the drug as treatment for newly-diagnosed acute myelogenous leukemia (or AML) in elderly patients, there is little reason for investors to hold on to hope. While it may technically be possible (as in the odds are not 0%) for the final results to look a little better, that seems exceptionally unlikely and investors should resist the temptation to believe that other applications like MDS will save the day. Cancer biotechs rarely ever go away entirely and these shares could be a speculative playtoy for traders, but investors looking for biotechs with a real future in oncology should move along.

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Cyclacel Now An Exercise In Futility

Seeking Alpha: Ghosts Of Business Problems Past Visit Accuray Again

Since taking over Accuray (NASDAQ:ARAY) in October of 2012, Josh Levine has done a lot of good things at Accuray. Not that you'd know it by the stock performance (down about 3% over that stretch), but Levin has championed a reorganized sales force, reduced operating costs, and significant improvements in product quality and product development.

Unfortunately, there are still multiple issues bedeviling Accuray. Communication with the Street, long an issue of the prior management team, has emerged as an issue again as the company has failed to adequately communicate the impact of order age-outs to investors. There have also been challenges in getting the CyberKnife multi-leaf collimator to market, not to mention the challenges that go with competing against the 500lb gorilla that is Varian (NYSE:VAR).

Despite these rather sizable bumps in the road, I'm still bullish on Accuray. I've unfortunately gotten a much closer look at the realities of radiation oncology and I continue to believe that Accuray's technology and products can gain share in a changing radiation oncology market.

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Ghosts Of Business Problems Past Visit Accuray Again

Seeking Alpha: Manitex Still Hopes To Grow Past The Crane Wreck

It's been a rough year for Manitex (NASDAQ:MNTX), as the hoped-for turnaround in crane demand failed to materialize. For what little it may comfort investors, Manitex hasn't fared much worse from a stock market perspective as Terex (NYSE:TEX), Manitowoc (NYSE:MTW), and Palfinger (OTCPK:PLFRY) have all been weak as well.

There are certainly still clouds on the horizon, as rental fleets likely do not need to refresh aging fleets on a one-to-one basis and housing/infrastructure spending hasn't caught fire. Even more concerning to Manitex, oil and gas spending is likely to drop meaningfully next year as energy companies respond to a sudden drop in oil prices that has pushed many drilling projects below breakeven.

Amidst the challenges, Manitex has continued to build its business toward a critical mass in specialty equipment and 2015 could see the company break out over $500 million in revenue. Pushing out my expectations for organic growth and margin improvement has dropped my fair value in the low-to-mid teens and the debt magnifies the risk, but Manitex is still targeting growth in recovering sectors like infrastructure and industrial capex.

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Manitex Still Hopes To Grow Past The Crane Wreck