Generex Biotechnology: Why Investors Should Get Out Now!

In the biotech industry, just like with anything else. There are some companies who thrive, and others who fall into the wastebin. Generex is one of the latter. Not all of us end up with a winner like Vertex Pharmaceuticals (VRTX) or Jazz Pharmaceuticals (JAZZ). For some stocks, it is simply time to sell out and accept the losses that they have incurred since inception.

The first stock is a stock that I used to own when I first got into investing, and I sold it a year after that point in time, Generex Biotechnology (GNBT.OB). Generex has been leaking cash for years. Which is truly a shame because their Antigen Express pipeline seems to have quite a bit of quality. I would invest in Antigen, if I ever got the chance to, but not with Generex's management. Antigen as a matter of fact should be its own company by now, according to a statementmade by the company on March 30th, 2011. Generex intended to spin out Antigen Express and issue dividends of Antigen Express shares to current shareholders, that was of course contingent upon shareholders approving a reverse stock split. This split was approved on June 8th, 2011; yet Antigen is still controlled by Generex to this day. Generex for some reason also scrapped the plan for the reverse stock split. Antigen was valued at over $300 million according to Generex. If this asset is worth so much money, why would Generex's market cap be sitting at a mere $17.97 million? Well, first of all what is mentioned in the press release is simply a "leading national valuation firm" estimated the value of Antigen Express to be at over $300 million. Well, this does not truly help to solve the value of Antigen Express, as I could tomorrow open a valuation firm, but that would not make me credible in terms of my valuation. They should have mentioned the name of the company that did this valuation. Now, moving away from the unrealized talk of the spinoff of Antigen Express, let's dive into Generex's financials and see why I believe that Generex could be on the verge of collapse. Generex, according to their recently filed financials lost $5 million last quarter. If you notice, Generex had a negative operating cash flow of $1.045  million. The only reason that they finished cash flow positive for that quarter is the fact that they ended up having $1.45 million in the sale of stock and another $708k in net borrowings. Now, before people say it, I know that many 'development' stage biotech companies are net negative for years while progressing their pipeline (although Oral-lyn is still undergoing Phase III testing, for what is now its fifth year of testing, given that it started North American testing on April 7th, 2008). In that time for Oral-lyn, Generex has announced two phase III trial results, only to discover that they will need more testing. With a dwindling cash supply, it looks as though Antigen's products might not reach the market before bankruptcy. The unrealized potential of Antigen Express is just some more empty talk from Generex.

Another interesting patent play: Single Touch

Single Touch interactive (SITO) is a company that you doubtlessly have never heard of before. Similarly, I have never heard of SITO until recently. There are a few things that have caught my eye about this company, the first is the fact that it is suing Hulu, and recently sent Facebook a letter regarding Single Touch's intellectual property. They also have retained a rather good IP litigation firm in Polsinelli Shughart, a tier one patent litigation firm. This could be one to watch, and SITO is not your typical patent troll in the respect that it also has revenues and a solid core business, very similar to DSS once the merger is finally completed. I will do some more due diligence on the company in the upcoming days and post a much more complete bio of why I like this company. This is definitely one to put on your radar!

Vringo's Appeal: Why it matters

The purpose of this post is to rather quickly clear up some misconceptions of investors regarding the appeal filed by Vringo (VRNG). Vringo is appealing the laches and past damages portion of the judge's decision. They are not yet able to even appeal the running royalty rate etc. The easiest way to think about the case at this point would be as almost two seperate cases. One phase would be the laches, and the other the Running Royalty rate. This appeal was brought on by the judge's final rejection of Vringo's motion for a new trial yesterday, as soon as the judge rejected that all of the outstanding motions regarding the laches issue was therefore solved. This opened the door for Vringo's appeal.

This appeal is great for Vringo, as it has the potential to yield a huge amount of money, with little downside as the worst that could happen is that the appeals court keeps the current damages calculation in place, which would mean $30 million for Vringo. I would however speculate that it was more positioning. If Vringo were in negotiations with Google, they just raised the ante and now have a stronger hand going into the negotiations. If Google does not provide the types of numbers that Vringo wants, Vringo will just simply walk away and say that they will see Google in the court of appeals. 

Some interersting biotechs

Some of my favorite Biotech stocks right now:

1. Antares Pharmaceuticals*, as you can see through http://seekingalpha.com/article/1292491-antares-a-compelling-long-term-investment, I lay out some of the reasons why I personally own this stock as well as some compelling reasons that I believe that other people should own this stock.

2. Titan Pharmaceuticals*- This company recently received a positive opinion from an FDA advisory panel, and received a massive boost in share-price as a result. I would look for it to "fill the gap" between where it was pre-panel and post-panel, before the PDUFA date. http://seekingalpha.com/article/1296401-why-titan-pharmaceuticals-is-currently-undervalued

3. Looking for a little bit more long-term: An interesting buy at current price levels is Dynavax Pharmaceuticals (DVAX). The interesting part is that you are banking that they are not going to have to run  any more trials, as that would hurt the share-price substantially. However, not having to run more trials would allow for a short-turn around time on a response to the CRL, and look for DVAX's meeting with the FDA to end up being positive. Remember that the FDA was the one who asked them to increase the age group, a main concern of the committee. If DVAX refiles relatively quickly we could see a run-up start all over again and subsequently, see huge gains on the stock.

4. Another more long-term idea is to invest in Amarin. Now I know what you all are saying, Amarin, we have been down that road before. However, I believe that the commercial potential of Vascepa, is huge. Also the Anchor indication coming up could help to boost the patient population. I would own this stock over the long-term.

 Note: stocks with astricks (*) indicate stocks that I currently own. Note: if you would like for me to go more in-depth in any of my stocks please post a comment and I will do my best to go more in-depth.

This post is meant for entertainment and informational purposes only. This does not constitute investment advice, or an offer to buy or sell securities. Conduct your own due diligence before investing. I have not been compensated for writing this post by any source except amaxstockideas.blogspot.com. Happy investing.

Generex Is anything left for this once interesting biotech?

Generex Pharmaceuticals (GNBT)- Has for years been promising, and promising, and promising... yet nothing has been delivered. Generex has made promise time and time again to help increase the value of the company, for example promising to divest its Antigen Express subsidiary if shareholders would just agree to a reverse stock split. Well, shareholders agreed, and still nothing. Generex promised to have Oral-lyn Phase III trials designed, and still Oral-lyn appears to be sitting dead on the shelf, a multi-million dollar view-piece  Collecting dust, and collecting past memories, that is Oral-lyn. Generex has still not cleared up its situation in India, and has still not designed a Phase III trial for AE-37, the one rather promising drug in Generex's pipeline.

It is truly sad though, this company had such great potential, its Metformin gum would have revolutionized the marketplace, but that project was mysteriously dropped by the company. The system surrounding Oral-Lyn was supposed to help revolutionize the way that Americans perceive diseases and the way in which we treat diseases. Yet, the technology platform is rotting away seemingly, while Generex is burning cash at an alarming rate. At this rate, one must begin to wonder if it would be best for Generex to just go bankrupt, and thus allow for shareholders to buy Antigen Express, and unlock the true value of the company. This company has a chance, but the shareholders must quickly choose, management or the company?

Note: the views expressed in the article are solely those of the author. This article is meant solely for informational purposes, and is not meant to be investment advice. The author has received no compensation for writing this article (other than from amaxstockideas.blogspot.com). You invest at your own risk, complete your own due diligence before investing in a particular stock. This article cannot be considered an offer to buy or sell securities. 

Hot Stocks to Watch

For all of us out there who like to watch stocks, here are some stocks to watch in the upcoming weeks and months in my opinion.

1. Titan Pharmaceuticals (TTNP)- With their positive advisory vote today, Titan has the potential to start swinging for the fences. The Price per share might see an increase back to the levels where it was before the FDA released documents.

2. France Telecom (FTE)- While I liked it better a week ago, I do believe that this stock is still one of the more undervalued stocks on the market. Its Forward P/E is very low, and it pays a hefty dividend. These facts combine to the conclusion that FTE could be in buy range.

3. Vringo (VRNG)- For those of you who have never heard of this company, I will provide some background. It is a company that is primarily engaged in the enforcement of intellectual property rights. This company owns many different patents and recently won a key case against Google for patent infringement. While the jury came back with a running royalty, and some past damages the issues for Vringo remain what the running royalty will be, and if they can overturn the judge's controversial laches ruling. Vringo has the potential to jump based on the court's announcement any day, and the fact that they already won a trial by jury, where the jury found Vringo's patents to be valid, enforceable, and infringed upon helps to lower the possibilities for downside. It is rather clear that Vringo will get something, the question is just how much they will get in damages.

4. Finally, another stock which as of late I have grown rather fond of is: Worlds inc (WDDD). This is another patent play, and they are suing activision blizzard over patent infringement related to the Call of Duty and World of Warcraft franchises, respectively. These lawsuits have the potential to become huge, and as we get closer to the marksman date, we should see the stock to continue to run.

I would keep my eye on these stocks in the coming weeks and months ahead, as I believe that they all have huge potential. As always, this article is meant for solely entertainment purposes, and should not be construed as investment advice. This is not an offer to buy or sell securities. You invest at your own risk. I have received no compensation for writing this article, other than from amaxstockideas.blogspot.com

Dendreon Opportunity?

Just today Dendreon Corporation (DNDN) announced "corporate restructuring" and that it would cut approximately 500 jobs. This comes on the back of disappointing sales for its Provenge treatment for Prostate Cancer, and an over 60 percent drop in its stock price on the day of the sales. Dendreon has spent a lot of money to open yet another manufacturing plant, and it seems to have atleast initially way over-anticipated the demand of Provenge. DNDN last quarter announced Provenge sales of just 49.6 million dollars, which is substantially lower than analyst estimates. DNDN also withdrew its previous revenue guidance and said that it expects moderate quarter over quarter growth in sales.

Previously DNDN had predictions of 350 to 400 million dollars in sales for the fiscal year, however that has now been withdrawn by the company.

The main problem that is facing DNDN is getting reimbursed by insurance companies.Provenge's price tag is a whopping 93 thousand dollars, and insurance companies seem to have a hard time justifying the cost in the face of how many more months it adds to a patient's life.

For the fourth quarter DNDN reported a net loss of 114.6 million dollars or 79 cents per share. DNDN is quickly bleeding cash and will need for Provenge sales to increase to have any hope.

The next question really becomes does DNDN have anything else in its pipeline that might be worth investing in? The answer is yes.... kind of. DNDN has a few different drug candidates listed under its pipeline, one of the more promising treatments appears to be a treatment called Sipuleucel-T, which is in Phase II and III trials in Hormone sensitive prostate cancer, as well as in metastatic Prostate Cancer. However, Cancer drug trials take a very long time to run by their very nature, so I am not sure how far away this drug is from the market, but I would say atleast a few years if it can even garner approval.

DNDN also has some other compounds which are in various stages of clinical trials but for now they seem to be reliant on Provenge for their future success.

On DNDN I would say invest on what you can see. I would estimate that the sales numbers although initially slumped, will probably pick up later, so the company could still be successful later. I believe that this company is very reliant on Provenge.

Its a risky bet but it might be worth picking up a few shares and being prepared for their next earnings and seeing if you can make some quick money on this one. DNDN's other drugs appear to be years out, so for right now Provenge seems to be the drug that is going to make or break this company.

Disclosure: I do not own a position in DNDN, and do not plan on opening one for the next week at least.


To view all drugs in their pipeline, here is a link to DNDN's home website:
www.Dendreon.com

To get a quick rundown of the earnings report:
http://www.thestreet.com/story/11208772/1/dendreon-earnings-provenge-whiffs-badly.html

Hope you enjoyed the post, please leave a comment!