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Source: Daniel E. Levy of The Life Sciences Report
Despite all of the advances in diagnosis and treatment, the family of diseases that falls under the umbrella of “cancer” still represents a significant unmet medical need. Consequently, research continues in the discovery and development of therapeutic agents with novel mechanisms of action, wider therapeutic indexes and lower overall toxicities. In this interview with The Life Sciences Report, Peter Culpepper, CFO and COO of Provectus Pharmaceuticals Inc., describes his company’s innovative rose bengal formulation and its use as a cancer therapeutic.
MANAGEMENT Q&A: VIEW FROM THE TOP
The Life Sciences Report: Rose bengal is commonly known as a dye. Can you tell me about the history of this compound as a therapeutic agent?
PC: Rose bengal is a very unusual compound. It was originally used as a textile dye in the late 1800s, and later found a wide variety of diagnostic applications. There are more than 3,500 peer-reviewed publications describing the use of rose bengal in staining diseased tissue or identifying tissue irregularities.
Provectus Pharmaceuticals Inc. (PVCT:OTCQB) has determined how to use rose bengal therapeutically—the first to do so. In the late nineties, and after more than a hundred years of diagnostic use, we identified rose bengal’s therapeutic potential for treating cancers and serious skin diseases by taking advantage of its photosensitivity characteristics.
TLSR: A recently published study by the Moffitt Cancer Center demonstrated that a single injection of PV-10, your rose bengal formulation, may revolutionize melanoma treatment. This could be very significant for Provectus. Can you comment on the results of that study?
PC: Moffitt Cancer Center is one of the National Cancer Institute’s 41 comprehensive cancer centers in the U.S. Moffitt is particularly active in melanoma research and has a strong understanding of rose bengal and its safety profile. Beyond this, Moffitt wanted to learn if this agent induced an immune response. This was important because PV-10 is an injectable, and is not delivered systemically.
The Moffitt study established that concentrations of rose bengal will destroy diseased tissue. Furthermore, an immune response follows: The study concluded that when PV-10 ablates, or reduces the growth of directly injected tumors, a robust antitumor T-cell response follows. This was observed in all cancer types studied—not just in melanoma. While Provectus sponsored this study, Provectus is not listed as an author. This is an independent study that proves to the industry that PV-10 works systemically.
TLSR: Regarding toxicity, what makes your rose bengal formulation attractive for development?
PC: Rose bengal operates through a novel mechanism of action. Our formulation, PV-10, is 10% rose bengal in a saline solution, the highest achievable concentration of rose bengal in an injectable. We found that, in this solution, rose bengal is agnostic to any type of cancer. The attractiveness for development is that PV-10 can be used in every cancer that you can get a needle into. It has multi-indication potential and can treat solid tumors in the breast, prostate, bladder and elsewhere.
Rose bengal has been used as a liver diagnostic for decades, and is useful for treating liver cancer. This is important because many cancers metastasize to the liver. Also, because PV-10 is minimally invasive and rose bengal is optically dense, direct injection into solid tumors is straightforward—you can image it as it is being delivered.
Finally, rose bengal is small molecule, not a biologic. It is synthesized in large quantities in a straightforward manufacturing process. Thus, PV-10 is a cost-effective, multi-indication injectable that can potentially be used in both the pre- and post-surgical arenas, either as a stand-alone or as an adjunct cancer therapy.
TLSR: Going back to your previous statement that PV-10 works by stimulating the immune system, can you describe how that is accomplished?
PC: A study presented at the Eighth World Congress of Melanoma describes the cytotoxicity of unformulated rose bengal, and its ability to preferentially kill diseased tissue over healthy tissue with a wide therapeutic window. The study, titled “Rose Bengal—Phototoxicity Versus Intrinsic Cytotoxicity,” concluded that an interplay of cell necrosis and autophagy (in which a cell “digests” itself) is a possible mechanism of action.
We call this interplay “autolysis.” Through autolysis, we are forcing cell destruction by delivering enough rose bengal to the tumor site. Following autolysis, work at the Moffitt Cancer Center demonstrates that cellular antigens are exposed to the immune system. The “antigen storm” that follows PV-10-induced autolysis results in the immune system being activated against the cancer. Rapid destruction of the tumor follows.
TLSR: Rose bengal operates in the absence of light-stimulated activity. Can you comment on that?
PC: Rose bengal is unique partly because it has photodynamic characteristics. It can be used as a photodynamic therapy (PDT) agent, as we’re demonstrating in the treatment of skin diseases like psoriasis and atopic dermatitis. But rose bengal can used for both PDT and non-PDT applications. For cancer, we don’t need light. Rose bengal delivers a pure cytotoxic effect that is safe and well tolerated. It is not metabolized in the body and it has a 30-minute half-life once in the bloodstream. Due to this rapid systemic clearance, intravenous delivery was never able to achieve therapeutic levels. Our therapeutic levels are achieved through direct injection into tumors.
TLSR: How would PV-10 be better than traditional chemotherapeutic agents, antibody-drug conjugates and photodynamic therapy?
PC: PV-10 differs from traditional chemotherapy because of its specificity. There is a wider therapeutic window with rose bengal, compared to chemotherapeutic agents, because it only goes to diseased cells. As a compound, rose bengal does not interact with normal cell membranes. It does, however, interact with cancer cell membranes. Furthermore, rose bengal prefers the lower pH intracellular environment of cancer cells, though it can also prefer higher pH environments. Rose bengal goes different ways in different scenarios, which makes it a very flexible molecule.
Chemotherapeutic agents are not specific enough to avoid toxicity challenges. Even antibody-drug conjugates don’t target individual properties of cells. We’re not looking at a particular protein or enzyme, or a particular pathway. Rose bengal destroys cancer cells because it is attracted to cancer cell walls. This is why rose bengal works on every tumor type that we’ve tried.
TLSR: There are cancers, such as esophageal cancer, that respond very well to photodynamic therapy. Do you envision instances where you would leverage the photodynamic properties of rose bengal as a cancer treatment?
PC: Esophageal cancer could be one example. But there is a complication. Because rose bengal is optically dense, if you have too much in a particular area, it absorbs light and will not facilitate the mechanism that allows cell destruction. Too much rose bengal limits its PDT capability. That’s why the concentration of rose bengal in the skin formulation, where we need to take advantage of light, is much less than in the formulation we use inside the body, where we don’t need light. Most solid tumors, according to our research and the research of others, react to rose bengal without light.
TLSR: We have talked about melanoma as your initial target indication. How are clinical trials progressing?
PC: We presented final phase 2 data for the use of PV-10 against metastatic melanoma at last year’s European Society for Medical Oncology (ESMO) congress. We reported a 51% objective response, a 25% complete response and a 26% partial response. We also found that results improved when patients received all the PV-10 they needed for their lesions. Disease control is very good, and progression-free survival is very good. These results, and additional data, will be presented at this year’s European Cancer Congress (ECCO). Finally, the key opinion leaders in the cancer community believe that PV-10 should be developed to approval.
TLSR: Can you comment on what kind of efficacy you’re seeing for PV-10 in additional cancers?
PC: The most exciting results on that front would be in primary liver cancer. We have already done a phase 1 study in hepatocellular carcinoma (HCC). These patients have advanced disease, and have already gone through appropriate local therapies, including surgery. Direct injection of PV-10 in the liver lesions of these patients resulted in substantial ablation of the lesions with sustained regression. There is significant durable response, with no evident disease detected during the follow-up period, as determined by CT scan.
Many of the study’s subjects—the phase 1 trial was small, involving only six subjects—have been followed for years. Because of its success, the study was expanded to look at safety and efficacy in up to 36 additional patients. Of particular interest are patients on sorafenib, the current standard of care. Our next studies will be designed to look at PV-10 both in addition to, and against, sorafenib.
Following HCC, we have enabling data against breast cancer. We believe there’s significant promise in breast cancer because PV-10 can function in the tissue-sparing capacity, much like in the Moffitt study treating melanoma patients. Down the road, we are interested in additional indications, including refractory scalp sarcoma, squamous cell carcinoma, and both pancreatic cancer and ocular melanoma metastasized to the liver.
TLSR: Would you envision being able to treat primary pancreatic cancer, and other difficult cancers like glioblastoma?
PC: We have an investigator who’s interested in treating primary lesions in the pancreas. We have seen potential for the immunologic affect of the agent in the pancreas and there’s a rationale for direct injection of PV-10 into pancreatic lesions. However, because pancreatic cancer presents with multiple smaller lesions, you have to hope that once you ablate the lesions, the immune system will be appropriately harnessed to assist in the regression of pancreatic cancer that is not directly treated.
In addition to pancreatic cancer, there’s a significant interest in bladder cancer and cancers of the head and neck, which are generally very difficult to surgically remove.
TLSR: When do you expect to launch PV-10 for melanoma?
PC: A lot depends on how fast we get regulatory clarity from the FDA, which we expect this year, in 2013. It’s fair to say that it would make sense to consider a breakthrough therapy designation. The breakthrough therapy designation could enable us to accelerate the path. Should we obtain breakthrough therapy designation, we could see a PV-10 market entry for melanoma sometime in late 2014. Without the breakthrough therapy designation, we are looking at a standard phase 3 study design, with product launch sometime in 2016.
TLSR: How soon after melanoma would you expect to launch for treatment of additional cancers?
PC: Liver cancer would be our next indication. If we can show, in a pivotal, powered, randomized study, that PV-10 is superior in combination with, or versus, the standard of care, sorafenib, we could have an opportunity for an accelerated path in liver cancer as well, including the breakthrough therapy designation. Furthermore, as indicated in our FDA filings, with an appropriate partner we would be able to leverage considerable additional development resources to advance in additional indications.
TLSR: We talked about how PV-10 works as a potential additive and in synergistic response to other cancer therapies. What kind of market share do you expect for PV-10 as a co-therapy?
PC: When we do the discounted cash flow analysis, we’re looking at a maximum penetration of 25% for the different cancer indications. The key opinion leaders want to use PV-10 for surgical candidates, as a monotherapy post-surgery and in combination with other therapies when significant inaccessible disease burden to PV-10 exists. These scenarios cover all the bases, because PV-10 is well tolerated and can be used on either an outpatient basis or for short hospital admissions. We anticipate 35% market penetration for melanoma alone. For at least one third of all stage 3 and stage 4 melanoma patients, lesions can be directly injected.
TLSR: Are there instances where a patient might be a non-responder to PV-10? Do you envision a way to determine if a patient will be a responder versus a non-responder?
PC: Rose bengal and PV-10 are completely agnostic to tumor biomarkers. It doesn’t matter if a patient is refractory or naive. It doesn’t matter what type of therapy the patient is on. PV-10 responds equally, across the board, to all lesions in all patients.
For some lesions, the morphology is such that the response does depend on lesion size. In these cases, repeat injections may be necessary. If you keep at it, you’ll be able to fully ablate all the lesions you can directly access. In this regard, PV-10 is a general tool that is independent of and complementary to personalized medicine.
TLSR: Thank you Peter. I enjoyed our conversation and hope we have the chance to talk again.
PC: I appreciate it as well. Thanks Daniel.
Peter Culpepper, CFO and COO of Provectus Pharmaceuticals Inc., has spent 20 years in the financial field in the U.S. and abroad. His experience includes working with private start-ups, publicly traded global conglomerates, large nonprofits and a national accounting firm. Previous employers include Neptec Inc., a privately held optical networking component manufacturer; Metromedia Company Inc.; and PageNet, the largest wireless messaging company in the world. Culpepper has also taught undergraduate and graduate business courses for the University of Phoenix. He is a licensed certified public accountant in Maryland and Tennessee. His professional affiliations include the American Institute of Certified Public Accountants, Financial Executives International and the Financial Executives Networking Group. Culpepper holds a master’s degree in business administration (finance) from the University of Maryland, as well as bachelor’s degree in philosophy from the College of William and Mary and an associate’s degree in accounting from the Northern Virginia Community College.
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1) Daniel E. Levy conducted this interview for The Life Sciences Report and provides services to The Life Sciences Report as an independent contractor. He or his family own shares of the company mentioned in this interview: None.
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Source: George S. Mack of The Life Sciences Report (9/19/13)
It’s important to take the emotion out of investing. Keay Nakae, senior research analyst with Ascendiant Capital Markets, looks at micro- and small-cap biotech stocks from an engineer’s perspective: It’s all about the data. In this interview with The Life Sciences Report, Nakae reports on four companies with upcoming catalysts that potentially position them for significant growth—and the ability to grab investors’ attention.
The Life Sciences Report: You have a very interesting background. You earned your master’s degree in business administration at the Anderson School of Management at UCLA, but you are also an electronic engineer, with an advanced degree from California Polytechnic State University in San Luis Obispo. You’ve also had significant experience in industry, where you were part of a team that developed the Affinity pacemaker at St. Jude Medical Inc. (STJ:NYSE). Engineers look at the world in a very disciplined, problem-solving fashion. You have been a sellside analyst now for more than a dozen years, and have been recognized by Forbes as one of America’s Best Analysts. Can you tell me how your experience has shaped your methods as a sellside analyst?
Keay Nakae: My prior work history has been cumulative in terms of my ability to be an effective analyst. At each stop along the way, I’ve had a certain set of tools that I was able to further develop, which, collectively, I use in my current job.
Starting with my engineering background, I have a certain, very logical way of problem solving and thinking about things. But equally important is the fact that, having worked for a company that was developing a product, I understand all the steps along the way: product design, developing the prototype, fixing what’s wrong and improving the product to the point where it can be handed off for manufacturing and go to the market. Being part of that process has been very valuable in knowing what questions to ask.
After being an engineer and then graduating from business school, I shifted careers and worked in corporate finance, which requires a whole different set of skills. But again, this has been very valuable to me as an analyst in terms of determining valuations. I understand how tradeoffs are made in determining which products in the development pipeline are advanced with additional funding and focus, and why other products are shuffled back or simply abandoned due to their perceived future values.
TLSR: Keay, how does your critical analytical process fit into analysis of micro- and small-cap biotech stocks? Does the discipline that you brought from business school, engineering and industry make it easier for you to see value drivers, or the lack of value drivers, in very small companies that often have just one product in development?
KN: For companies that fit the micro- and small-cap criteria, I focus on the game plan. A drug developer must, obviously, have a good compound, but it also must have a good game plan for advancing that molecule through the required clinical steps to create value. More often than not, the design of clinical studies can go a long way toward creating perceived value along the road to commercialization.
If a smaller company has fewer resources, limited funding and less experience, trial design may not be up to the standards found in larger companies. Poor decisions about clinical trial design can have very negative ramifications down the road. If a company makes good trial design decisions on the front end, it may take a little bit longer to complete the process, but positive results could bolster value creation as a product moves to the next phase of clinical development.
TLSR: I’m going to ask this next question specifically because you follow both micro-cap and small-cap stocks. Micro-cap names may not be very reactive to catalysts, even though the catalysts might be very positive. Many micro-cap biotech and specialty pharma stocks have significantly lagged this two-year biotech bull market. I’m wondering if you can venture an opinion as to why these micro caps are not following the lead of small-, mid- and large-cap biotech stocks.
KN: The lag time has to do with both the micro caps’ investor base, and also with what their future funding requirements are going to be.
Let’s say you have a company working on a product, and let’s say it has some positive preclinical data. The developer is still going to have to go through phase 1, phase 2 and phase 3 studies, so we know the pathway required to get that drug approved. But at step one the developer is still a long way off, and there is a lot of work that needs to be funded. The market knows that the company is going to need additional capital. In most cases it is too early to talk about partnering at this stage, so the developer has to go it alone. Hence, the need at some point to raise additional cash, which means further dilution, which represents an overhang on the stock.
TLSR: Another issue has to be the fact that institutional investors can’t own these micro-cap stocks. As an analyst, do you have to cultivate the small hedge fund manager for these types of names?
KN: There are different investors for every type of company at every stage of development. To your point, the larger mutual funds obviously have restrictions on what they can buy in terms of market cap, liquidity, and possibly profitability. Liquidity is always an issue at any stage. If you make an investment and you want to get out of it, can you do that? That’s obviously a key concern or criteria for anybody investing in any stock.
Typically companies start small, with very focused types of investors, and move up the chain as they gain success and create value. From the company’s perspective, it’s important to keep the doors open, allowing it to continue to work on its compound. Financing may be more expensive on the front end, but the company has to have funding to keep working. Hopefully, as the company continues to create value and achieve successes in human clinical trials, smarter hedge funds will then want to invest. Maybe the company can even do a financing without using a banker. With continued clinical success, the company can reach a position where it is able to conduct a larger financing with traditional mutual funds as investors, and/or enter into licensing agreements with bigger companies.
TLSR: I’ve been reading some of your research. Can you throw out a name that you like?
KN: We can start with a couple of names. One is Synthetic Biologics Inc. (SYN:NYSE.MKT). This company has a number of different products, some legacy products, and others more recently acquired. Deep in the company pipeline is a monoclonal antibody collaboration with Intrexon Corp. (XON:NYSE), which is very intriguing.
With regard to near-term opportunities, Synthetic Biologics has a legacy product to address multiple sclerosis (MS). Obviously, that’s a big market and the focus of a lot of drug development. The company has a very simple solution, which is to take a form of the female hormone estrogen, which it is calling Trimesta (estriol), and co-administer it with a commonly used MS drug. Currently, Trimesta is being evaluated with Copaxone (glatiramer acetate) to see what the additional benefit is. The company is near completion of its two-year follow-up in this phase 2 MS study.
What I like about this study is that it has an industry-standard primary endpoint, which is a two-year follow-up for relapsing-remitting MS patients. The last patient follow-up should occur in January 2014, and we should see the top-line results reported a few months later. If we get a good result, it’s going to be well accepted because of the solid trial design.
TLSR: Keay, Clostridium difficile (C. difficile) infection has been a trendy topic among investors. Synthetic Biologics has an interesting approach to the infection. Could that be a value driver here?
KN: Yes. The second compound in Synthetic Biologics’ pipeline, which we think could be the most interesting, is another oral product, SYN-004 (beta-lactamase), for C. difficile. It’s an enzyme, and the concept is very simple.
C. difficile is a quite common hospital-acquired infection. A whole class of antibiotics, the beta-lactams, are administered intravenously (IV) when patients are admitted to hospitals. But what tends to happen is that these antibiotics make their way into the gastrointestinal (GI) tract and wipe out some of the natural flora—the “good” bacteria—that exist there. That creates an opportunistic environment for C. difficile, which is also naturally present—but it can cause significant problems for a patient. By using the enzyme SYN-004, which would be co-administered with the IV antibiotic, clinicians could protect the “good” bacteria in the GI tract from the beta-lactam antibiotic, thereby preventing C. difficile from taking over and causing its symptoms. It is a very interesting concept, and could be a low-cost prophylactic approach to treating this problem.
TLSR: This company has the estriol hormone, Trimesta; the beta-lactamase SYN-004; and a monoclonal antibody targeting the Bordetella pertussis toxin, which causes whooping cough. This is a lot for a company with a $70M market cap. How does the company manage all of this activity?
KN: The company stock has benefited from a change in focus and a partnership with Intrexon—more specifically with Intrexon’s chairman and CEO R. J. Kirk.
A few years ago, Synthetic Biologics was known as Adeona Pharmaceuticals Inc. and, other than Trimesta, had a less-interesting development pipeline. A key transformational event occurred in Q4/11, when Adeona signed its first collaboration agreement with Intrexon, which prompted the company to shift its focus and change its name. R. J. Kirk now has a significant stake in Synthetic Biologics, and that relationship has allowed the company better access to investors who have been successful investing in R.J. Kirk and his ideas and companies.
As the company moves forward, and with top-line results with Trimesta expected no later than mid-2014, I think we will see creation of value and potential licensing opportunities. Because of the trial design, with its well-established and accepted endpoint, positive data could open some doors for licensing.
TLSR: Do you suspect that Teva Pharmaceutical Industries Ltd. (TEVA:NASDAQ) might be the ideal partner, considering that the phase 2 trial is studying the combination of Trimesta with Teva’s Copaxone?
KN: Teva’s Copaxone is going off patent, and Synthetic Biologics does have a patent issued for the combination therapy of Trimesta with Copaxone. Partnership would logically be a direction that Teva might be interested in, and a positive phase 2 outcome on a hard, well-accepted endpoint would likely result in advancement of Trimesta + Copaxone into phase 3 studies. But at the same time, I believe we could also see other pharmas thinking about how synergistic Trimesta could be with one of their new oral medications. While Copaxone is a very commonly used drug, the big excitement in MS today comes from new, orally bioavailable drugs, specifically the new drug from Biogen Idec Inc. (BIIB:NASDAQ), Tecfidera (dimethyl fumarate). Since Trimesta is also administered orally, I think a positive phase 2 result will definitely lead to more development of Synthetic Biologics’ compound.
TLSR: It’s interesting that you say that because Copaxone is an injectable, and one of the value propositions for Trimesta is that it can be given orally. Theoretically, if the patient could be on all oral medications, that would be a better situation. Why do you imagine that Trimesta is being developed with Copaxone?
KN: At the time this phase 2 study was being designed and commenced enrollment, Copaxone was the standard of care that Trimesta needed to be compared against.
TLSR: Could you mention another name?
KN: We also cover companies in the cell therapy area. One company with a number of important catalysts coming up is Cytori Therapeutics Inc. (CYTX:NASDAQ). [Editor’s Note: Cytori Therapeutics will be one of the presenting companies at the upcoming Stem Cell Meeting on the Mesa, taking place in La Jolla, Calif., Oct. 14–16.]
Cytori has an autologous (using the patient’s own cells or tissues) approach. The company runs a sample of adipose tissue obtained from a liposuction-like extraction procedure through its device, the Celution System, which concentrates the cells of interest. The processed material is called adipose-derived stem and regenerative cells (ADRCs), which are injected back into the patient. The company has generated a decent amount of clinical patient data thus far, and is now focusing on two areas. The first is cardiovascular disease, where Cytori is currently conducting a clinical study in the U.S. to evaluate the ability of its cell therapy product to treat patients with chronic ischemic heart disease. That particular phase 2 study, called ATHENA (NCT01556022) is currently enrolling patients, and we expect to see top-line results reported in the middle of 2014.
Cytori’s other opportunity is using the same cell therapy approach to treat patients who have experienced thermal burns as a result of radiation exposure. In this particular case, the company has been granted a development contract from the Biomedical Advanced Research and Development Authority (BARDA), which is under the U.S. Department of Health and Human Services. BARDA is looking for new technologies and therapies that could be available to the U.S. in case of a nuclear event. The company is currently doing work under phase 1 of the contract, which provides the company $4.7M to complete a number of tasks, the most significant of which is a preclinical evaluation of the product. That work is expected to be complete in Q1/14, and at that point the company will show the results to BARDA. The hope is that Cytori will then qualify to move into the more significant second phase of the contract, which would provide the company with up to $56M in additional funding to conduct a pivotal study in the U.S. with the goal of having the therapy receive FDA premarket approval (PMA).
Hence, Cytori has two pretty significant, upcoming catalysts: a decision on whether it will move into the second phase of the BARDA contract, and the top-line results from its ATHENA study, evaluating its product in chronic ischemic heart disease.
TLSR: I note that the final data collection for the ATHENA study will be December 2013. We’re just a couple of months from that now. How long is the follow-up?
KN: ATHENA is effectively a pilot study, so its primary endpoint will be evaluated at six months follow-up.
TLSR: This company is creating value with its research and the BARDA contract for the thermal and radiation burns. My question goes to how this is going to be monetized. My understanding is that Cytori sells or leases the Celution device, and then it sells the consumables, the supplies. That doesn’t sound like a tremendous value generator for the amount of research going on here. Your thoughts?
KN: The work that the company has done to date has generated positive results in a number of areas, but there are a couple of key hindrances. One, the Celution product is not yet FDA-approved here in the U.S., and even where it is commercially sold outside the U.S., there is a lack of reimbursement. That is hindering any kind of rapid acceleration in revenue growth for Cytori. The product is sold and used outside the U.S., but primarily the system is used to conduct clinical research. That’s the case in Japan and, to some extent, in Europe.
As for the U.S., if the company were to be successful in phase 2 of the BARDA contract, which would lead to a PMA, the U.S. government would potentially be a large customer for the product. The government would likely purchase the product, place it regionally in different hospitals and have it in place to be used in case of a nuclear event. At the same time, the hospitals could use it for non-nuclear burn patients who might come in.
Equally important is that one of the tasks in phase 1 of the BARDA contract is to demonstrate the feasibility of a next-generation version of the Celution System, which has already been completed. The next-generation system will have a much lower cost of goods, which will allow the company to move toward a business model driven much more by the economics derived from the sale of the per-procedure disposables.
TLSR: Could you mention another company?
KN: We cover another micro cap called NovaBay Pharmaceuticals Inc. (NBY:NYSE), which has a number of upcoming catalysts. This company is involved in the anti-infective area, but is not antibiotic-related. Its key product, NVC-422 (auriclosene), is a very specific compound, N,N-dichloro-2,2-dimethyltaurine. NovaBay is conducting three separate phase 2 studies in different areas. We should have the results from all three of these studies over the next year.
The company has just reported positive results from the first of these indications, in urology. Auriclosene was evaluated as an irrigation solution for people requiring longer-term use of catheters, to prevent urinary catheter blockage and encrustation. The top-line results from this randomized, double-blinded, placebo-controlled phase 2 study demonstrated that auriclosene was effective at reducing the degree of catheter encrustation and maintaining catheter patency over the course of the study. The auriclosene arm demonstrated a statistically significant reduction (p = 0.005) in the degree of encrustation compared to the control arm of saline-treated catheters. While complete catheter blockage was observed in 64% of the saline-treated catheters, this was not observed in any of the auriclosene-treated catheters (p = 0.0004).
The second opportunity is in impetigo. This application is already partnered with Galderma Laboratories L.P. (private), one of the largest dermatology companies in the world. Use of auriclosene in this indication is also in a phase 2 study, and we will probably see the top-line results in Q4/13. We believe that the positive outcome of auriclosene in the urology study bodes wells for the drug’s success in the impetigo study.
The third opportunity is in ophthalmology, using auriclosene to treat viral conjunctivitis (“pink eye”). We should see the results from that phase 2 study in Q2/14. That makes three catalysts driven by phase 2 data for this company in the next nine months.
TLSR: It’s an exciting time for this company, no doubt about it. Its stock has behaved rather well over the past year, up 20% over the past 52 weeks, but its market cap is just $64M. Do you think that money managers haven’t really looked at NVC-422 as a serious medicinal product?
KN: I believe there are a number of reasons for the low valuation. First are the limitations on micro-cap stocks that we have already discussed. Second, there is some confusion about how NVC-422 is different from both NovaBay’s other product, called NeutroPhase (hypochlorous acid), which is sold as a skin and wound disinfectant, and other anti-infective products out there that, for lack of sophistication, you might think of as simply a diluted form of chlorine bleach. Finally, there is the prior failure of NVC-422 in a viral conjunctivitis study conducted by Alcon (a division of Novartis AG [NVS:NYSE]) back in 2011.
TLSR: I imagine that pediatricians would love to be able to manage pink eye in patients who can’t reenter school without being treated, or highly contagious impetigo without using antibiotics. There is a crop of young physicians today looking for alternative solutions to antibiotics. But I’m wondering if investors are thinking that NVC-422 could be easily duplicated, or that a similar product is being developed.
KN: As you know, “pink eye” can be more of a generic term for eye inflammation, or conjunctivitis that may have been caused by either a bacterium or a virus. In the prior study conducted by Alcon, while the objective was to evaluate how well NVC-422 treated viral conjunctivitis, the number of patients enrolled in that study who actually had a viral infection was low. So we didn’t really learn anything because of a poor trial design on the front end. The current study has a much better design, which will ensure that patients with viral conjunctivitis are evaluated. As a result, a positive result will be much more specific and informative, and would be very helpful to NovaBay in deciding how to proceed in phase 3 studies.
TLSR: We will hear the phase 2 viral conjunctivitis result in Q2/14, right?
KN: Yes, that’s probably a good timeframe.
TLSR: And there is no approved therapy for adenoviral conjunctivitis currently, correct?
KN: That’s right.
TLSR: Another name, please.
KN: A name we follow that’s a little different is MusclePharm Corp. (MSLP:OTCPK), which is in the nutritional supplement business. One of the reasons we like this name is that while MusclePharm is in a competitive space, it has done an amazing job of establishing a brand name that people have gravitated to. We’ve seen really rapid revenue growth, and we would expect that to continue for a number of reasons.
The company is introducing some new product lines, one of which is focused specifically on female athletes. Then there is the more recent collaboration with Arnold Schwarzenegger to launch a branded line of Arnold Series products. Underneath that, in terms of distribution, MusclePharm continues to make good strides in moving from what had been a larger reliance on specialty stores that sell nutritional products to selling in more big-box retailers. Most recently, it has entered into a deal with Costco Wholesale Corporation (COST:NASDAQ), and we would expect it will enter into other agreements with larger drugstore chains and retailers.
TLSR: The company has concentrated on growth. It is headed toward $100M in annual revenue this year, but what about profitability?
KN: The company has achieved critical mass on the top line, but as we look down the income statement, there is a lot of room for improvement. In terms of the gross margin, we believe that the company can improve how it sources raw materials, how it manufactures products, how it ships the product, and the degree of discounting that’s required to get its products on the shelf at retailers. We expect the company to move into profitability next year and to begin leveraging the infrastructure in the middle of the income statement that it already has invested in.
TLSR: It takes real talent to achieve a $100M top line from nothing, and it also takes talent to get a product into a big-box store like Costco, which could easily become MusclePharm’s biggest customer, with 400+ stores in the U.S. How much risk does this one huge customer, for which MusclePharm will have to gear up to manufacture and package an exclusive five-pound container of product, present to the company?
KN: Think of it this way. First of all, the two largest current customers aren’t going anywhere—those being BodyBuilder.com and its other wholesaler Europa Sports Products. The form of the product sold at Costco, in terms of quantity, will be different than what is sold through those other outlets, which not only could make it a higher margin product, but also is a point of differentiation that allows all the channels to continue to be productive.
When you start out as an unknown, you have to beg to get retailers to handle your product because stores have a limited amount of shelf space. Whatever they put on the shelf, they need to achieve high turnover, and if the product is not moving, it will get replaced with something else. Hence, the big store is going to want to know how much effort you’re going to put into promoting and advertising the product to ensure it will move.
Now that MusclePharm has achieved critical mass, it becomes a heck of lot easier to get its products on the shelf at a store like Costco. When retailers see the kind of numbers MusclePharm has been posting, they know it’s a much lower risk to give the company a shot. The company has done a good job in establishing the brand, which is reflected in its sales growth, and continues to look several years forward to identify future growth drivers.
TLSR: It’s been very nice meeting you and hearing your ideas, Keay. Thank you.
KN: It was great talking to you.
Keay Nakae is a senior research analyst for Ascendiant Capital Markets LLC, where he covers the healthcare industry. He has twelve years of experience as a healthcare equity research analyst and has covered small- to large-cap biotechnology, medical device and diagnostic companies that compete in areas of cardiology, gynecology, neurology, urology, oncology, diabetes, aesthetics and cardiac and spine surgery. Prior to joining Ascendiant, Nakae was a senior research analyst at Chardan Capital, Collins Stewart, CE Unterberg, Towbin and Wedbush Morgan Securities. He has made media appearances on Bloomberg, and has been quoted in The Wall Street Journal, Time, Business Week andThe Los Angeles Times. He has also been recognized by Forbes magazine in its annual survey of America’s Best Analysts. Before becoming an equity research analyst, Nakae worked at Atlantic Richfield Co. in corporate finance and portfolio management positions, and at St. Jude Medical as a member of the research and development engineering team responsible for the Affinity pacemaker. He earned a master’s degree in business administration from UCLA’s Anderson School of Management, and holds master’s and bachelor’s degrees in electronic engineering from Cal Poly. Nakae is a Chartered Financial Analyst (CFA) and member of the CFA Institute. He maintains FINRA Series 7, 16, and 66, 86, and 87 securities registrations.
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DISCLOSURE:
1) George S. Mack conducted this interview for The Life Sciences Report and provides services to The Life Sciences Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Life Sciences Report:MusclePharm Corp., Synthetic Biologics Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Keay Nakae: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Cytori Therapeutics Inc. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.
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Source: Zig Lambo of The Energy Report (9/19/13)
On his recent tour of U.S. shale basins, Frank Curzio, Editor of Small Stock Specialist and Phase 1 Investor, noticed two major trends: The transportation industry is eager to make the switch to cheap natural gas, and the oil and gas industry wants to further its reach by building LNG export facilities. In this interview with The Energy Report, Curzio discusses companies enabling the fuel switch, and shares some likely recipients of export terminal building contracts.
The Energy Report: Frank, you recently toured different shale plays in the U.S. Tell us about that.
Frank Curzio: My research team and I have visited every major shale area in the U.S. over the past 12 months, including the Wolfcamp and Cline Shales in the Permian Basin, the Eagle Ford, the Marcellus in Pennsylvania and recently the Bakken Shale in North Dakota. We drove over 800 miles with an energy expert who’s been drilling for oil in Texas for over 30 years. We interviewed a lot of people.
I was mostly impressed with the sheer amount of oil and natural gas we’re able to extract right now. It is simply amazing. Technology has become so advanced that companies rarely miss a well anymore. People who have worked for some of the largest oil service companies in the world tell me they can’t remember the last time they actually missed an oil well. It’s almost more of a manufacturing process today, and the challenge isn’t so much finding reserves as it is determining the cheapest way to get oil and natural gas out of the ground.
More important is how small towns in Texas, like Karnes City, and Williston and Watford City in North Dakota, in the Bakken region, are booming. Simple land owners are now millionaires because of drilling on their land. Meanwhile, anyone who passes a drug test and has a clean record can make a six-figure salary working for oil services firms like Halliburton Co. (HAL:NYSE), Schlumberger Ltd. (SLB:NYSE), Baker Hughes Inc. (BHI:NYSE) and Weatherford International Ltd. (WFT:NYSE). Wages are also significantly higher in these areas for employees in retail and hospitality.
TER: Not everyone thinks that the domestic shale gas potential is as great as most people would like to believe and that these fields are depleting much faster than first expected. What do you say?
FC: Depletion is definitely a topic of discussion in the media, but I say go into the fields with an open mind and do your own research. There are shale areas in the U.S that haven’t even been fully explored, such as the Utica, which is under the Marcellus; the Three Forks, which is under the Bakken; and the Cline, which is known as the lower Wolfcamp, in the Permian Basin. People who believe in depletion should look at some of the numbers reported by companies like Pioneer Natural Resources Co. (PXD:NYSE) andContinental Resources Inc. (CLR:NYSE). Some may say natural gas abundance is temporary. I don’t think it’s temporary.
Many other state economies, such as California, New York and even Florida, could benefit if they allowed for responsible fracking. Hopefully that will happen and we could become energy independent one day, but personally I don’t think it’s going to happen. There’s just too much politics involved.
TER: Low gas prices have had a major impact on industry and power generation. There is talk of converting commercial trucking fleets from diesel to natural gas. How do those prospects look?
FC: Very good. There is now more than a 30% cost savings between these fuels, which could become greater in the future. Natural gas prices have come down to levels where almost every major trucking fleet is planning on switching from diesel to natural gas. In time, I expect to see the same trend in other modes of transit like ferries and locomotives. You’re seeing major equipment companies moving to natural gas.
TER: How does the fuel storage capacity compare between natural gas and diesel?
FC: That’s a good question because the industry is working on making the capacity as close to diesel as they can, and they’re just about there. Companies like Westport Innovations Inc. (WPT:TSX; WPRT:NASDAQ) are building new fuel tanks that can carry these trucks hundreds of miles on one fill-up. A company called Clean Energy Fuels Corp. (CLNE:NASDAQ) is building natural gas fueling stations along every major route.
I visited Westport Innovations headquarters in Vancouver with our research team. I got to meet all the executives and CEO David Demers. I rode in these natural gas vehicles, including an 18-wheel truck and also a pickup truck with conversion devices that use both natural gas and gasoline as a fuel supply backup. I didn’t notice any difference in the power of the pickup. The only major difference is you can’t even hear the truck move when it’s running on natural gas.
Westport has also been working hard to create new products to bring to market. One of the founding fathers of the natural gas technology that goes into these engines showed us 15 or 20 different moving parts that Westport has patents on. Every single one needs to be incorporated in order to make the technology work and run on natural gas. He said it’s almost impossible not to infringe on their patents unless you reverse engineer an engine. We have recommended this company in my Small Stock Specialist newsletter twice and made over 100% annualized returns on these trades. We bought it again, close to where it’s trading today, at $27 a share. Right now it has so many different catalysts, with many new types of engines coming to market, whether it’s for a garbage truck, Class A truck, heavy duty truck or even pickups. You’re going to see good news for the next few years. This company is behind one of the greatest fundamental changes taking place in the U.S. today. I think its stock could easily double over the next three years.
TER: How could fluctuating prices for oil and natural gas, respectively, alter the outlook for natural gas as a transportation fuel?
FC: If oil were to go to, say, $50 per barrel ($50/bbl) and natural gas to over $10 per thousand cubic feet ($10/Mcf), you’re going to see this diesel-to-gas switch get disrupted right away. I expect that oil will average above $85/bbl going forward, because a lot of companies are having trouble keeping their reserve replacement ratios above 100%. Even in Saudi Arabia, they’re drilling offshore. I think natural gas as a transportation fuel is going to remain a trend as long as oil prices average above $85/bbl and natural gas prices stay below $6/Mcf.
TER: What are your current investment selection criteria?
FC: One of the things that I’m seeing now is the opening up of a lot of new LNG exporting facilities. We have one, which is owned by Cheniere Energy Inc. (LNG:NYSE.MKT). Now, three more permits for export terminals have been approved. I believe there are 15 or more in the pipeline. We’re likely to see the government approve at least one of these every four months or so. KBR Inc. (KBR:NYSE) is one of the best names here and can build these natural gas exporting facilities all over the world that cost between $5–10 billion ($5–10B). That’s a lot of money for a company like KBR, which has a market cap of less than $5B. It has a very strong balance sheet with almost $800M in net cash and it’s trading at less than 10 times earnings. You’re looking at a good growth play with cheap valuations. These LNG facilities aren’t going to get built tomorrow, but KBR is the first in line to receive contracts.
TER: Where is it trading now and where do you expect it to go?
FC: It’s been trading around $30 and I think it could easily double from here in three years or so. Another company that should benefit right away from an LNG export facility build-out is Chicago Bridge & Iron Co. N.V. (CBI:NYSE), an energy infrastructure company. It’s in very good shape now, but I suggest waiting for a pullback. The stock is up 60% over the past 12 months.
Another one worth considering is McDermott International Inc. (MDR:NYSE). It missed badly over the past few quarters. If you’re a technical analyst don’t even look at the chart. After one of its recent quarters, one analyst said that McDermott needs a McDo-over. But I love to see stuff like that when I’m recommending stocks, where the whole world has given up on a name. I think that’s what happened with McDermott.
McDermott builds the platforms for offshore oil companies. These are some of the biggest manmade structures in the world—bigger than the Empire State Building. This is a 100% pure play on this industry. Offshore drilling is going to see a massive boom. All the majors are drilling right now, spending a lot of their budgets on offshore drilling in Japan, Thailand, Brazil, China, even the U.S. The U.S. has quietly been opening up more of the deeper areas in the Gulf of Mexico and even Alaska.
The stock is trading at just 10 times earnings now because it got crushed over the last couple of quarters. But insiders are buying, which is something I like to see when a stock goes down. Goldman says the offshore drilling industry is going to grow 40% annually over the next couple of years. I like both the growth and value components in this name. I love that everybody hates the stock right now. Even if it comes out with bad news, you shouldn’t really see the stock get crushed. One good quarter will push it up at least 30% in the short term. Longer term, the stock could easily double from these levels as capex toward offshore drilling continues to hit record highs.
TER: What else do you like?
FC: I mentioned Clean Energy Fuels. This company has signed so many different deals over the last six months that the stock has run up a little bit. Then it announced a bond offering because it’s looking to build even more fueling stations, not just in the U.S., but also in China. The company is not making money right now, but I think it’s going to turn the corner within two years. Clean Energy is a really good, cheap, long-term play. It’s more of a speculative play than the others I gave you, but this is one I like that’s in buying range.
Another one we like is Chart Industries Inc. (GTLS:NGS; GTLS:BSX). It makes LNG fueling tanks. We bought this stock in the fifties and cashed out at around $100. It’s a little expensive at about $120 today. It has seen massive growth in the natural gas transportation fuel industry and the exporting facility potential because this is a nuts and bolts play that supplies all these companies, and business is absolutely booming for Chart.
TER: Do you have some closing thoughts on what you think our readers should be doing now to take advantage of all these energy-related investment opportunities?
FC: Open your mind up to fracking. Forget everything you’ve read. The fact is, people who were once poor are now millionaires. That could be happening in so many areas of the U.S. It would create more jobs for people and, in the end, it would be a better country for our kids to grow up in. Do your own homework and research on it. Don’t just listen to me. The movie “Gasland” created a lot of misconceptions, which I realized by driving thousands of miles through these areas and interviewing the locals. That’s where I got my information.
TER: We appreciate the opportunity to talk with you again, Frank.
FC: Thanks for having me.
Frank Curzio is the editor of Small Stock Specialist and Phase 1 Investor. With more than 18 years of investing experience, Curzio is the latest addition to the Stansberry and Associates team. He has been a guest on Fox Business News, CNBC’s “The Kudlow Report” and “The Call,” and CNN Radio. His “S&A Investor Radio” program is one of the most widely followed financial broadcasts in the country.
Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.
DISCLOSURE:
1) Zig Lambo conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Frank Curzio: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.
Streetwise – The Energy Report is Copyright © 2013 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.
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London Gold Market Report
from Adrian Ash
BullionVault
Fri 20 Sept 08:50 EST
SPOT BULLION prices for gold fell $25 Friday morning from yesterday’s 7-session high, trading at $1350 per ounce as concerns grew that next month’s US “debt limit” deadline could spark panic in financial markets.
Slipping with world stock markets and commodity prices as the US Dollar rallied, gold cut its post-Fed surge – made when the central bank failed to trim its $85 billion per month bond-buying program as expected on Wednesday – by one third.
Silver dropped alongside the gold price, also cutting its week-on-week rise to the same 1.8% at $22.60 per ounce.
“Although the price of gold has been dropping since the end of August,” says French bank and London bullion dealer Natixis, “we would not be surprised to see a re-emergence of the tensions that existed in summer 2011 when the US was downgraded due to the danger that Congress might reject a budget or debt ceiling increase.
“Then, the price of gold reached a record high because of the market’s impression that no agreement could be reached,” says Brown, noting greater intransigence between Republicans and Democrats in 2013 over funding health care.
“I think,” said Fed chairman Ben Bernanke on Wednesday, “that a government shutdown, and…a failure to raise the debt limit, could have very serious consequences for the financial markets and for the economy.”
The debt limit wrangle of 2011 led to ratings agency S&P downgrading US bonds that August. Gold rose $300 per ounce to new record highs above $1900.
Today some 43% of US citizens want Congress to keep the debt ceiling at $16.7 trillion, says a new Washington Post-ABC poll, defaulting on America’s bills and obligations to do so.
Yet 73% also fear that not raising the limit would therefore do “serious harm” to the US economy.
“We cannot afford for Congress to gamble with the full faith and credit of the United States,” Treasury secretary Jack Lew told the Economic Club of Washington on Tuesday, ahead of the US Fed’s decision not to taper its QE bond-buying.
Despite the debt ceiling deadline next month, however, “October is a live meeting” for the US Federal Reserve to discuss tapering once more, St.Louis Fed president James Bullard told Bloomberg today.
“Just as the monetary indicators are turning positive [for gold],” said HSBC in a report Thursday, “physical demand – a mainstay of the market through the summer – is turning less supportive.”
Reuters today notes a sharp fall this week in Asian premiums for physical gold, over and above benchmark London prices.
Hong Kong premiums fell to $1.50 per ounce from $2.50, the newswire says. Tokyo gold went to a slight discount to London settlement.
“There has only been investment buying because of the Fed decision,” says Hong Kong dealer Ronald Leung at Lee Cheong Gold.
“There is no physical interest” from jewelry stockists.
Sales of American Eagle gold coins by the US Mint ticked higher this week, latest data show. But at current rates they remain 80% below September last year and 85% below September 2011.
Speaking about the debt ceiling debate, “[People] expect Washington will only act irrationally for a certain length of time,” says Warren Buffett in a CNBC interview today.
Not raising the debt limit would be “pretty damn dumb.”
The volume of gold held to back the giant SPDR Gold Trust for US investors – the most valuable ETF in the world when the debt ceiling downgrade of 2011 drove prices to record highs – was unchanged Thursday.
Gold price chart, no delay | Buy gold online
Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.
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Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
Both Australian and Asian stocks were seen in red on Friday, as the Australian stocks dropped from its five-year high while Japanese stocks came in mixed on Friday.
Investors were surprised by the Federal Reserve (Fed) decision over its monetary stimulus, as Asian Stocks were pushed by the new on Thursday. The week began with the news of former US Treasury Secretary Lawrence Summers withdrew as a candidate to become the next Federal Reserve (Fed) chairman.
Asian stocks exchanges were closed due to the public holidays. China, Hong Kong and South Korea did not trade of Friday..
The Japanese benchmark Nikkei 225 edged 0.16% lower at 14,743.00 on Friday, while Tokyo’s broader Topix index was rising 0.29% higher to 1,218.98.
Earlier in the day, the Bank of Japan (BoJ) governor Haruhiko Kuroda said that the country’s economy is recovering and is track to reach the 2% inflation target.”Our main scenario is that overseas economies will gradually pick up as the US and European economies improve,” he said.
“Japan’s economy is recovering moderately, as a virtuous cycle from income to spending is gradually starting to operate in both the corporate and household sectors, In addition, looking at surveys conducted on households, economists, and market participants, inflation expectations are judged to be rising on the whole. The year-on-year rate of increase in the CPI is likely to rise gradually,” he added.
The Bank of Japan (BoJ) ¥60-70 trillion into the country’s economy, with an aim to grow a total of ¥270 trillion by the end of 2014.
The bank introduced a quantitative and qualitative easing program (QQE) in April in order to achieve an inflation target of 2% in the next two years.
The Japanese yen edged up 0.18% higher at ¥99.24 against the greenback as of the time of writing.
Sydney’s major S&P/ASX 200 dropped from its five-year high, edging 0.44% lower to 5,272.40.
Interested in trading shares in Asian Markets? Visit www.hymarkets.com today and start trading from $50!
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Article provided by HY Markets Forex Blog
Oil Prices for both WTI and Brent were seen trading flat on Friday; with Brent crude on the edge of hitting its biggest weekly decline in three months while WTI crude is expected to drop to its second weekly loss as tensions surrounds the oil-rich region continuous to ease.
The West Texas Intermediate deliveries for October were seen edging 0.02% lower at $106.36 a barrel at the time of writing on New York’s Nymex, while the European benchmark Brent rose slightly higher as futures for November gained 0.16% to $108.94 in London at the same time.
Both WTI and Brent crude reached their biggest gains in three weeks on Wednesday as the US dollar weakened, making foreign investors more interested in the commodity.
Libyan output is expected to rise as much as 800,000 barrels per day (bpd),compared with the production of 1.5 million bpd in April, the director of measurement at Libya’s oil ministry announced.
Meanwhile in Syria, the Syrian government is expected to provide information about its chemical inspectors, the Syrian President Bashar Al-Assad said in an interview with Fox News.
“No problem, we can do it tomorrow,” the Syrian president said in the interview. The United Nations Security Council is expected to finalize plans on how to destroy the country’s chemical weapons.
The Organization of the Petroleum Exporting Countries (OPEC), which produces almost 40% of the globe’s crude oil, is expected to increase its shipments of the commodity by 1.4% to approximately 23.9 million bpd, as Saudi Arabia is expected to increase its output in four weeks to October 5.
OPEC members, excluding Angola and Ecuador are going to boost its crude exports by 320,000 bpd, according to data posted on Thursday.
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The post Oil Prices Seen Flat as Middle East Tension Eases appeared first on | HY Markets Official blog.
Article provided by HY Markets Forex Blog
USDJPY reversed sharply from 97.75 region in this week, which appears to be an impulsive price action that also took out the upper side of a downward channel. These are all important signs for a change in trend, even if just temporary. With that said, we will be looking for higher USDJPY in days ahead as long as 97.75 low of a complex correction is in place. Ideally market will continue higher back to 100.60 region in impulsive fashion.
Written by www.ew-forecast.com
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If you’re a newbie to the Wall Street Daily Nation, you’re in for a real treat.
Each Friday, I try my darndest to zip my lips and let some carefully selected graphics do the talking for me.
This week, I’m dishing on Twitter’s highly anticipated (and highly overvalued) IPO, the stock massacre that wasn’t and a thief that robs us all.
Pictorial enlightenment begins in three, two, one…
The Tweet Heard Round the World
Social media mania is heating up yet again. And all it took was 135 characters (including spaces) to do it.
And now inquiring minds want to know: Will the Twitter IPO be hot or not?
Well, as I’ve said countless times before, IPO performance always comes down to valuation. (Remember Facebook (FB), anyone?)
One look at this chart should immediately dampen any rational investor’s expectations.
If you still can’t resist the temptation to buy into the hype, at least be smart about it. Check out my colleague Marty Biancuzzo’s latest piece here. He ferreted out two less-risky ways to get a piece of the action.
Rest assured, I’ll be providing more analysis on Twitter’s upcoming IPO in the weeks ahead, too.
A Double Whammy for Market Pundits
So, yeah, that whole September taper thing that everyone expected to be announced Wednesday? It didn’t happen. (We told you so.)
And that thing about September being the worst month for stocks? Yeah, it doesn’t appear to be happening, either. (We told you so.)
So far this month, the S&P 500 Index is up 6.48%.
On a sector-by-sector basis, cyclicals are outperforming the S&P 500 Index. (The energy sector is the lone exception.) Whereas defensive sectors are underperforming the market. Take a look:
As Bespoke Investment Group notes, the discrepancy is “typical in a strong market.” Indeed!
If you’re putting new money to work, buy into the strength by finding undervalued opportunities in the best-performing sectors. If you need help, we’re here for you.
Use Protection
Rich or poor, old or young, inflation is the thief that robs us all. And a new chart out from BlackRock demonstrates how costly even moderate inflation can be.
A mere 2% bump in inflation rates can mean the difference between eroding 52% versus 70% of our wealth over time.
Inflation might not be at the top of everyone’s worry list right now. But it’s going to be eventually, given that the Fed is dead set on printing money into eternity. So a little gold could go a long way to protect us.
That’s it for this week. Before you go, though, let us know what you think of this weekly column – or any of our recent work at Wall Street Daily – by going here.
Ahead of the tape,
Louis Basenese
The post Friday Charts: Hype, the Stupidity of Crowds and a Thief That Robs Us All appeared first on Wall Street Daily.
Article By WallStreetDaily.com
Original Article: Friday Charts: Hype, the Stupidity of Crowds and a Thief That Robs Us All
USDCAD remains in downtrend from 1.0559, the rise from 1.0182 is treated as consolidation of the downtrend. Initial resistance is at the downward trend line on 4-hour chart, as long as the trend line resistance holds, the downtrend could be expected to resume, and another fall towards 1.0000 is still possible. One the upside, a clear break above the trend line resistance will indicate the lengthier consolidation of the downtrend from 1.0568 is underway, then range trading between 1.0182 and 1.0350 could be seen.
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