Month: September 2013

By Profit Confidential

In the late 90s, the anticipation of an initial public offering (IPO) was the hottest thing on Wall Street for traders. Get in on the pre-IPO allotment, and chances are you would make tons of money. I still recall the frenzy that surfaced after an IPO, especially from technology stocks.

Fast-forward a decade, and the market anticipation for IPOs is not as frenzy-like. Now traders are more careful to buy into IPOs after their initial debut.

The key to success in investing in IPOs today is patience. Even if an IPO skyrockets after its debut, it is often prudent to wait for a pullback or for the lock-in period to expire before buying, as this is when the initial investors, such as funds and institutions, can sell their shares in the stock market.

A great example of a former IPO star that opened at a high price but subsequently faltered was Internet stock Groupon, Inc. (NASDAQ/GRPN); the stock traded above $30.00 on its November 4, 2011 debut, but fell to as low as $2.60 a year later on November 12, 2012. I looked at the stock as a decent risk-to-reward play, and now the stock has been sizzling on the charts, up 332% from its November 2012 low. (Read “Why There’s No Stopping the Internet Sector.”)

Another example of a highly anticipated Internet IPO was Facebook, Inc. (NASDAQ/FB), which traded as high as $45.00 on its debut on May 18, 2012, and subsequently plummeted to $18.80 on October 19, 2012. But with over one billion subscribers, I considered Facebook to have excellent potential—if the company could monetize its user base, which it’s currently doing with its mobile advertising sales. The stock is now up over 130%, to its initial level when it first went public.

From these two examples, and there are many more, it’s obvious that the key to successful investing in IPOs is patience. These hyped-up stocks were talked up because they have promise and are not fad stocks.

While the IPO pipeline has numerous interesting stocks, the most anticipated are the technology stocks.

Here are some interesting initial public offerings that could debut this year or in 2014. You might want to keep an eye on these.

Airbnb, Inc.

Airbnb is an online service that allows users to list and rent home-based accommodations instead of hotels.

Dropbox, Inc.

Dropbox is a service that many of you are probably familiar with and use. The online service allows you to store your files in their cloud and access them from anywhere in the world on any device.

Square, Inc.

Square is a mobile payments service for merchants who may be on the road or for small businesses that are just starting out. Having seen the service in action at an arts fair, I can say it’s quite interesting. The merchant simply plugs a square adaptor into a smartphone, the credit card is swiped in the adaptor for approval, and voila!—the transaction is done. The California-based company has already made its way into Canada and recently announced its expansion into Japan.

Article by profitconfidential.com

Article by Investazor.com

Another week has past and some very interesting readings were published. Wednesday Great Britain has published some very good data from the labor market. Its Claimant Count Change has fallen 32.6K and the Unemployment Rate dropped unexpectedly at 7.7%. The next day Australia reported a rise in its Unemployment Rate of 0.1% and RBNZ’s governor said that it expected a rise in the inflation rate in 2014 and they might have to raise the interest rate. Thursday it was also published the Unemployment Claims for USA at a value of 292K, but it might have been a problem with their computerized systems and this number could be revised next week.

The economic calendar for next week looks like this:

As you can see in the table, Tuesday there will be posted the CPI for Great Britain, the German ZEW Economic Sentiment and the Core CPI for the United States. Wednesday the event of the day and maybe the most important of the week is the FOMC Press Conference. The markets are waiting for details regarding the Quantitative Easing program. Thursday Great Britain will publish its Retail Sales and from USA there will be the Unemployment Claims, Existing Home Sales and Philly Fed Manufacturing index. On Friday Kuroda will have a speech and Canada will report its CPI.

The post What to Expect from the Forex Market Next Week 16 – 20 September appeared first on investazor.com.

By Admiral Markets

Have you imagined how you can legitimately transform a thousand dollars into a hundred thousand dollars? Try the forex market and use leverage to earn ninety nine-fold profit. If you play in the forex realm, leverage could be one of your most potent weapons to score victory after victory in your conquest for big bucks. Of course, when there’s an up, there’s always a down and leverage can also be a real danger to your account, so proceed with caution.

Mechanics of Forex Leverage

Leverage allows a trader to use an amount of money, which he technically borrows from a broker, to raise a far larger amount. The trader is able to do this using his initial amount of money, the margin, to leverage a much larger investment. Wise use of leverage can make even a small investor command large positions in the forex market within a short time. At the same time, this characteristic can also be responsible for staggering loses.

Traders should intelligently control the use of this very powerful weapon. Particularly, newbies in the forex market should not get too excited about scoring big and make the blunder of over-leveraging. It takes only a small position on the right side to make some significant returns and vice versa. Volatility too should not be taken out of the formula. Before making that big plunge and increasing leverage, traders should peruse on their entire risk capital and their trading strategy.

The leverage offered by different brokers is typically quoted as a ratio of X:1, where X is the value of the position and 1 is the margin for the position. A leverage of 100:1 is a very high leverage. This leverage means the trader controls 100 times the margin amount. If your margin is $1000, then you control $100,000 for a particular position.

Some Points to Remember

A basic rule of thumb is that anything less than 50:1 is low leverage. New traders should get a feel and understanding of the power of leverage in the forex market before venturing into high leverage positions. A typical way to start is using 10:1 and increase in increments of 10:1 units as one gets the hang of it. Traders usually know the signs because they gain confidence.

When using leverage, keep the following in mind:

• Understanding and management of leverage separates the future winners from habitual losers.

• Permitted leverage in forex varies with the place and time.

• The higher the leverage or the lower the margin, the greater will be the profit or loss for every 1% price movement. Likewise, the greater reward or risk, respectively.

• A trader’s margin deposit is NOT his maximum possible loss. Instead, maximum loss is dependent on where the trader set the stop loss order.

• Never trade without enough cash. If a trader runs out of cash, he can not keep his position, regardless of whether the position is gaining or losing.

Playing in the forex market can be a lucrative engagement. However, be very wary of volatility and fluctuations and always be ready for surprises. Remember, demo accounts are a great way to practice your trading strategies and get your feet wet, but demos are far different from the real thing. It is a different feeling entirely when losing real cash. Never immerse yourself in real money trading without the proper training and planning. Furthermore, look to build your trading experience and confidence always before upping your leverage.

Content Source, www.admiralmarkets.ph

By The Sizemore Letter

In Part II of today’s show, listen to Charles discuss investing in Turkey, emerging markets, gold, and more with Mike Robertson and Peggy Tuck on Straight Talk Money radio.

This article first appeared on Sizemore Insights as Charles Talks Turkey, Emerging Markets, and Gold on Straight Talk Money

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By The Sizemore Letter

Listen to Charles chat with Mike Robertson and Peggy Tuck about Singapore REITs, emerging markets and more on Straight Talk Money radio.

This article first appeared on Sizemore Insights as Charles Talks Singapore and Emerging Markets on Straight Talk Money

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By www.CentralBankNews.info     Russia’s central bank held its benchmark refinancing rate steady at 8.25 percent, saying it expects inflation to return to its target by the end of the year and continue to decline next year under the current monetary policy stance, signaling that rates are likely to remain steady.
    The Bank of Russia, which has held its refinancing rate steady since September 2012, also took a major step forward in its move toward an inflation-targeting regime on February 1, 2014, introducing a key policy rate within an interest rate corridor to manage liquidity in the banking sector.
    As part of the preparations for the new policy regime, the central bank cut the rate on overnight loans and one-day loans secured by non-marketable assets for 1 day to 6.50 percent from 8.25 percent and 6.75 percent, respectively, raised the rate on one-week deposit auctions to 5.50 percent from 5.0 percent, and auctioned loans, secured by non-marketable assets for 3 months with a floating rate.
    “This decision is based on the assessment of inflation risks and economic growth prospects and implies unchanged monetary policy stance,” the central bank said.
    Russia’s inflation rate was steady at 6.5 percent in August from July and has exceeded the central bank’s 5-6 percent target range for 12 months. But the central bank estimated inflation at 6.3 percent as of Sept. 9 as it continues to decline due to an expected improvement in this year’s harvest, which should push inflation to the bank’s target by the end of this year. 

    “Given an unchanged monetary policy stance and a continuation of the current macroeconomic tendencies, inflation will continue to decline in 2014,” the central bank said.
    In August a decline in food inflation was partially offset by higher gasoline prices and some regulated prices but “the absence of significant demand-side inflationary pressure with gross output staying slightly below its potential level is considered one of the factors fueling a decline in core CPI in recent months,” the bank said.
    At the end of August,  the core inflation annual rate was at 5.5 percent.
    Russia’s economic growth has slowed sharply in the last year and the central bank said growth of Gross Domestic Product decreased “substantially”  in the second quarter, mainly due to a decline in manufacturing and construction.  Consumer demand remains the main driver of growth and unemployment is still at a relatively low level, the bank said.
    “According to Bank of Russia estimates, the risks of persistently low economic growth continued to be related to subdued investment activity and sluggish recovery of external demand,” the central bank said.
    Russia’s GDP expanded by an annual 1.2 percent in the second quarter, down from 1.6 percent in the first quarter, continuing the decline seen in the last five quarters.
    The central bank forecasts growth of 2.4 percent this year, down from 3.4 percent in 2012.
    The Bank of Russia has been preparing to shift to an inflation-targeting regime next year and said one-week, auction-based operations will become the main policy instrument from Feb. 1, 2014 when its stops conducting one-day repo auctions on a daily basis and starts using 1-6 day repo auctions as a fine-tuning operation in the event of sharp changes in banks’ liquidity.

By The Sizemore Letter

Master limited partnerships have become wildly popular over the past decade, and it’s easy enough to see why. Collectively, they are the highest yielding major asset class available, and the 10-year cumulative total returns are an eye popping 328%, as measured by the Alerian MLP Index. (And yes, those returns include the carnage of 2008 and early 2009.)

Still, a lot of investors are intimidated by MLPs because of their perceived complexity. They shouldn’t be. While the tax issues aren’t fun, that’s what TurboTax and CPAs are for.

This brings me to the crux of this article. A host of ETFs, ETNs and mutual funds have cropped up to satisfy investor demand and provide an “IRA-friendly” alternative. The JPMorgan Alerian MLP ETN (AMJ) is the largest and most popular, but the ALPS Alerian MLP ETF (AMLP) and Oppenheimer SteelPath MLP Income Fund (MLPDX) are also popular options.

Today I’m going to go over the pros and cons of investing in these funds vs. building a portfolio of individual MLPs.

Diversification

For instant diversification, you have to go with a fund … but most funds are not as diversified as you might think. The top 10 holdings of the Alerian MLP Index — which serves as the benchmark for many MLP funds and includes companies such as Enterprise Products Partners, LP (EPD), Kinder Morgan Energy Partners, LP (KMP) and Plains All American Pipeline, LP (PAA) — account for 61% of its market cap. The top 15 holdings account for 72%.

Most investors — particularly if they are long-term income investors — would have no problem buying 10 to 15 individual MLP holdings. And with online trading commissions generally lower than $10 per trade these days (and given that dividend reinvestment is often free), it’s not cost-prohibitive to do so.

Cost

This brings me to the next consideration: cost.

Most MLP funds are maddeningly expensive to own. Both AMJ and AMLP — which are passive index products — have expense ratios of 0.85%, which is nearly as much as you would expect to pay for active management. MLPDX’s expense ratio comes in at 1.35%.

Given that most investors buy MLPs for their yield — and given that a “decent” MLP yield these days is 5%-6% — an 85-basis-point haircut is going to be felt.

Let’s take a look at some numbers. In a $100,000 MLP portfolio split across 15 individual holdings, you would pay $150 or less in trading commissions to get started. If your broker allowed for commission-free dividend reinvestment, you would have no additional costs. Ever. That same $100,000 invested in AMJ or AMLP would cost $850 per year to own, every year you own it.

Taxes

This is where it gets messy.

MLPs avoid corporate taxes by being organized as partnerships. In a nutshell, this means they have 35% more cash at their disposal to distribute, which is why MLPs are able to offer such high yields. But because MLPs generate “unrelated business taxable income,” they should never be held in an IRA account. Doing so can create a tax nightmare in which you have to file a separate tax return for your IRA.

And there is really no advantage to putting an MLP in an IRA. MLP distributions are generally not taxable for the first several years of ownership due to large non-cash expenses that cause the distributions to be classified as “return of capital” rather than current income. These have the effect of lowering your cost basis and thus raising the capital gains taxes you’ll owe when you eventually sell. Once your cost basis reaches zero — which might take multiple decades — your distributions are fully taxable at your marginal tax rate. It’s a pretty sweet deal.

The taxes on MLP funds will make your head swim. The distributions made by AMJ are considered bond interest by the IRS and are thus taxed as ordinary income. And AMLP, in a departure from normal fund tax structure, opted to be structured as a corporation and pay taxes at the corporate level. This has the effect of making its effective expense ratio of nearly 5% as opposed to the quoted 0.85%.

I see no reason to ever own AMLP.  And AMJ is generally the “least-bad” option for investing in MLPs within an IRA.

My advice? Hold your regular MLPs in a taxable account and learn to tolerate the annual K-1 tax forms. It’s an annoying headache, but you’ll enjoy higher returns and pay less in taxes and fees. If you are limited to IRA investing, then go with AMJ or a substantially similar security. In IRA accounts I manage, this is precisely what I do.

There is one exception I should note. MLP general partners are often structured as corporations and are thus able to be held in IRA accounts with no complications. General partners can be thought of as “leveraged” MLPs because of their incentive distribution rights. Without getting into the nitty-gritty accounting details, the general partner gets a larger share of the payout every time an MLP raises its distribution.

Two general partners I own and recommend are Kinder Morgan Inc. (KMI) and Williams Cos. (WMB). Both have been dividend-raising monsters in recent years and sport current yields of 4.5% and 4.2%, respectively.

Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he was long EPD, KMP, PAA, AMJ KMI and WMB. Click here to learn about his top 5 global investing trends and get your copy of “The Top 5 Million Dollar Trends of 2013.”

This article first appeared on Sizemore Insights as How to Buy MLPs: Individual MLPs vs. MLP ETFs

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London Gold Market Report
from Adrian Ash
BullionVault
Fri 13 Sept 08:25 EST

The PRICE of GOLD marked the 5th anniversary of Lehman Brothers’ collapse by sliding $25 per ounce Friday morning, finally bouncing from a new 5-week low at $1305.

 World stock markets held flat, while the price of crude oil rallied from a 3-week low.

 Silver regained 40c per ounce from a fresh 4-week low at $21.42 – some 10% below where it ended last week.

 Gold has now lost 6.2% vs. the Dollar so far in September.

 “Five years on [from Lehmans’ bankruptcy] global finance is a long way from safe,” says a lead editorial in this week’s Economist magazine.

 “The system is just as insane – perhaps more so,” says the Financial Times’ US editor, Gillian Tett. Because “the big banks are bigger, shadow banking is taking over more activity, not less, [and stability] depends more than ever on investor faith in central banks.”

 Since the eve of Lehmans filing for Chapter 11, notes Tett’s FT colleague James Mackintosh, US stocks have averaged 7.8% real returns per year allowing for dividends and inflation.

 That is “identical to the return in the five years up to June 2007, the month before the credit crunch hit,” says the FT, and more than one percentage point above the US stock market’s very long-term average.

Physical gold – net of all transaction and storage costs, as well as inflation – has returned 9.8% per year since the Lehmans collapse for US citizens buying, owning and selling today on BullionVault.

 “For next year, a move to $1000 is on the cards,” reckons investment bank UBS commodities research chief in Singapore Dominic Schnider.

 “Once a timetable of tapering is known, then you probably will see a fresh selling wave of the exchange-traded fund side.”

 The quantity of gold held to back ETF shares in the giant SPDR Gold Trust was unchanged Thursday at 917 tonnes – nearly 50% greater by weight from September 2008, but one-third down from the peak holdings of December last year.

 “We expect reduced tail risks and QE tapering expectations to continue to weigh on the gold market,” said HSBC bank in a note Thursday.

 “Gold’s failure at the 1415/24 barrier,” says a technical analysis from fellow London market-makers Credit Suisse, “leaves us still bearish.

 “Key downside levels are at 1277…beneath which triggers a move to [end-June’s] 1180 low.”

 Japan’s Nikkei Shimbun meantime reported that Larry Summers will become the next chairman of the US Federal Reserve, quoting unnamed “sources”.

 Appointing the former Treasury secretary and Harvard professor would be opposed however, a leading Republican warned, because of his “history of promoting stimulus funding and higher taxes.”

 “Conservatives [will also] exploit looming fiscal deadlines,” says a Reuters report, “to derail President Barack Obama’s signature healthcare reform law.”

 Agreement to raise the so-called “debt ceiling” – now set at $16.7 trillion – must be reached by September 30 if Washington is to avoid what the newswire calls “an historic default on its debt that would create havoc in global financial markets.”

 “Uncertainties surrounding US fiscal issues…have in the past been typically positive for gold,” says UBS’s precious metals team in London.

 “Geopolitical issues, Eurozone and US debt/budget debates,” agree analysts at Asian bank Nomura, “could…help gold through the traditionally seasonally strong Q3.”

India’s legal gold imports – now curbed by 10% duties and strict central-bank rules – will likely fall 30% this year to $38 billion by value, economic adviser to the prime minister C.Rangarajan said today.

With investment gold trading 13% below August’s record highs today in Rupee terms, “Some buyers are still on the sidelines expecting a further drop in prices,” Reuters quotes a Mumbai dealer.

 “Indian gold demand will recover in the months ahead,” says commodities analysis from Standard Chartered Bank, “especially given expectations of rising farmers’ incomes, after a bumper monsoon season.”

 But while StanChart expects Asian demand “to remain robust…we do not see much upside” for gold prices.

“The global economic recovery is strengthening, which will deter safe-haven buying.”

Adrian Ash

BullionVault

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 buy gold and silver in Zurich or Singapore for just 0.5% commission.

(c) BullionVault 2013

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.

AUDUSD moved through 0.9230 swing high from Aug 19th that caused an extension up to 0.9353 from where pair reversed nicely in this week. We can see prices back below the upper line of trading channel which means that an A)-B)-C) corrective rally could be the case, called a zig-zag. We however need more evidences that wave C) has topped. Further weakness in impulsive fashion to 0.9110 will confirm the bearish case for AUDUSD.

AUDUSD 4h Elliott Wave Analysis

What is Zig-Zag Elliott Wave Pattern?

A zig-zag is a 3-wave structure labeled A-B-C, generally moving counter to the larger trend. It is one of the most common corrective Elliott patterns.

• Structure is 5-3-5
• Wave A must be a motive wave
• Wave B can only be a corrective pattern
• Wave B must be shorter than wave A by price distance
• Wave C must be a motive wave.
• Appears in wave two or four in an impulse, wave B in an A-B-C, wave X in a double or triple zig-zag, or wave Y in a triple threes

Written by www.ew-forecast.com | Try EW-Forecast.com’s Services Free For 7 Days at http://www.ew-forecast.com/service

Source: Peter Byrne of The Life Sciences Report (9/12/13)

http://www.thelifesciencesreport.com/pub/na/hidden-finds-in-regenerative-and-medical-technology-jeff-cohen

Ladenburg Thalmann & Co. Inc.’s Jeff Cohen regularly explores the frontiers of regenerative and medical technology looking for solid investment opportunities. In this interview with The Life Sciences Report, Cohen reveals promising finds in one of the world’s fastest-growing business sectors. From robotics to skin grafts, Cohen knows his science and his market.

The Life Sciences Report: Can you tell me a little bit about your role as an analyst at your firm?

Jeff Cohen: Ladenburg Thalmann is a public company, and the firm has a retail and advisory network that manages approximately $75–80 billion ($75–80B) in client assets. The firm’s institutional division has about 15 analysts covering approximately 200 companies. Four analysts are focused on the healthcare sector. I cover micro-, small- and mid-cap medtech and healthcare companies. Each analyst has some level of autonomy in deciding what companies to cover.

TLSR: How do you choose companies for your coverage list?

JC: I search for medical technology companies developing innovative therapies, primarily within the endovascular and cardiovascular space, for the brain, for the skeletal system and in the regenerative space—which includes both harvested and cellular engineered products and tissue forms. I am particularly interested in companies looking to improve patient interventions and long-term outcomes while producing an economic benefit to the entire cascade of payers in the healthcare system.

TLSR: What do you mean by cascade of payers?

JC: Cascade of payers refers to the sources of revenue: the hospitals, the deductibles that patients themselves pay and the private and public insurance companies. I analyze the ease or difficulty with which the use or purchase of a new product is likely to be reimbursed by institutions and insurance firms. Most insurance companies try to determine a time versus cost benefit for adopting a new therapy over the current standard of care—whether that is a savings in paying for hospitalization, operation time, or time for recovery.

TLSR: Are you looking mainly at products that aim to make incremental improvements to existing medical delivery systems, or toward innovations that will jump-start major changes?

JC: Improvements in medicine are generally incremental—however, some come in much larger increments than others. A slight incremental change may have a hard time getting reimbursed in the insurance system. But a large incremental change will make it easier for that product to obtain regulatory approval and to garner buy-ins from physicians.

TLSR: What qualities do you look for in a management team?

JC: I favor senior management teams that develop a strategic five-year vision for each product in their pipelines. I like management teams who are less focused on telling the Street what is possible and what they can do, and are more focused on actually doing. Don’t tell me, show me!

I do understand that there are competitive issues and that some companies only want to disclose a certain amount of information about their respective businesses. However, managers must provide as much information as possible so that analysts can grasp the comparative advantages of a new product.

TLSR: How do you assess the relative merits of junior firms as compared to more established companies?

JC: I follow smaller-cap companies, which are not the dominant forces within their respective industries or markets. My companies tend to be at the forefront of innovation, creating products that larger entities may wish to own. The smaller players often possess the entrepreneurial spirit necessary to succeed in competition with stronger forces. The market caps of my companies are typically between $20 million ($20M) and $1 billion ($1B).

TLSR: Are these companies able to access capital when they need it?

JC: Most companies with a clear path to commercialization—or current commercialization— are able to gain access to capital markets, mostly for capital for growth.

TLSR: Capital for growth based upon some degree of success already?

JC: Yes, based on whether the product is already approved, already selling or is close to an approval.

TLSR: Do you have some picks for us among the companies that you cover?

JC: Robotics is becoming increasingly important to the healthcare industry, and I currently cover Hansen Medical Inc. (HNSN:NASDAQ) and Mazor Robotics Ltd. (MZOR.NASDAQ).

Since 2007, Hansen has shipped approximately 110 Sensei robotic catheter units, which use electrophysiology to treat atrial fibrillation; the robot manipulates a catheter into the heart chamber. Last year the company introduced the Magellan endovascular robotic system, for use in interventions throughout the vast majority of blood vessels within the peripheral system. While we believe the new Magellan system offers many benefits, its adoption has been far slower than we had anticipated. About 10 clinical units have shipped: Four of those sold and one was leased for the balance of 2013.

TLSR: How has Hansen’s stock been performing?

JC: We currently have a Neutral rating on Hansen. The stock is at about $1.65, relatively unchanged from a year ago.

TLSR: Tell me about Mazor Robotics.

JC: Mazor has its Renaissance robotic spine surgery platform, which enables surgeons to accurately insert pedicle screws and various other spinal implants and instrumentation in an extremely accurate fashion, with no reported cases of nerve damage. The unit consists of a cart that contains a central processing unit with software, screens and a small robot that can be affixed to the spine. The software package enables the robot to manipulate itself and show the physician exactly where to place the pedicle screws.

We anticipate that the company will soon offer an additional software package—as a bolt-on to the current system—that will enable biopsies and lead placements for the brain.

TLSR: How lucrative is the spine intervention market?

JC: Spine intervention is a huge market. There are more than 1M spine interventions in the U.S. annually. About one-third of those are appropriate for the Renaissance platform. The platform offers reduced radiation and procedure time, and superior accuracy reduces the rate of revisions while offering increased safety and a return on investment for hospitals and surgical centers. Mazor has placed 54 units worldwide, 28 of those in the U.S. The vast majority of growth has occurred since the device’s U.S. introduction in late 2010.

TLSR: How much does the Renaissance robot cost?

JC: The U.S. cost of the unit is about $750,000 ($750K). Outside the U.S., it is approximately $500–550K, and that is a result of distribution agreements that Mazor has in place. The average selling price for the disposable kits used for each procedure ranges from $1–1.5K, depending on geography, with cost in the U.S. being more than in Europe or the rest of the world.

We estimate that by the end of 2014, there will be approximately 106 units placed worldwide, largely driven by acquisitions in the U.S. We expect that revenues over the next three years—2013, 2014 and 2015—will be $23.8M, $34.1M and $46.2M respectively, representing annual revenue growth of 96%, 43% and 36% year over year. Although the stock price and market cap have appreciated about 720% and 1,150% respectively since we initiated on Mazor in February 2012, it is still a timely investment with lots of upside built in. We rate the stock a Buy, with a $16.54 price target for the U.S. ADR listing.

TLSR: How do you pick target prices for the companies that you cover?

JC: I look at comparable companies in a similar sector or with a similar type of profile, whether in specific products or as a growth trajectory. I look at revenue multiples, earnings per share multiples, enterprise value to revenue multiples or price to sales ratios. In some cases, I use more than one metric to average a target price.

TLSR: When you are evaluating a company, how important is momentum in revenue and stock price movement?

JC: It is important, although I prefer to find companies that are unknown or undiscovered, underappreciated or misunderstood—or not over-followed by the Street.

TLSR: Can you give us some examples?

JC: CryoLife Inc. (CRY:NYSE) was founded more than 30 years ago to sell vascular and cardiac tissue, which it still sells, although it has expanded into a number of medical products, including hemostatic agents. We like Cryolife due to its potential growth trajectory. Its PerClot product is really well positioned. It is a hemostatic agent used during surgical interventions to absorb blood. The product is currently approved and bringing in around $5M annually in a few geographies outside the U.S. PerClot is approved to begin a U.S. clinical trial, which is anticipated to be completed in 2015. We are very excited about it: The size of the U.S. market for hemostatic agents is about $900M, and worldwide the market is about $1.4B.

In mid-August Medafor Inc., a small, privately held company selling $45M worth of hemostatic agents annually, agreed to be purchased by C.R. Bard Inc. (BCR:NYSE) for more than $200M, plus up to $80M based upon sales milestones. Cryolife owns more than 8% of Medafor, dating back to a 2010 selling arrangement, which should bring in a gain of $14.2M to Cryolife. Plus, Cryolife will be eligible for $6.71M for future sales milestones.

AxoGen Inc. (AXGN:NASDAQ), has emerged as a player in the regenerative space, selling a nerve allograft aimed at replacing the current standard of care, known as autografts, in which a surgeon harvests a nerve from the back of a patient’s leg and then grafts it into place elsewhere. AxoGen uses fresh nerves from cadavers, so no harvesting of the patient’s nerves is needed. AxoGen was previously a private company located in the research park at the University of Florida in Gainesville. It merged with a public company called LecTec Corp in 2011. LecTec was basically defunct but had cash on its balance sheet that it wanted to put to work. Bingo.

OvaScience (OVAS:NASDAQ) has been public for less than a year, and is backed by a tremendous amount of science and clinical studies. It aims to improve the quality of human eggs, thereby increasing rates of success for in vitro fertilization (IVF). That is a huge market. There are more than 1.4M IVF cycles performed annually, of which only 160K are performed in the U.S.

We previously expected the company would launch and commercialize its Augment IVF product in the U.S. during 2014, but the company recently ceased development of that product in the U.S. to seek further FDA clarity regarding the specific development regulatory classification (tissue versus biologic).

OvaScience’s financial model could take off if its current studies show higher rates of fertilization. In the U.S., the average cost per cycle is $14–16K. Outside the U.S., the IVF cycle cost is approximately one-quarter to one-half of that.

TLSR: Why do these products cost less outside of the U.S.?

JC: Pricing for medical technology in European markets and the rest of the world is often one-half to two-thirds the cost of the U.S., because medicine there tends to be socialized.

TLSR: How does U.S. Food and Drug Administration (FDA) regulatory approval impact these types of companies when they go abroad?

JC: Products with FDA approval are typically able to garner additional approvals swiftly in Europe. But companies with non-U.S. approvals often have to go through a rigorous procedure with the FDA when they seek to move their products in the other direction. Japan and China each have their own medical technology approval processes, which are data driven, very time-consuming and quite different from the U.S. regulatory system.

TLSR: Any other names?

JC: Tribute Pharmaceuticals Canada Inc. (TBUFF:OTCQB) is a small, Canada-focused specialty pharmaceutical company. It sells eight products in Canada and a couple of products internationally. Tribute sells its Cambia brand, for acute migraine, in Canada. The medication is sold in a sachet form, a powder mixed with a couple of ounces of water. It is extremely fast acting. Nautilus Neurosciences Inc. (private) has licensed Cambia to Tribute for sale in the U.S., where revenues from the product are estimated to be $35M annually.

Another Tribute product is called Bezalip SR (bezafibrate), which is a fibrate drug intended to lower cholesterol. Tribute acquired a license two years ago to sell the drug in Canada. The company also owns the license to sell Bezalip in the U.S. The company expects that it will file an investigational new drug (IND) application in the U.S. by the end of the year. The size of this market is approximately $17B in the U.S, of which the fibrate portion is approximately $4.5B.

TLSR: Thanks for your time, Jeff.

JC: My pleasure, Peter.

Jeffrey Cohen, a stock analyst with Ladenburg Thalmann & Co. Inc., has more than 20 years of professional experience in the worldwide financial markets, working with such companies as Cantor Fitzgerald, the American Stock Exchange (NYSE Euronext) and Sanwa Bank. For the past 13 years, Cohen has been actively involved in direct research, analysis and marketing pertaining to the growing $2.7 trillion U.S. healthcare sector, including detailed fundamental and financial analysis specific to the development, marketing, delivery and commercialization of medical technologies, therapeutics and various other healthcare solutions. During the past seven years, Cohen has developed, published and presented detailed fundamental analytical reports and financial models for more than 34 publicly traded and privately held medical technology, healthcare service and biotechnology companies with more than $14B in aggregate market capitalization. Cohen is an engineer by early training and education (he holds a bachelor’s degree in engineering from the University of Pennsylvania), and has several years of experience planning, designing and implementing complex fixed-rail automated transportation systems. He also holds a master’s degree in business administration and various FINRA licenses.

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DISCLOSURE:

1) Peter Byrne 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: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Jeff Cohen: 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. 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) Ladenburg Thalmann & Co. Inc. discloses the following:

Hansen Medical Inc.: Ladenburg Thalmann & Co. Inc. makes a market in the subject company. Ladenburg Thalmann & Co. Inc. has not had an investment banking relationship with nor received compensation related to investment banking services from the subject company in the last 12 months.

Mazor Robotics Ltd.: Ladenburg Thalmann & Co. Inc. makes a market in Mazor Robotics Ltd. (MZOR). Ladenburg Thalmann & Co. Inc. had an investment banking relationship (advisory) with the subject company in the last 12 months. Ladenburg Thalmann & Co. Inc. received investment banking related compensation from the subject company in the last 12 months. Ladenburg Thalmann & Co. Inc. expects to receive or intends to seek investment banking related compensation from the subject company in the next 3 months.

Cryolife Inc.: Ladenburg Thalmann & Co. Inc. does not make a market in the subject company. Ladenburg Thalmann & Co. Inc. has not had an investment banking relationship with nor received compensation related to investment banking services from the subject company in the last 12 months.

AxoGen Inc.: Ladenburg Thalmann & Co. Inc. makes a market in AxoGen Inc. (AXGN). Ladenburg Thalmann had an investment banking relationship with AxoGen Inc. in the last 12 months. Ladenburg Thalmann & Co. Inc. acted as co-manager in a securities offering for AxoGen Inc. and received compensation related to investment banking services from AxoGen Inc. in the last 12 months. Ladenburg Thalmann & Co. Inc. expects to receive investment banking related compensation from AxoGen Inc. in the next 3 months.

OvaScience: Ladenburg Thalmann & Co. Inc. makes a market in the subject company. Ladenburg Thalmann & Co. Inc. had an investment banking relationship with OvaScience (OVAS) and received investment banking related compensation from OvaScience in the last 12 months. Ladenburg Thalmann & Co. Inc. acted as a co-placement agent in a securities offering for OvaScience in the last 12 months.

Tribute Pharmaceuticals Canada Inc.: Ladenburg Thalmann & Co. Inc. makes a market in the subject company. Ladenburg Thalmann & Co. Inc. had an investment banking relationship (placement agent in PIPE) with Tribute Pharmaceuticals Canada Inc. (TBUFF) and received compensation (including warrants) related to investment banking services from the subject company in the last 12 months. Tribute Pharmaceuticals Canada Inc. and Teva Pharmaceuticals Industries (TEVA‐Not Rated) have joint development interests. The chairman of Teva also serves as chairman of Ladenburg Thalmann Financial Services, the parent company of Ladenburg Thalmann & Co. Inc.

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