Month: March 2014

Article By RoboForex.com

Analysis for March 19^th, 2014

EUR USD, “Euro vs US Dollar”

After rebounding from upper target levels, Eurodollar started consolidating. Probably, it nearest future current descending correction may continue up to level of 50%. If later price breaks, market may start deeper correction.

As we can see at H1 chart, price reached its upper target levels right inside temporary fibo-zone. After that, local correction reached level of 78.6%. Possibly, in the nearest future price may continue moving towards level of 50%.

USD CHF, “US Dollar vs Swiss Franc”

At H4 chart, Franc is trying to rebound from lower levels again. I’ll move stop on my buy order into the black as soon as market breaks local maximum. Short-term target is at level of 50%.

At H1 chart we can see, price rebounded from lower targets right inside temporary fibo-zone. Closest target is at level of 0.8810, where there are several additional fibo levels. After reaching them, pair may start new correction.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article by Investazor.com

EURUSD it seems to be moving sideways between 1.3945 and 1.3875, but above the 200 exponential moving average. A break above the resistance area could signal a rally to 1.3965 or 1.40. A drop bellow the local support at 1.3915 could mean that the Euro might lose some ground and retest 1.3900 or even lower the EMA. Do not forget about the FOMC meeting and statement today. It might trigger high volatility for this instrument.

The post EUR/USD Price Action For March 19 appeared first on investazor.com.

By MoneyMorning.com.au

It’s time for a change of pace.

Gold is back in the picture.

And there’s good news for gold lovers. It’s back to behaving as it should behave. Since the start of the year, gold has climbed more than 13%.

So much for our claim that gold wouldn’t do much this year. Although, we won’t say we got it completely wrong. We said there would be better places to invest your money.

It turns out you could have made twice as big a return if you had bought another kind of gold…

Last year gold had its first losing year in 12 years.

This year it has a chance of ending the year in the black. The low point for gold over the past year coincided almost exactly with the end of 2013.

So providing that low point acts as a support for the gold price, there’s a good chance that gold investors will have a profitable year.

Of course, the reality is that most serious gold investors don’t care about the gold price. Most serious investors (those who own bullion rather than exchange traded gold) buy gold for the long term.

They don’t buy it as a one-week, six-month or one year trading bet. They buy gold because they know governments and central banks will devalue a nation’s paper money over the course of many years.

So when that happens (as it surely will), gold investors know that they have a safe asset that should be worth the same to them 40 years from now as it is today.

On the other hand, with this other kind of gold there’s no such certainty, but there is the potential to make a lot more money.

Stocks Beat Gold Again

As Bloomberg News reports:

‘Investors seeking a hedge against a waning U.S. economy recovery and escalating conflict in Ukraine made twice as much money buying gold-mining shares rather than the metal the companies produce.

‘The Market Vectors Gold Miners ETF climbed 35 percent this year, more than double the 12 percent advance for the SPDR Gold Trust…‘

This provides more proof for the idea that stocks are the best way to build long term wealth. Gold is great. You should own it. But if you want to make real money, the best place to do it is in stocks.

That’s why we often refer to the Bloomberg Billionaires Index. We point to the fact that there isn’t a single person in the top 100 who has amassed their billions by investing in gold.

The vast majority of the Bloomberg Billionaires made their fortunes by investing in businesses. They’re entrepreneurs or capitalists who have an eye for making money.

But that’s not the only message you can get from that report. It also lights a fire under the lie that the resource sector is dead.

Over the past three months the Market Vectors Gold Miners ETF is up 39%. The index that follows the supposedly dead Aussie resource sector, the S&P/ASX 300 Metal & Mining Index is up 2.3%.

Sure, that’s nothing to crow about. But it’s only just below the performance of the S&P/ASX 200 index, which is up 4.9% over the same timeframe.

The point we’ll make here is that despite all the talk about China’s economy collapsing and emerging market turmoil, the reality is that the market had already taken this into account over the previous two years, when resource stocks fell.

We’ve said it more than once so we’ll say it again: this isn’t the time to sell, it’s the time to buy. It turns out we’re now gaining some support from the mainstream on our position.

Don’t Repeat The Mistakes of The Past

Take this from another Bloomberg report, quoting Sam Vecht, fund manager at BlackRock Emerging Europe Trust Plc:

‘“For several years we had been relatively bearish on emerging markets in general and Turkey in particular, but in the last few months we have turned more bullish,” Vecht said. Investors getting out of emerging markets now risk repeating the mistakes of 2009 to 2011, when many were too late to share in the biggest gains, he said.‘

The important thing with any big picture approach is that it’s almost impossible to pick the exact bottom of the market. Vecht admits that when he said he turned bullish a few months ago…before emerging markets took a beating.

The same has happened to us. We started looking at emerging markets around the middle of last year as an investing opportunity. And as for the resource sector, we turned bullish on that market around this time last year.

So, did we get it wrong? Of course we did. Look at any resource or emerging market price chart and you’ll see that. But has it changed our view on both sectors? Not a bit.

Hunting for a Crisis That Doesn’t Exist

Markets move all the time. They move up and down second by second. The important thing is to take into account the big underlying trends.

And the big trends are that there will always be a demand for resources, and Asian economies (despite the bumps) are on an inevitable growth path. Remember, China’s economy is set to double within the next nine years.

Plus, there’s the other factor that we’ve also written about for some time – the urge among some to seek the glory of picking the next market crash.

From the same Bloomberg report, quoting Paul McNamara, fund manager at GAM UK Ltd:

‘“Everyone who missed the 2008 crash wants to call the next one, and emerging markets are the new-found object of expertise,” McNamara said in e-mailed comments yesterday. “Claims of a global crisis are overstated.”‘

We won’t agree with everything McNamara says, because it depends on which crisis he’s talking about. If he’s talking about the big one…the eventual collapse of the monetary system, then we’d say the claims are actually understated.

But if he’s talking about the global impact of Russia, Ukraine, Crimea, Argentina, or even China, then yes, we totally agree that these are the ‘crash catalysts’ some analysts claim.

In short, while we can’t claim that investing in stocks will get you a place on the Bloomberg Billionaires Index, we can say that if your goal is to grow your wealth over the next five or six years then checking out the beaten-down opportunities on the stock market is the best thing you can do.

Your first port of call should be to check out the latest on resource stocks here. Resource expert Jason Stevenson says the market in certain commodities is set to boom.

We agree.

Cheers,
Kris+

Special Report: Mining Boom Act II

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By MoneyMorning.com.au

By MoneyMorning.com.au

This weekend I caught a bus.

I also caught a taxi and a train.

I walked for a bit too.

Now this might sound pretty normal, because it is. But while using the various modes of transport I took a moment to realise the importance of technology in it all…

You might think a bus isn’t particularly high-tech. But consider this. Before heading to the bus stop I jumped online on my phone to see how far away it was. I used a website that tells me exactly when the next bus for my particular stop will arrive at the stop. And it’s accurate to within 10 seconds. Not only that, but the tracking system is accurate to within 10 metres.

You see, buses in London are all fitted with GPS, gyroscopes, odometer feeds and real time route layouts. This isn’t your run of the mill GPS system, it’s iBus. And it uses this full array of sensors and information to let me know whether to stay inside for a bit longer, or make my way to the stop.

A central control centre receives and processes all this data by the second. It’s an immense amount of raw, real-time data. This control centre tracks the 8,500 buses across greater London. And it then sends the processed data to my smartphone, instantaneously.

After the bus trip was the train trip. Again, not particularly high-tech, but while standing on the train I noticed a small square barcode, a QR Code, by the train door. That was interesting, as I thought QR codes were dead. QR codes are dead by the way, quite an irrelevant technology. But also by the train door was an NFC (near field communication) sign.

Luckily enough my phone has NFC, so I touched my phone to the sign and received information about CMC Markets. I wasn’t particularly interested in the marketing, but it was clear evidence that this kind of technology is slowly finding its way into the world.

My NFC experience didn’t end there.

Off the train, I jumped onto another bus and saw another sign. But this ones was a reminder that I could touch onto the bus not with my oyster card, but my PayPass debit card. Or I could use NFC on my phone if I had a connected digital wallet.

What I also neglected to mention was this second bus wasn’t your typical bus either, but a hybrid diesel-electric powered bus. It had circular LED lights and was virtually silent. It just had this faint hum, exactly what you’d expect from a futuristic bus.

It’s design is quite retro looking, which not everyone likes. But you can’t deny its genuine high-tech, built in technology.

I jumped off the bus in an area I’d never been to before. I knew where I had to go, but wasn’t sure if it was left, right or back around. In a situation like that there’s only one thing to do; whip out Google maps and go.

So with a quick search of the place I was heading to, the GPS in my phone found where I was, where I needed to be and then kindly directed me there, also letting me know how long it would take.

When I arrived, it was accurate to the minute. Scary yet reassuring.

Some time later it was time to go home. Having lived in Melbourne for a long time, I know that hailing a cab at nighttime can be a nightmare. Now in London, in an area I’d never been before, I was pretty concerned I might be stuck for a while.

Never fear, I had a couple of aces up my sleeve. I decided not to use my favourite taxi app, Uber. Instead took a new option that I’d used to great success before. It’s a similar app, Hailo. But this is specifically for London’s black cabs.

The Easiest Way to Get a Ride in a City of 8.1 Million People

All I had to do was open the app, and it immediately located where I was. Thanks again to the GPS inside my phone. Then Hailo located the nearest available cab and told me exactly how long it would be for it to get to my location.

I confirmed I wanted a ride and the app informed me I’d be waiting for an entire six minutes for my cab.

Where this gets even better though is that the picture, name and phone number of my driver popped up, and he too had my picture pop up on his cab. That meant he knew who he was picking up and I knew who was picking me up. So no one else was going to ‘steal’ my cab. And he was going to make sure he got the right fare.

In those six minutes I was also able to watch his location on the app. I could see the cab getting closer to me and even the streets and direction he was coming from. I had the option to pay for the cab through the app on my registered card, but opted to pay cash. I had the choice.

And as you’d have guessed, he arrived promptly in six minutes. He was also a friendly driver. And at the end of the journey, I had the option to rate my driver.

Now if he’d been horrible I could have given him one star. But I gave him five. This means higher rated drivers get more jobs on the system, and the bad ones miss out.

As a driver he also gets the opportunity to rate me as a passenger. If I was an abusive or nasty passenger he could give me a low rating. I would then miss future rides or wait longer than usual.

A system like this drives good customer service and good passenger manners. It weeds out the bad and rewards the good. It’s competition in its finest form.

And competition like that results in a better outcome for all involved.

Looking back on the day it made me realise that we don’t always take the opportunity to really appreciate how the world advances.

To get me across London efficiently and quickly took more than just my smartphone and a few Google searches. It took GPS technology, thousands of servers, sensors, processors and computers. It took hybrid technology, wireless mobile internet and an innovative app.

When I really considered all the different aspects of technology involved in my reasonably monotonous journey it truly spun my head. While I consistently talk about what the future holds and the kinds of technology you can expect in the coming year, it’s the technology that’s already here we should also stop to appreciate.

Because at some point in the not so distant past, someone said ‘hey maybe there’s a better way to run busses, trains and the taxi system’. And those people then found a way to make it happen.

And that’s the beauty of technology. It just creeps into your life and we wonder how we ever managed to get along without it.

Sam Volkering+
Editor, Revolutionary Tech Investor

Ed note: The above article was originally published in Sam Volkering’s Tech Insider, the free daily eletter in which Sam Volkering gives his readers the inside scoop on the new technology and tech companies that are changing the world.

By MoneyMorning.com.au

Market speculation, which is otherwise known as trading, has become a career for some and a past time for others. Futures traders and stock traders around the world for years have been speculating on the direction of their respective markets. If someone wants to enter the world of market speculation this is not a cheap endeavor.

In the future’s world the most popular of all traded products without question is the E-mini S&P 500. During the US session, there is always a great deal of movement or also known as volatility in this futures contract. If one were to look to trade the mini S&P 500 the margin requirement is $4758.

Traders around the world are also always looking to trade the best stocks. Companies like Apple or Google are very popular among stock traders. Once again, the rules or the margin requirements in order to participate in stock daytrading are quite high. The initial deposit required to daytrade stocks in the US is $25,000.

Traders that follow events in Europe usually look to the DAX. The DAX is by far one of the most popular traded products in Europe but it comes at a hefty price tag. The margin requirement for the DAX is €17,978.

London is considered to be one of the financial capitals of the world. The FTSE 100 is the index that best represents the markets in the UK. The price to trade this index here again is not cheap at all. The margin requirement for FTSE 100 is 3,407 pounds.

Binary options trading, on the other hand, is a great way to participate in market speculation without the cost. One can select an investment amount as low as one dollar. The investment amount can also be adjusted depending on the comfort level of the trader. The binary options trader can also select a time-frame that is most suitable to them. They can choose an expiry is as short as one minute. In the end, flexibility and affordability are two of the biggest advantages of binary options trading compared to trading the major stock markets.

To learn more please visit www.clmforex.com

Disclaimer

Trading of foreign exchange contracts, contracts for difference, derivatives and other investment products which are leveraged, can carry a high level of risk. These products may not be suitable for all investors. It is possible to lose more than your initial investment. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. A Product Disclosure Statement (PDS) is available from the company website. Please read and consider the PDS before making any decision to trade Core Liquidity Markets’ products. The risks must be understood prior to trading. Core Liquidity Markets refers to Core Liquidity Markets Pty Ltd. Core Liquidity Markets is an Australian company

MPC minutes and a raft of employment data set for release on Wednesday, March 19. If the releases support the same bias, they could fuel a break out of current range in the GBP/USD. If the releases contradict each other (i.e. one bullish one bearish), it will likely hold the pair within its range. The different scenarios are outlined on a table below.

For bearish/bearish, downside movement should be expected at the support area of 1.6593-1.6600. Should GBP/USD close below this level then look for further movement to 1.6550.

For a bullish/bullish scenario, expect a break at the range mentioned above around 1.6700 and if GBP/USD goe over this level, upside movement will continue towards the target 1.6749-1.6761.

Assuming no other unexpected surprises such as over a 2 percent employment drop or majority of the MPC voting for a rate hike/cut, the response will likely be muted and GBP/USD will hold in its current range.

Daniel Elo, www.economiccalendar.com

By Gary, www.fxlight.co

March 2014 – I am not a lawyer but I believe one of the more fascinating aspects of studying the law is the concept of “Intent” to commit a crime. You see it is not really enough to commit a crime, the prosecutor must prove that the accused had “intent” or intended to commit the crime. For most people this idea seems ridiculous and they assume that the act of committing a crime is enough to prove intent. “If you didn’t intend to do it, then why did you do it?” would be a reasonable retort and that is fair enough.

But if you stop and think about it, don’t we all do things that qualify as accidents, that is to say committing an action that had unintended results?  Getting too excited at an auction and paying over the odds, or breaking the law by speeding to a meeting you are late for.  These would be a temporary lapses of an otherwise sane person.

Add to this the properly insane who by legal definition cannot intend to do something illegal. Insane people do not know the difference between right and wrong and so therefore are presumed not to have the ability to have intent as legally required in a criminal charge. The law is fun isn’t it!

There is also temporary insanity. This person is deemed to be sane before the act and sane after the act – but “insane” at the moment the criminal act was perpetuated. Of all the legal defenses I’ve read about, this one fascinates me the most.

Then there is mass market insanity and where we get to the interesting bit. The market is always right, is of course true, and certainly any time I have ever tried to reason with the Forex market it has not listened to me. Over long periods of time I totally subscribe to this idea but I also study Japanese Candlestick patterns which was originally a psychological study of price action and temporary insanity in 17th Century Japanese rice markets.

Personally I prefer to trade Forex over longer time frames but then the market can be insane for long periods of time. Didn’t Keynes say something about “the market remaining irrational for longer than you can remain solvent”.  So where am I going with this insanity?

Shinzo Abe’s government in Japan is conducting a policy that is virtually guaranteed to make the Yen substantially weaker.  Starting last October the yen has lost ground relentlessly to the dollar as the Japanese government began its debasement of the yen. Today, however, the yen has regained more than 4 big points – from above 105 to 100.74 at one point and now trades in the 101’s – against the dollar. And all the while the Japanese have re-iterated their intent to proceed to debase the yen. My target for 2014 is 110-112 vs the Dollar but other sensible people are projecting as high as 200! I am not saying that the greenback is anything special. Let’s just say if both have fallen out of the ugly tree then neither looks pretty, but the Yen hit every ugly branch on the way down. It could just be that in times of uncertainty the Yen is seen as a safe haven. After all EURCHF is back in the 1.21’s so there would seem to be a risk off trade in forex at least with the Yen benefiting too.

So how long will this insanity last? I don’t know but I am looking for technical opportunities to get long. I think that the best trades are when the fundamental and technical analysis all point in the same direction.  The 200 day SMA held twice in October and once in November and sits patiently at approx. 100 vs the Dollar as does previous triangle resistance turned support on a weekly time frame. That’s not a bad entry point if we get to 100 or even down into the 99′s for a period. If instead this market rises and we can close above 103.50 then perhaps that is a good entry level but the point here is that markets are simultaneously efficient but are also managed by humans whom as I have discussed are prone to bouts of insanity.  USDJPY is case in point in my opinion where it’s like we are trying to sell a second hand car to a guy and are talking it up, while at the same time the original owner is in the back ground hitting the car with a baseball bat. Sooner or later the customer will lose his enthusiasm for this asset.

See more at: http://www.fxlight.co/market-psychology-and-temporary-insanity/

Guest Post By Dennis Miller

My grandfather liked to use clever sayings to make a point. One of his favorites was, “the same thing, only different!” As we pulled together this article, I immediately thought of how his funny little saying applied.

The Same Thing…

When you buy an annuity, you give a private company a sum of money in exchange for its promise to pay you a fixed amount every month until you die. As an investment, it’s not likely to pay off – unless you happen to outlive your expected mortality – but it may still be a good idea. And if you’re one of the lucky folks who outlive their actuarial life expectancy, an annuity can turn out to be a terrific investment.

A reverse mortgage is quite similar. But instead of writing a big check to an insurance company, you give the bank a mortgage on your home based on your current equity. In return, the mortgage company agrees to pay you a certain amount every month for some period of time: until you die, move out, or celebrate your 100th birthday (more on that later). For a reverse mortgage to be a good investment, you have to outlive your expected mortality and stay in your home.

It may not turn out be a good investment, but under certain circumstances it could still be a good idea. We’ll examine what a reverse mortgage is and how to determine if one is right for you. We also consider many of the risks involved, suggest steps to improve your position, and pass along tips on how to get the best possible deal available.

Reverse mortgages have many individualized, variable components. For our purposes, we are sticking to the basic concepts. If you think you are a good candidate, make sure to consult a licensed, professional HUD counselor to help tailor the product to your needs.

…Only Different

I’ve looked into reverse mortgages several times, and they always made me uncomfortable. The value of owning your home free and clear is one of my core beliefs.

Personally, paying off my mortgage was a tremendous emotional relief. Now it’s time to challenge that idea.

What if you could mortgage your home and no matter how high the balance on that mortgage got, no one could throw you out of your home? As long as you kept up your home and paid your taxes and insurance, you could live there as long as you wanted. What if the property value became less than the balance of the mortgage, yet if you moved out and sold the home, you would not have to make up the difference? Or, when the house sells, the reverse mortgage is paid off, and you get the balance of any remaining equity?

In essence, these are the ideas behind a reverse mortgage. But just as insurance companies tilt the odds in their favor by setting the monthly payouts, the same is true for banks that hold reverse mortgages.

However, the “only different” part is this. Some reverse mortgages may be capped at a certain age (generally 100).  The rules are constantly changing so be sure you check if you apply for one.  With the advances in modern medicine, this could become a factor.. Unlike an annuity that continues to pay every month no matter how long you live, the payments from a reverse mortgage may have a stopping point. You still own your home after that and you can still live there until you die or it is no longer your principal residence, but you no longer receive monthly payments.

The banks do very well financially on most reverse mortgages. Most folks send checks to the bank for 25 years or more before they own their home outright. With a reverse mortgage, the bank will own all – or a major part – of the equity in your home, and in much less time. You still have title to the property, but your equity could be depleted. The good news is they must continue to send you monthly checks which is the risk they take.

Reverse mortgages are not right for everyone. While you may be feeling the pinch, there may be better remedies for your situation. If you are a good candidate, we can help you understand some of the common pitfalls and mistakes so that the monthly check can help you have “money forever.”

Back to Basics

A reverse mortgage is a special type of home-equity loan sold to homeowners 62 and older. It gives a homeowner access to some of the equity in their home in the form of monthly payments, with the protection of knowing that they can stay in their home as long as they pay their taxes and maintain the property.

When you die or move out, the mortgage must be repaid. The Federal Trade Commission report Reverse Mortgages states:

“The loan must be repaid when the borrower dies, sells the home, or no longer lives in the home as a principal residence. … Most reverse mortgages have a ‘nonrecourse’ clause, which prevents you or your estate from owing more than the value of your home when the loan becomes due and the home is sold.”

Federally insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs), are backed by the US Department of Housing and Urban Development (HUD). The National Council on Aging reports that HECMs represent 95% of reverse mortgages originated in the US. Since HECMs make up the vast majority of reverse mortgages, they are the focus of our report.

HUD Counseling and Other First Steps

Before a homeowner begins the application process, they must go to a HUD-approved counseling agency to learn about the cost and features of these loans. As you read on, you will probably agree that the cost of HUD counseling is money well spent. Most agencies charge around $125. The fees can be added to the loan proceeds, and you cannot be turned away if you cannot afford the fee.

The lender’s upfront fees can be quite expensive. Nevertheless, there are two types of HECMs: the HECM Standard Loan; and the HECM Saver Loan, which has a lower closing fee. For example, if a homeowner has a $250,000 home with no existing mortgage, the standard fee at closing (which is added to the mortgage) is $14,721. The HECM Saver Loan fee is $9,746.

The amount of monthly payments also varies. A 65-year-old with a Standard Loan would receive $754/month, while that same person with a Saver Loan would receive $730/month. In addition, there is a capped monthly service fee of $35 or $420 per year added to the loan to cover servicing costs.

The monthly payment also varies by the age of the homeowner when he takes out the loan. If you own a $250,000 home and you take out a HECM standard loan at age 65, your payouts will be $754/month. If you wait until age 75, they’ll be $950/month and $1,380/month if you hold off until age 85. The offered amounts fluctuate weekly with interest rates, just as mortgage interest rates do.

Please note that we recommend that both spouses be on a reverse mortgage. If there’s an age difference, the monthly amount is based on the age of the younger spouse.

So… should I get one?

Just because you qualify for a reverse mortgage doesn’t mean you should get one. Before you consider a reverse mortgage, you should check out our unbiased report that will give you all of the details for evaluating whether this is a good step for you. You’ll learn:

• How a reverse mortgage is different from what you probably think it is, and why the number “100” is the most important number to consider… page 5.
• The two types of reverse mortgages that comprise 95% of the market; pick the wrong one and you could have to shell out nearly 50% more in fees without even knowing it… page 6.
• The three questions you must answer before you take on a reverse mortgage; ignore them and you could be trapped in your home forever… page 9.
• The six-part checklist you need to ask your spouse or housemate to see if both of you can actually stay in your home… page 10.
• The risks that come with a reverse mortgage: these are the ones the companies will never tell you about, but they’re real… page 13.
• Who’s getting a reverse mortgage these days? The answer may surprise you, but it’s a reflection of the times… page 19.
• Other realistic options to a reverse mortgage; miss these and you could make mistake you’ll never recover from… page 23.

Don’t even consider listening to a reverse mortgage pitch until you’ve had a chance to read through The Reverse Mortgage Guide.

Source: George S. Mack of The Life Sciences Report   (3/18/14)

http://www.thelifesciencesreport.com/pub/na/promising-biotechs-target-new-ways-to-kill-bad-bugs-venture-capitalist-dennis-purcell

Dennis Purcell, senior managing partner of Aisling Capital, has seen the biotechnology industry morph from exciting science project to a full-blown, multibillion-dollar industry producing blockbuster products that routinely save lives. Now a new crisis is looming, as drug-resistant bacteria evolve, proliferate and wreak havoc. With this dire need driving interest, Purcell believes a change of focus, from oncology and orphan drug indications to anti-infectives, will develop in 2014 and beyond. In this interview with The Life Sciences Report, Purcell shares ideas that could offer a definitive cure for your portfolio.

The Life Sciences Report: As a venture capitalist, your investments are the feedstock of the initial public offering (IPO) markets, and you must constantly think about getting your private equity holdings ready to go public or be acquired. How has this process changed over the past two years?

Dennis Purcell: Things have changed substantially. On the regulatory front, the Jumpstart Our Business Startups (JOBS) Act has been a big driver in terms of making it easier for companies to go public because they can file anonymously with the Securities and Exchange Commission (SEC). Everything worked well last year in the sense that companies attempting to go public were better funded because they were able to test the waters ahead of time.

For the better part of a decade the science was doing well, but Wall Street hadn’t caught on yet. Prior to that, there had been a lot of disappointments, and selloffs on approvals. Then Wall Street started to catch on to what was happening in biotech. Now we’ve seen some really good product launches, and that is feeding into a robust market. We’ve also added the generalist investor to the sector. The generalists got into some IPOs and did quite well.

Those things coming into play at once—on the regulatory front, with the JOBS Act and the SEC, as well as the underlying fundamentals—made for a very good year. IPOs were up an average of almost 50%.

TLSR: Let me ask you about the generalist investors. Biotech has enjoyed very sophisticated sponsorship over the past five years, even when the stocks weren’t doing so well. These new investors might not understand the science and the technology platforms. Does it worry you to see these “last-in” investors get involved?

DP: Certainly. The generalist investor has a very hard time understanding the industry because of the complexity of the science, which only gets more complex as time moves on. The challenge is that we’ve seen significant highs and lows over the last 15 years in biotech. If we can smooth out those curves and continue to show scientific progress, we’ll keep the generalists interested in the sector.

Historically, generalists have been somewhat fickle: Once the performance isn’t there anymore, they move on to chase returns in other sectors. Now that they have had such a good run with biotech over the last year or two, and are seeing startups mature from science projects to real companies with products on the market, generalist investors don’t have to understand the scientific underpinnings. They can simply look at how the drug is doing in the marketplace and what it’s doing for patients.

Yes, I worry about generalist investors, but if we can flatten those extreme highs and the lows to keep generalists in the market, we should see a sustained period of success in the industry.

TLSR: Capital has to go someplace, and people do look for higher returns. When biotech companies mature, with products on the market, investors seek better returns than they get by waiting for earnings every quarter. The money will necessarily filter down to companies with preclinical products, and with phase 1 molecules and 10 patients in the clinic. Could that lead to companies using this free flow of capital inefficiently?

DP: That’s a key question in terms of flattening out the highs and the lows. To address that issue, I consider what I call the three Os. The first one is output. We have to prove to investors that our output is going to be better than it has been in the past. That means getting a quick answer and killing off bad projects earlier, without wasting $50 million ($50M). Upward of $500 billion ($500B) has been spent on cancer drugs that didn’t go anywhere. Now that we have a lot of companies that have $50M, $100M or $200M cash in the bank, we have to be much more judicious about how we spend it.

The second O is about outcomes. We need to share data better than we have in the past. Almost half of all clinical trials never get reported. Some of the money waste not only has to do with waiting too long to kill a project, but also with making the same mistake that somebody else made in the past. We need better cooperation on sharing data about outcomes.

The third O is originality. As you trickle down into some of these companies with 10 patients in a clinical trial, we need to see more originality in business models. For instance, companies in the past year have actually secured predetermined purchase prices from big pharma companies if they hit certain milestones. They are being original.

TLSR: The specialist biotech investor has been in the market forever, and now we’ve seen the generalist come in to catch the wave. What about the retail investor? Are biotech IPOs suitable for retail investors?

DP: I think they are suitable for the retail investor. These investors have to take a look at the people who started the company, the company’s advisors and the people on the board. As a small retail investor, you can take comfort that somebody else has done work on a company. It’s a risky business for sure, but by the time a company is ready for an IPO, so much diligence has been done that, as a small investor, you know something about the people involved. I’ll contrast that with a company funded by angel investors, who may not be the most sophisticated in terms of biotechnology. That’s different than a company funded by a well-known venture capital firm with a couple of Nobel laureates on its board.

The final filter is the underwriters. Are they quality underwriters? Have they taken good companies public in the past? If these pieces are in place, even a small investor who may not understand the science totally can take some comfort in that experts have been involved.

TLSR: I have one more question from the retail investor’s point of view. Institutional investors get the first shares coming off the shelf; these are people you and your fellow syndicate members know, and the people that fuel your IPOs. Is there a way for the retail investor to get into the IPO, or must he or she jump in at the open?

DP: Generally, 20–30% of any deal is allocated to retail. Obviously, some deals are hotter than others. For an unsophisticated or small investor, it might be better to play it in a diversified way through a well-known mutual fund, like a Fidelity fund or T. Rowe Price. Mutual funds are the biggest clients of the investment banks.

The question is how much of the hot deals a small retail investor gets. Most firms have a target in terms of how much stock they want to go to retail, institutional and international investors. They have an idea about the right mix. By and large, there’s always something left for retail. It may not be everything that the retail investor wanted, but he or she can get exposure.

TLSR: When a corporate venture capitalist—say from Amgen Inc. (AMGN:NASDAQ), Takeda Pharmaceutical Co. Ltd. (TKPYY:OTCPK) or Genentech/Roche Holding AG (RHHBY:OTCQX)—takes an interest in one or more of the companies in your portfolios, does that give you some sense of validation?

DP: It’s not so much the corporate venture capitalist that gives us comfort. It’s the corporate business development people who lend us another set of eyes. We spend a lot of time with the big pharma companies talking about their interests, what they are looking for. If someone in business development in cancer at, for instance, Merck & Co. Inc. (MRK:NYSE), is interested in our oncology company, that obviously gives us some idea that we’re on the right track.

Then it becomes our job to finance those companies for three or four years, get them mature, and then, hopefully, have them acquired by big pharma. There are two ways we can recognize returns: The first is through the IPO market, and the second is through acquisition.

TLSR: I believe you have a theme this year in that you believe bacterial infectious disease indications are going to be a hot market. Is that correct?

DP: Last year was the year of cancer and orphan drugs. We were pretty involved with those. But if you look at the rising resistance of infections to antibiotics, we are running out of treatments in the arsenal. So yes, the infectious disease market will be a theme over the next year or two. A number of companies coming down the pike will bring new products to market that are superior to the ones we’re using and, hopefully, will overcome this resistance problem.

TLSR: The Generating Antibiotics Incentives Now (GAIN) Act has been signed into law, and there are a few physicians in the U.S. Congress right now who seem to be interested in antibiotic resistance. Do you believe Congress is paying enough attention to this problem, particularly with regard to the possibility of a resistant-bug pandemic in the future?

DP: I think the government is paying more attention to it than Wall Street is. The GAIN Act, over time, is going to be very important for the development of new anti-infectives. The question is, how difficult will the U.S. Food and Drug Administration (FDA) be in terms of approving new anti-infectives? Wall Street has not seen the potential coming out of new anti-infective agents so far, but I think Congress and the FDA see the need. We read about a difficult infection every day in the papers now.

TLSR: From Wall Street’s perspective, infectious disease is typically a short-term problem, and antibiotics are short-term therapies. In fact, the better the antibiotic, the shorter duration of treatment. Isn’t that a valid problem for the investor?

DP: Yes and no. Certainly, bacterial infections are not chronic lifelong issues like some viral infections, such as HIV or even hepatitis C. There are numerous anti-infectives on the market that bring in well over $1B in sales. You’re right on one hand, but on the other, the prevalence of bacterial infections is so large it offsets the issue of shorter-term therapy.

TLSR: Let’s go ahead and talk about some companies.

DP: On March 31 there’s an advisory committee meeting for a company we have been involved with called Durata Therapeutics Inc. (DRTX:NASDAQ). A new drug application (NDA) has been filed for its product Dalvance (dalbavancin) for acute bacterial skin and skin structure infections, including methicillin-resistant Staphylococcus aureus. Its Prescription Drug User Fee Act (PDUFA) action date is May 26, 2014. Durata is a beneficiary of the GAIN Act, and Dalvance is treating gram-positive infections like Cubist Pharmaceuticals Inc.’s (CBST:NASDAQ) Cubicin (daptomycin). We now have an endpoint with Dalvance that’s different in that regulators will be looking to see what the bacteria look like after 48 hours, rather than what they look like after 7 or 14 days. We shall see how the regulators like Dalvance shortly.

We are not investors in Cubist, but it has an NDA filed for tedizolid phosphate (TR-701), which was acquired with its acquisition of Trius Therapeutics last year. The PDUFA date for tedizolid is June 20, 2014. At the end of February Cubist said that the European Medicines Agency (EMA) had accepted tedizolid for review for complicated skin and soft tissue infections. We should hear back from the EMA on that during H2/15.

TLSR: What about another antibiotic developer?

DP: Cempra Inc. (CEMP:NASDAQ) is another publicly traded company, and it is in a couple of phase 3 trials with its lead compound solithromycin (CEM-101). One indication is for community-acquired bacterial pneumonia. Solithromycin is in a class of drugs called macrolides, which would replace something like a Zithromax (azithromycin; Pfizer Inc. [PFE:NYSE]) or a Biaxin (clarithromycin; Abbott Laboratories [ABT:NYSE]). Cempra refers to it as a next-generation macrolide/fluoroketolide, and it does have the potential for a broad range of infections. We’re going to see the first readouts of its phase 3 SOLITAIRE-ORAL study in Q1/15. The company is also ready to start a phase 3 trial in urethritis.

Based on what happens with Durata and Cempra in the not-too-distant future, we’ll see exactly how regulators are going to treat new and novel mechanism antibiotics. The need is great.

TLSR: Dennis, you also have an interest in a newly public company called Esperion Therapeutics (ESPR:NASDAQ). It has a proposed product to treat hypercholesterolemia. Could you address that?

DP: Yes. Both Durata and Esperion have drugs spun out of Pfizer, and both of these companies are in our portfolio. Esperion has a small molecule, orally bioavailable, low-density lipoprotein (LDL)-lowering drug, ETC-1002, which is in two phase 2 trials slated for completion by the end of this year; we will get results in H2/14.

We’re particularly drawn to this company because the scientific leader is Roger Newton, who was the codiscoverer of Lipitor (atorvastatin). He sold Esperion to Pfizer a few years ago, and we at Aisling Capital, and other venture capitalists, have recently reacquired it. The product is intended for statin-intolerant patients, of which there are many, and we have high hopes for these trials.

TLSR: When you say the drug is intended for statin-intolerant patients, are you talking about hepatotoxicity, muscle pain, that kind of thing?

DP: Exactly. Mostly muscle pain.

TLSR: So nice meeting you, Dennis.

DP: Thank you. Nice talking to you.

Dennis Purcell has served as the senior managing director of Aisling Capital since February 2000, and is responsible for the management of the partnership. Prior to joining Aisling Capital, Purcell served as managing director of the Life Sciences Investment Banking Group at Chase H&Q (formerly Hambrecht & Quist) and was a member of the operating committee. Prior to joining H&Q, Purcell was a managing director in the healthcare group at Paine Webber Inc. Purcell has served on the boards of directors of numerous public and private companies. He is a member of the board of the Life Sciences Foundation, L.E.K. Consulting, a special advisor to Poliwogg Holdings Inc. and an external advisory board member of the NYU Office of Therapeutics Alliances. He has previously served on the boards of the Biotechnology Industry Organization, the New York Biotechnology Association, the Irvington Institute, and was a member of the Advisory Council of Harvard Medical School. In addition to being a regular speaker and commentator on the industry, Purcell has authored articles in Nature Biotechnology, Xconomy, and theJournal of Biolaw and Business. Purcell has been honored in the “Biotech Hall of Fame” by Genetic Engineering News, named to the Biotechnology All-Stars list by Forbes ASAP, and cited as one of the top 100 contributors to the biotechnology industry. Purcell received his master’s degree in business administration from Harvard University, and his bachelor’s degree in accounting from the University of Delaware.

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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: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Dennis Purcell: I own or my family own shares of the following companies mentioned in this interview: Esperion Therapeutics, Cempra Inc. and Durata Therapeutics Inc. 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: Esperion Therapeutics, Cempra Inc. and Durata 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.
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Capital Trust Markets – The Japanese Yen (JPY) has lost strength against the U.S. Dollar during the Tuesday European morning, as Europe and the US impose relatively modest sanctions on Russia. The Yen had gained a considerable amount of strength throughout last week, as the Crimean secession referendum dictated a risk-off sentiment across global markets, fueling the demand for safe haven assets. While tension remains, market fears of stricter sanctions, and their potential for causing military and political unrest look to have allayed, shifting general sentiment.

During the first week of March, the USDJPY rose from month-long lows at 101.19 to reach its highest level since January 23, yet as the situation Eastern Europe unfolded the USD gave back this gain in its entirety, with the pair falling back to 101.19 Friday last week. A small corrective bounce throughout Monday’s trading hinted at a resurgence, but the upside momentum tapered off and the pair dropped sharply heading into the European open. As mentioned, the USDJPY has risen from the Tuesday European open, and is currently trading just shy of previous support at 101.75.

As is generally the case in times of geopolitical uncertainty, event driven sentiment will likely dictate the medium-long term trend. However, a number of key Japanese trade releases slated for Tuesday evening could catalyze a short-term shift.

At 19:50 EST, the Japanese Ministry of Finance will report February’s trade balance data. Consensus suggests rising export levels and slowing import levels will contribute to a trimmed trade deficit, with the headline figure forecast at JPY-590.

Assuming there are no significant changes in the Crimean situation, a tighter than expected deficit would reinforce the aforementioned resistance and catalyze a break towards the lows at 101.19. A daily close below this level would hint at a short-medium term downside bias, and offer up an initial target at February lows of 100.79.

Conversely, a miss would fuel the current bullish momentum in the USDJPY, with an initial target at the previous high of 101.93; that is, assuming Tuesday’s action doesn’t hit that level organically. A close above 101.93 leaves a relatively clear run up to previous resistance at 102.66, but keep the overarching fundamentals in mind when setting targets. In spite of Tuesday’s action so far, there will be a considerable number of forex traders waiting to pull the trigger on a USDJPY sell at the slightest hint of escalation in Ukraine. The current standoff has given the markets some breathing space, but exactly how much remains to be seen.

Written by Samuel Rae – Currency Strategist at Capital Trust Markets

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