Archive for November, 2009

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MOD-PAC Corp. (Nasdaq: MPAC) Buzz Stock of the Day

Wednesday, November 4th, 2009

Paper products maker, MOD-PAC Corp. (Nasdaq: MPAC) reported a sharp increase in third quarter profit driven by cost restructuring initiatives to improve operating leverage, and increases in the company’s folding carton sales and custom folding carton sales, offset by lower stock packaging and print service sales.

For the quarter ended October 3, MOD-PAC reported profit of $1.01 million, or 29 cents per share, compared with profit of $14,000 and flat EPS in the same quarter a year ago. Revenue for the quarter decreased to $12.59 million, from $12.64 million a year ago.

“Our custom folding carton sales have grown exceptionally well,” said MOD-PAC’s president and chief executive officer, Daniel Keane in a statement. “Many of our customers produce private label products for the consumer staples market. Consumers in this economic environment are highly cost conscious and tend to buy more store brands which drives sales for our customers. Importantly, as our customers are realizing stronger sales, we are also capturing a greater percentage of their business and adding new accounts.”

Sales of folding cartons, which include custom folding cartons and stock packaging, were up 11.2 percent, or $1.18 million, to $11.65 million in the 2009 third quarter from $10.47 million in the prior year third quarter. Custom folding carton sales drove the product line increase. Custom folding carton sales for the third quarter of 2009 were $9.41 million, up $1.21 million, or 14.8 percent, from 2008 third quarter sales of $8.19 million. Greater sales from two large existing customers and the addition of one new customer, more than offset reduced sales from customers impacted by the economy and decreased waste sales due to a drop in the recycled paperboard market.

Gross profit for the 2009 third quarter was $2.52 million, or 20 percent of total revenue, compared with gross profit of $1.98 million, or 15.6 percent of total revenue, in the same period a year earlier.

Shares of MOD-PAC surged 73 percent touching on a high of $4.25 after the Company announced third-quarter earnings of 29 cents a share on revenue of $12.6 million.

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Diedrich Coffee Inc (Nasdaq: DDRX) Buzz Stock of the Day

Tuesday, November 3rd, 2009

Shares of Diedrich Coffee (Nasdaq: DDRX) spiked nearly 27 percent on Tuesday after Peet’s Coffee and Tea (Nasdaq: PEET) announced it will acquire the wholesale coffee roaster and distributor for $213 million.

Peet’s will pay in cash and stock for Diedrich, with the $26 per share price representing a nearly 28 percent premium to the stock’s Monday close of $20.36. For each Diedrich share, Peet’s will pay $17.33 in cash and a fraction of a Peet’s share valued at about $8.67.

Peet’s said it will pay for Diedrich with a combination of cash and $140 million in debt. The purchase, which is expected to close by the end of this year, will dilute 2010 earnings but should add to profit after that.

“The Diedrich acquisition represents another major strategic growth initiative for our consumer packaged coffee business, by entering and driving adoption of the single cup segment through Diedrichs high-growth K-Cup business,” said Peet’s President and CEO Patrick O’Dea, in a statement.

Peet’s is acquiring Diedrich to enter the quickly growing single-cup coffee market. Diedrich, whose share price hit a 52-week low of $0.21 has rebounded remarkably on the back of popular K-Cup single serve coffee packs, through a licensing agreement with Green Mountain Coffee Roasters (NASDAQ: GMCR).

Diedrich’s Chairman, Paul Heeschen, along with other directors and executive officers representing more than 32 percent of the company’s shares agreed to tender their stock in the offer. The acquisition, which was unanimously approved by both company’s boards of directors, is still pending regulatory approval and other closing requirements.

Diedrich reported profit of $3 million on revenue of $20.1 million for its fiscal 2009 year, which ended in June. The company has forecast 2010 revenue of $90 million to $95 million. Last month, Peet’s raised its 2009 profit guidance after reporting third-quarter earnings of $2.5 million on revenue of $73.9 million.

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Human Genome Sciences, Inc. (Nasdaq: HGSI) Buzz Stock of the Day

Monday, November 2nd, 2009

Human Genome Sciences, Inc. (Nasdaq: HGSI) shares rallied to a 52-week high of $26.21, and added $1 billion to its market value after the company announced favorable results from the second phase of clinical trials for its lupus treatment, Benlysta on Monday.

Rockville, Maryland-based Human Genome said it expects to file its marketing application for Benlysta, early next year, and could have the drug on the market by the end of 2010. If approved, Benlysta will be the first new lupus treatment on the market in more than 50 years.

“The lupus community has waited for decades for one, positive phase III trial of an investigative drug developed for lupus,” said Dr. Joan T. Merrill, a lupus expert at the Oklahoma Medical Research Foundation and an investigator in the trial, in a statement issued by Human Genome Sciences and its development partner, GlaxoSmithKline. “Now we have two.”

Data from a composite of three measures in the latest trial showed that after 52 weeks, 43.2 percent of patients taking 10 milligrams of Benlysta in combination with standard therapies achieved an improvement in symptoms, with no significant worsening of the disease in individual organs.

Only 33.8 percent of patients receiving the placebo and standard care had noticeable improvement. Serious side effects were reported in 26.8 percent of patients taking Benlysta, compared with 24 percent of patients taking a placebo.

Lupus, which affects approximately 5 million people worldwide, is an autoimmune disorder in which the body’s own defense system against pathogens turns on the body and begins attacking healthy tissues. The symptoms can include, but are not limited to, rashes, arthritis, mouth sores, and kidney damage. Historically, it has been difficult to demonstrate in clinical trials the effectiveness of potential lupus drug candidates as the symptoms vary greatly from one individual to another.

Benlysta, which is known generically as belimumab is given once a month by IV infusion, and works by blocking a protein that stimulates B cells that are produced by the immune system. Human Genome, a trailblazer in studying genomics, first discovered the gene for that protein. The discovery would make Benlysta one of the first drugs to arise from genomics, if the drug is approved.

The company has not yet nailed down a price for the drug, but biologic drugs that treat rheumatoid arthritis and multiple sclerosis, which are also autoimmune disorders, range between $15,000 and $30,000 per patient per year, according to Barry Labinger, Human Genome’s chief commercial officer.

Shares of Human Genome Sciences, which traded at $3.32 the day before the positive first trial data was announced in July, closed the following day at $18.69 per share.

Analysts expect the drug to generate annual sales of at least $1 billion and potentially much more. Human Genome will split profits from the drug with its larger partner, GlaxoSmithKline Plc (NYSE: GSK).

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