Archive for July, 2010

Harley-Davidson, Inc. (HOG) – Buzz Stock of the Day

Tuesday, July 20th, 2010

Shares of motorcycle maker, Harley-Davidson, Inc. (NYSE: HOG) were up as much as 14 percent from Monday’s closing price, in morning trading on Tuesday after the company announced a profit at its motorcycle financing unit and stabilizing motorcycle sales in the second quarter.

Harley-Davidson Financial Services, the business unit that gives loans to Harley customers and dealers posted operating income of $60.8 million in the quarter, up from a loss of $90.5 million in the same quarter last year. Harley’s net income for the three months ended June 27 was $71.2 million, or 30 cents per share, up from $19.8 million, or 8 cents per share in the same quarter a year ago. Excluding discontinued operations, profit was 59 cents per share. Analysts polled by Thomson Reuters expected profit of 41 cents per share, on average.

Harley-Davidson’s second quarter revenue from motorcycles and related products was flat at $1.14 billion. Analysts expected revenue of $1.13 billion.

“Over the past year-and-a-half, we’ve taken many actions, from an operations standpoint, in marketing and product development at HDFS and in every aspect of our business to deal with the economy and focus our resources on long-term goals and priorities,” said CEO Keith Wandell in the company’s earnings call. “Harley-Davidson’s first half earnings from continuing operations were $0.89 a share. We saw continued improvement at HDFS and there was a further moderation in the retail sales decline for new Harley-Davidson motorcycle sales in the second quarter.”

The Milwaukee-based Harley-Davidson a major overhaul at the start of 2009 to cope with a shrinking market and an economic downturn that has undercut demand for its pricey, chrome-laden bikes. Sales of Harley motorcycles, whose prices range from $7,000 to $25,000 can take a big hit when the economy goes south. The company has been focused on cutting costs and streamlining its business. Last year, it announced the shutdown its Buell sport-bike line and said it planned to sell the Italian motorcycle maker MV Agusta. In December, the company and its union agreed to a cost-cutting contract at its main motorcycle plant in York, Pa., that involved layoffs for about half the company’s unionized work force there.

The next step in its restructuring plan comes this week, when Harley-Davidson executives begin negotiations with the company’s union in Wisconsin for a new contract. Wandell said the company is “not flexible” on its demands and reiterated that the company will move Wisconsin production elsewhere if it doesn’t get the cost-savings it wants, which include lower expenses at its powertrain factory in Milwaukee and its motorcycle components facility in Tomahawk, Wis.

Cypress Bioscience, Inc. (CYPB) – Buzz Stock of the Day

Monday, July 19th, 2010

Shares of drug maker Cypress Bioscience, Inc. (Nasdaq: CYPB) rallied as much as 41 percent from Friday’s closing price, in morning trading on Monday after hedge fund, Ramius offered to buy the company for about $154 million, or $4.00 a share in cash.

Ramius currently owns 9.9 percent of Cypress’ common stock. The offer of $4.00 per share is a 60 percent premium over Friday’s closing price of $2.50.


In addition to the all-cash offer, Ramius also stated  that it would consider an acquisition structure that would allow management to continue the development of the recently acquired antipsychotic drug, BL-1020 if they are able to fund the required financing for the Phase IIb trial themselves or from a third party financing source.

In late June, Cypress Bioscience, Inc. entered  into an exclusive North American license for the development and commercialization of BioLineRx’s novel antipsychotic, BL-1020, a treatment for schizophrenia. Specific terms of the transaction were not disclosed, but the total upfront payment to BioLineRx was $30 million, with total potential clinical and regulatory milestones of up to $160 million through to approval in the United States, potential commercial milestones of $85 million, and a potential additional $90 million associated with approval for additional indications in the United States or for approval in other countries in North America. Cypress also agreed to fund all continuing development activities and pay BioLineRx a royalty based on applicable sales.

Ramius said poor decisions by Cypress management has damaged its stock price and that the company should hold off on making any further acquisitions or licensing deals. Shares of Cypress Bioscience are down about 73 percent over the past 12 months.

In a letter to Cypress management, Ramius said it is “ready, willing, and able to close this transaction expeditiously and expect the board to retain a reputable investment bank to immediately engage in discussions with us and any other potential acquirers to maximize value for all shareholders.”

Arena Pharmaceuticals, Inc. (ARNA) – Buzz Stock of the Day

Friday, July 16th, 2010

We first featured Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) on July 1, after the company announced a U.S. marketing deal for its obesity treatment, lorcaserin. Since then, shares have continued their climb, surging almost 20 percent in pre-market trading on Friday after it was announced that an FDA panel voted 9-7 against clearing a competing experimental weight loss drug developed by Vivus, Inc. for marketing in the U.S.

Panelists unanimously agreed the drug helps patients lose pounds, with most reporting more than 10 percent weight loss. But those benefits were outweighed by a slew of safety concerns that cropped up in company trials, including memory lapses, suicidal thoughts, heart palpitations and birth defects.

In contrast, Arena’s weight loss drug, lorcaserin is much safer, but hasn’t shown to shed pounds as much as Vivus’ drug, Qnexa. Lorcaserin is the most advanced candidate in Arena Pharmaceuticals’ pipeline. It is a member of a new class of selective serotonin 2C receptor agonists. The serotonin 2C receptor is expressed in the brain, including the hypothalamus, an area involved in the control of appetite and metabolism. Stimulation of this receptor, the company said, is strongly associated with feeding behavior and satiety. The FDA is expected to act on Arena’s application to begin marketing lorcaserin by October 22.


Shares of Orexigen Therapeutics (Nasdaq: OREX), whose diet drug Contrave is also up for approval, plummeted 12.6 percent to $4.37. Many industry experts believe that while Contrave is safer than Qnexa, its safety profile may not be as strong as Arena’s lorcaserin. Contrave combines the antidepressant Wellbutrin with a sustained-release version of an opioid blocker used to treat alcohol, drug, and other addictions. The company said a late-stage trial of Contrave in patients with type 2 diabetes showed that after 56 weeks of treatment, overweight or obese patients with the disease lost significantly more weight and achieved greater improvement in glycemic control than those treated with placebo. Orexigen is up for review in January.

ARNA was recently upgraded to Overweight from Neutral by JP Morgan, with a price objective increasing to $6 from $5. Arena Pharmaceuticals, was also downgraded to Market Underperform from Market Perform by Rodman & Renshaw on Friday morning. The R&R analyst put a paltry $1 price target on the stock, citing efficacy and safety concerns that could present “regulatory challenges” for the firm’s Lorcaserin diet drug.

The market research firm Datamonitor referred to obesity in a 2009 report as the “$11 billion market that never was” as it forecast drug sales in the category to reach just $560 million in 2018, far less that the $12.2 billion market opportunity it says is there. The problem, says Datamonitor, is that “current approaches just aren’t good enough to capitalize on this opportunity.”

Verenium Corp. (VRNM) – Buzz Stock of the Day

Thursday, July 15th, 2010

Shares of biofuels developer Verenium Corp. (Nasdaq: VRNM) surged as much as 86 percent from Wednesday’s closing price, in morning trading on Thursday after the company announced that BP (NYSE: BP) will pay $98 million for technology and facilities developed by Verenium.

“This agreement should give both companies the flexibility to pursue the growth opportunities in the respective businesses and achieve goals in the near-term,” said Verenium’s president and CEO Carlos A. Riva. ” As a result of this transaction, Verenium will have the resources to grow our commercial enzyme business while maintaining strategic access to the emerging cellulosic ethanol market in a manner that better fits our resources.”

Under the terms of the agreement, BP will acquire Verenium’s Jennings, Louisiana facilities, including a pilot plant and demonstration scale facility; Verenium’s research and development facilities in San Diego; cellulosic biofuels technology and related intellectual property; and Verenium’s cellulosic enzyme technology and related intellectual property. BP will also retain scientists and technology experts necessary to move the projects forward.

Verenium, which is based in Cambridge, Mass., will retain its core commercial enzyme business, the ability to access select biofuels products developed by BP using the technology BP acquired, the ability to transition out of its San Diego R&D facility over the next two years, $98.3 million in cash, and an additional $10.8 million in cash to be released upon assigning the lease of Verenium’s R&D facility to BP.

BP will become the sole investor in Vercipia Biofuels, a 50-50 joint venture formed by BP and Verenium in February 2009, and will independently manage all of Vercipia’s activities going forward. Similarly, Galaxy Biofuels, a 50-50 joint development company owned by BP and Verenium, will be owned 100% by BP.

The transaction is expected to close in the third quarter of 2010.

Keryx Biopharmaceuticals, Inc. (KERX) – Hot Buzz Stock of the Day

Wednesday, July 14th, 2010

Shares of Keryx Biopharmaceuticals, Inc. (Nasdaq: KERX) climbed as much as 17 percent in morning trading Wednesday after the after the company announced its experimental childhood cancer drug, KRX-0401 (perifosine), had received Orphan Drug designation from U.S. Food and Drug Administration (FDA).

Commenting on receiving Orphan Drug designation, Ron Bentsur, Chief Executive Officer of Keryx stated, “We are currently exploring next steps for the development of perifosine in this indication which we hope, ultimately, could provide a new treatment option for children and infants suffering with neuroblastoma.

The FDA grants Orphan Drug status to new drugs that treat a rare disease afflicting fewer than 200,000 patients in the U.S. The benefits of Orphan Drug designation include seven-year marketing exclusivity if the drug is the first of its kind approved, tax credits for clinical research costs, the ability to apply for annual grant funding, clinical research trial design assistance and waiver of Prescription Drug User Fee Act (PDUFA) filing fees.

KRX-0401 is being developed for the treatment of neuroblastoma, a cancer of the nervous system affecting mostly children and infants. Although it is a rare form of cancer, neuroblastoma accounts for approximately 7 percent of all cancer deaths among children.


Clinical Phase 1 data was presented last month in the pediatric solid tumor poster discussion session held at the 46th Annual Meeting of the American Society of Clinical Oncology (ASCO). Investigators from the Memorial Sloan-Kettering Cancer Center concluded that perifosine was demonstrated to be safe and well tolerated in children with advanced solid tumors and that perifosine may have antitumor clinical activity as a single agent in neuroblastoma.

Additionally, the Nationaly Cancer Institute recently published a preclinical study that found perifosine showed a statistically significant reduction in neuroblastoma cell survival, slowed or regressed tumor growth, and increased survival in mice bearing neuroblastoma tumors.