Wednesday, July 31, 2013

Stocks DD Cites: FDA's love letter to Spectrum Pharma on Zevalin


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FDA sends this letter dated 07/23 to Spectrum pharma on Zevalin marketing practices  ->Full Letter here Link  

Mr. Anil Hiteshi, RAC, 
Vice President, Global Regulatory Affairs 
Spectrum Pharmaceuticals 
157 Technology Drive 
Irvine, CA 92618 
RE: BLA #125019 
ZEVALIN® (ibritumomab tiuxetan) Injection for Intravenous Use 
MA #195 

Dear Mr. Hiteshi: 

As part of its routine monitoring and surveillance program, the Office of Prescription Drug 
Promotion (OPDP), of the U.S. Food and Drug Administration (FDA) has reviewed a 
professional sales aid (0103058300) (sales aid) for ZEVALIN®
 (ibritumomab tiuxetan) Injection for Intravenous Use (Zevalin) submitted by Spectrum Pharmaceuticals, Inc. (Spectrum) under cover of Form FDA 2253. This sales aid is false or misleading because it minimizes important risk information, overstates the efficacy of Zevalin, and omits material facts. Thus, the sales aid misbrands Zevalin in violation of the Federal Food, Drug, and Cosmetic Act (the FD&C Act), 21 U.S.C. 352(a) & 321(n), and implementing regulation 21 CFR 1.21(a). Cf. 21 CFR 202.1(e)(5)(i), (iii); (e)(6)(i), (x), (xviii).

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Saturday, July 27, 2013

Stocks DD Opines on MNTA: MNTA/Mylan wins Copaxone patent suit but we're not impressed with MNTA's value proposition


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This friday Momenta/Mylan won the generic Copaxone patent litigation suit, effectively allowing them to launch copaxone in May 2014, assuming FDA approval of their ANDA's -> Link

While we think this is positive for Momenta considering that Copaxone profit sharing agreement with Sandoz stays at 50% despite new generic competition(unlike Lovenox sharing), investors should weigh in the following facts. 

  1. The declining market share of Copaxone due to newer, more efficacious products including Tecfidera. We think the decline could be precipitous in the coming years as the new orals take foothold.  "The medical community considers Tecfidera effective and safe, on the basis of the clinical trials conducted in the past few years. It reduces attacks by 49 percent (compared with 20-30 percent for Copaxone), and its side effects are not severe."
  2. Prospect of generic competition including Mylan. Please remember it was shocking to see Momenta's characterization patents did NOT hold in the lovenox case and Amphastar launched its product. Momenta went all the way to the supreme court  in this case.  The safe harbor provisions allowed Amphastar to copy processes in Momenta's lovenox characterization even during commercial manufacturing. This judgment , in our opinion, was pivotal to Momenta's valuation and quashed Momenta's perceived competitive advantage as a generic maker of complex products with IP to block further generic competition. While momenta spends years and millions of R&D dollars to get its 2 minutes of fame as being the First generic by making remarkable strides in characterization for complex molecules, in some sense, shareholders of Momenta are subsidizing the approval path for the  future generic competitors that piggyback on MNTA's characterization technology/process (thanks to the supreme court verdict) that is largely put on public domain by FDA and get FDA approval subsequently in a few months/years. So we are inclined to speculate, that at best, Mylan could be a year or two away behind Momenta in its ANDA approval and Momenta could enjoy sole generic status for this very short period.
  3. Momenta for 2013 projected that its net cash usage will average approximately $20 to $24m/quarter. As of March 31st, 2013 had $324m in cash.
  4. Momenta's market cap is already $880m
  5. The 1st drug in the Biologics program is at least 5-7 years away from FDA approval. At this point we assign no meaningful value to this program.
So while we hail Momenta's pioneering characterization technology for complex generics, we believe it has so far not proven  a big competitive advantage, except to put Momenta ahead of generic competition by a few months/years. Hence, given that Momenta trades at $880m market cap, we are inclined to believe there is no significant upside to MNTA stock price.


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Thursday, July 25, 2013

Stocks DD Rebuts to Bronte's article


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Disclosure: I am neither short or long. I wrote this on my own.

Investing in Herbalife (Short or Long side) 
First of all, let me state I have no position (either long or short) in Herbalife. I think there are good reasons NOT to be on the either side considering the risks and the uncertainty on both sides. I would not be a long because of the legal risk or potential FTC action in the US. (I am not saying Herbalife is compliant or non-compliant. I am not a legal expert). Although it is important to note that the US is only 80% of Herbalife's business. 

Even if you truly believe FTC would eventually come down hard on Herbalife, I would not be short because of the trading risk. Nobody can predict the timing of regulatory investigation or action, if any. Also, nobody can predict in the short term where Herbalife would trade at and it is just risky to be on the short side. A bunch of rogue traders, momentum trading, follower-based investing, media coverage could feed onto itself and create a short squeeze. I am pretty sure this is Ackman's biggest nightmare today, if he has not already hedged his short position in some way or he has not covered. ( It is quite possible that Ackman may covered his position but is still lobbying for FTC action to protect his ego. We all have seen infamous (ego?) fight b/w Icahn and Ackman)  Existence of Amway business for decades, the international nature of Herbalife, does bolster's the longs thesis from a risk standpoint. However, one should undermine the power of Ackman.  A major legal precedent had to be set in General growth for Ackman's 10-bagger long thesis. And lo and behold that legal precedent was set and Ackman made >10 times his investment. 

Setting the Record Straight with Bronte's Capital's John
Bronte Capital's John wrote the following yesterday:

"One of the dumbest arguments I have heard (made insistently by StocksDD amongst others) is that the turnover in Herbalife customers/distributors is enormous and therefore Herbalife must be evil or at least burning the customers.
I would love to see the customer retention rate scatter amongst Herbalife distributors (my guess is the average is low and the spread is wide) and say Weight Watchers (probably with a similarly low average and wide scatter). The people I have met who are the most convincing Herbalife sales people have lost a lot of weight and kept it off for several years. These people are I expect the exception. Turnover and failure would be the norm."

The Rebuttal
First of all, I never said Herbalife is evil or that Herbalife does not meet the threshold of retail sales. I just asked Bronte a question the answer to which ONLY people can speculate. Why do a large %(90%?) of  distributors leave ?

Second, it is a complete red herring to try and correlate the secondary stock resales or resales in ebay/craigslist to the Product's genuine retail demand. Why ? I can give 10 different reasons. Let's start with these a few...

1. How many people will take the pains of stock reselling ? They may as well keep it and consume it until it lasts. 
2. Some may just trash it.
3. Some may just give it away to friends as gift or "sell" it for 20 cents to a dollar.

So, the billion dollar question still remains;
How many distributors sign up to primarily avail discount and are real consumers  ?

Here is a potential Solution for the Regulator: For every distributor that does NOT renew its membership a.k.a "failed distributor" (I have heard the churn rate here is >90%), the regulator should require a mandatory survey taken every single former distributor: So this is not a sampling which I believe was done by Liberman's research for Herbalife

The survey would go something like this:

A. What was your Primary intent to join MLM ?
1. To be Consumer and avail the discount.
2. To make Full time income (>30k or higher).
3. To make Supplemental income (1k-10k).
4. I was simply obligated to buy it because of a friend/relative. If I had a choice I would not have bought it. 

Depending on the answer to the 1st question, one of the 3 below groups of questions could be asked.

B. Primary Intent to join MLM: Consumer
1. Would you have joined MLM(paying annual fees and buying mandatory stock) to just get a discount but were NOT allowed to sell/distribute product ?

C. Primary Intent to join MLM: Full time income 
1. Are you quitting because you realized that you could never achieve the full time income that you expected to make when you joined ?
2. Were you misled to believe that you could achieve full time income ? Were you aware of the odds of first time distributor achieving full time income when you joined ?

D. Primary Intent to join MLM: Supplemental income
1. Are you quitting because you realized that you could never achieve the supplemental income that you expected to make when you joined ?
2. Were you misled to believe that you could achieve supplemental income ? Were you aware of the odds of first time distributor achieving supplemental income when you joined ?

By having real responses from real distributors that fail to sign up again, regulators could get an idea of the following:
1. Of the distributors that are leaving (remember the 90% churn rate), what % were bona fide consumers or bonafide retail demand ? So 'yes' to A1B1 and A4, implies he/she is a real consumer.
2. Of the distributors that are leaving, what % answered Yes to question C/D.1) (Real distributors) and No to question C/D.2) ( were sold unreasonable expectations of income by the MLM).

Regulators could set threshold % compliance limits for each MLM. For example, >50% have to be consumers and >25% could not have been sold unreasonable expectations of income.  In my opinion, when you have 10000's failed distributors taking these survey these statistics will not lie. You will ultimately know the reason for the demand. 

I would appreciate feedback from readers. 

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Monday, July 22, 2013

Stocks DD Comments on Bronte's post on Herbalife


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http://www.businessinsider.com/hempton-on-ackmans-herbalife-thesis-2013-7?pundits_only=0&comments_page=1#comment-51edb5ac69bedd264d000012

Pay close attention to comments (esp from yours truly)

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Tuesday, July 9, 2013

Stocks DD Opines on TARO - Seeking Alpha Article: A Serendipitous Event That Could Potentially Re-Value TARO's Shares In The Market


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Link -> http://seekingalpha.com/article/1539522-a-serendipitous-event-that-could-potentially-re-value-taro-s-shares

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