Agenus Call Luck, Alexion analysis

I had a bit of luck with my Agenus positive call earlier this week, but first a link to my article Seeking Alpha published yesterday:

Alexion's Rare Disease Model Analyzed

My article on Agenus might seem prescient:

Agenus: Herpes Competition And Cancer Checkpoint Prospects

You might even think my articles can move a small-cap stock. As I write Agenus is at $4.04 per share. I was near $3.12 when my article came out on the 11th around noon.

In fact Agenus and GlaxoSmithKline (GSK's) announced good data on GSK's shingles vaccine, on the 18th. Agenus contributed an adjuvant to the vaccine (which makes it work better), and is entitled to a milestone payment (amount not stated) and royalties when the vaccine is commercialized. Keep in mind that there is not yet regulatory approval and royalties for an adjuvant are not in the same magnitude as if GSK had licensed the entire vaccine from Agenus.

Still, this is Agenus's second time to have approvable results in a partnership with its QS-21 Stimulon. The other is also with GSK, for malaria.

Some of the vaccines using IP licensed from Agenus have failed. As can be expected, the price of Agenus stock goes down when a failure is announced, and up when good trial results come in. Given that today's vaccines are for diseases that are typically hard to vaccinate for (else they would have had working vaccines by the 1960's), any company working on a variety of vaccines is going to have some failures. Any success is a breakthrough.

The fact that Agenus now has 2 working vaccines provides proof of concept. Read my article to see just how broad Agenus's platform is.

I own shares of Agenus but not of GSK, though I think GSK is a good buy right now and reserve the right to buy it at any time.

On the downside Cyclacel (CYCC) announced its AML (acute myeloid leukemia) trial is unlikely to achieve statistically significant results. Nevertheless the trial will continue as there is little hope for these patients, Cyclacel's oral therapy is easy to administer and tolerate, and there is a small chance that while Sapacitabine may be no better than Dacogen in efficacy, patients may prefer it because it can be taken at home. I lost money on CYCC, but am holding onto my shares because Cyclacel also has a shot at the easier-to-treat disease myelodysplastic syndrome.

Agenus and American Prosperity 3.0

I originally heard about a company called Agenus (AGEN) from a Seeking Alpha article. It seemed interesting, but I had doubts about its vaccine program for cancers and infectious diseases. But after a while I thought its market capitalization was low compared to its chances of success. I bought a small amount in October 2013, and have added to it sense then. It is a risky small cap stock, so although I think it might turn into a large cap stock somewhere down the road, I keep it to a small percent of my portfolio. I own shares in a number of small, risky biotechnology companies.

Here's my latest Seeking Alpha article: Agenus Herpes Competition and Cancer Checkpoint Prospects.

On a more humorous note you could try my one-page history of the American economy, American Prosperity 3.0.

Intel thoughts

Newest Seeking Alpha Article:

Intel Expiring or Renewing with Mobile and Cloud?

See my other: notes and posts on Intel

Note my worst performing stock that I nevertheless still have in my portfolio is Intel sort-of competitor AMD. My other AMD notes and posts.

The argument about Intel, AMD, Nvidia, and the various ARM chip makers will go on ad-infinitum. Want to get some hits on Seeking Alpha, write about something the techno investors feel they know enough to argue about. Is my opinion special? No, not really. But I already knew how to program when Intel introduced its first CPU ship in 1971. I have seen the demise of many companies, and I have seen IBM survive, to my surprise (my first computer was an IBM mainframe at university).

I don't give financial advice, but my own holdings have shifted from being mostly computer technology to mostly biotechnology over the past 10 years. And that worked out better than any one particular computer stock has for me.

I don't own Intel (INTC), but if I did I would likely hold it for the dividend and any ongoing upside to its general business.

Celgene analysis and Biogen Idec Alheimers therapy

My latest analysis of Celgene (CELG) is at Seeking Alpha:

Celgene Stock Price: Is It Bubbly?

Biogen Idec (BIIB) announced today it plans a Phase III trial for an Alzheimer's Disease (AD) therapy. I just recently wrote in Biogen Idec, PML Deaths, And Hemophilia Therapies that I was not counting any of its Alheimer's pipeline in my valuation, which was basically positive. And I'm still not.

The interim data on BIIB037, an anti-amyloid beta MAB (antibody), Phase 1b randomized, blinded, dose-escalated study, for early-stage AD, showed safety and the removal of beta amyloid from the brain. Also patients were tested for cognition and nerve function. Removal of amyloid corresponded with dose size and time of treatment. At 54 weeks the effects on cog were positive and statistically significant. The study is not even done yet.

Biogen is planning a Phase III trial, but that would be dependent on finishing the trial and permission from the FDA.

I hope this will turn out to be true and Alzheimer's patients will at last have a therapy that works, if administered early enough. However, I have seen false positive signals before, followed by failures in Phase II and Phase III trials. Some scientists question the correlation of amyloid deposits to mental deterioration. Cognitive trials tend to be subjective, even if double blinded.

I believe it is too early to get excited, but of course I will take a close look at the full data when it is published.

And, as I said in my article, if this therapy helps or prevents progression in Alzheimer's patients, the revenue and profits from it would likely eclipse anything we have seen in pharmaceutical history.

Disclosure: I own stock in both BIIB and CELG.

Mylan shows its stuff.

First, I hope everyone has much to give thanks for this Thanksgiving.

I would like to point out that Mylan (MYL) made a new 52-week high today.

My Mylan: Deeply Undervalued On Unwarranted Approval Concerns was published by Seeking Alpha on August 27, 2014. Before I had submitted the article, on August 25, 2014, Mylan closed at $48.30.

I am writing before the close today, right now Mylan is at $58.80, after hitting $59.12 earlier in the day. That is not a bad return on about 3 months of not working.

Things can go wrong, we are still waiting for permission to sell generic Copaxone, but I still believe the most likely path if for Mylan to be at about $100 per share by the end of 2015.

I own shares in Mylan as well as a number of other medicine companies. This article constitutes journalism and shameless self promotion, not financial advice. Be sure to read all my posts here and Seeking Alpha articles, but keep in mind I make mistakes sometimes, so think for yourself.

Biogen Idec; Hansen Medical

I realized my expertise in Biogen Idec (BIIB) had gotten out-of-date, spent a day doing research, and wrote it up. It was published at Seeking Alpha yesterday:

Biogen Idec, PML Deaths, and Hemophilia Therapies

Writing a summary article about a large biotechnology company presents some difficulties. This article was longer than most people will read. Yet I had to be very selective about the current drugs and pipeline that I covered in any detail. There always has to be room to discuss whether the stock is at an attractive price, given the likely future path of earnings.

Checking my records, I originally bought BIIB for $61.57 on 2/6/2008, when I was first beginning to shift my attention from information technology to biotechnology. I accumulated BIIB for a while, but in 2012 sold half my holdings at $137.19, thinking the P/E had gotten too high. As you know, despite fluctuations, the general trend has tended up. As I write it is trading at $301.56. I think Biogen is again attractively priced, but it is already about 6% of my holdings, so I am just watching for now.

Hansen Medical (HNSN) is an entirely different matter. I bought some today at $0.80 per share, which is about as low as it has ever been. I have owned some since 2009, but sold some for $2.35 earlier this year. For perhaps a variety of reasons Hansen just can't seem to actually sell very many of their robotic catheter surgical machines. They keep announcing new procedures the machines can do, in particular the Magellan machine designed for peripheral vascular procedures. Today they announced the first successful use of Magellan in the U.S. to do a prostatic artery embolization procedure for Benign Prostatic Hyperplasia. Which translates to a safe and effective procedure to treat enlarged prostate glands, which affect about 75% of men by the time they reach 80 years of age. It could be big, but of course it competes with other types of surgery as well as with drugs as treatment options.

That said, if past sales of Hansen surgical robots is an indicator, even $0.80 is not cheap. But there have been lots of field tests of Magellan, so maybe Q4 will surprise us with more than token sales.

Recent Trades: Gilead and Dot Hill

In the interest of transparency, since I am a financial journalist, I note that I made the following trades recently:

Dot Hill (HILL). I sold a small amount of HILL because it exceeded my usual 10% limit on share of portfolio. It sold for $4.57 on November 14, 2014. I had bought these particular shares on December 4, 2009 for $1.78 per share. I note that Dot Hill provided strong guidance for Q4 2014 and hinted that 2015 quarters should be closer to the Q4 run rate than was typical in the past. I am bullish on Dot Hill, but note it has missed guidance for various reasons in the past. See my Dot Hill Q3 Analyst Summary.

Gilead Sciences (GILD). Even though Gilead now takes up about 15% of my portfolio, I bought more this morning for $100.62 per share. I believe 2015 earnings will be in the vicinity of $10 per share. I believe the reason the price of the shares is so low is that institutional investors owned most of the shares, and as the price rose they had to start shedding shares to keep within their own portfolio limit rules. I believe competition for cures for Hepatitis C will be weak, and that public pressure will force insurers and the government to stop rationing Harvoni. Hepatitis C is infectious; it is bad health policy to not cure as many people as possible as early as possible in their disease course. See my Gilead Q3 analyst summary.

My buys and sells should not be construed as financial advise. I am just sharing my opinions with other writers and investors.

Celgene and Agenus

Just some catch-up notes. I have spent most of my time lately looking at quarter results and listening to analyst conferences. Next week that finally lets up and I should be able to start doing some analysis. The articles will appear at Seeking Alpha, or if rejected there, at this blog.

Recent trades:

Just two. I sold a small amount of Celgene (CELG) to bring it back within my portfolio rules limiting each stock to 10% of my tiny portfolio. I had bought these shares for $52.40 on 1/28/2011 and sold them for $102.21 on 10/24/2014.

I added a small amount of Agenus (AGEN) on 11/3/2014. Agenus has a lot of potential in immuno-oncology, including checkpoint modulators, that is not reflected in its market capitalization. But it is also a very risky stock, with only one near-term approval likely, and that probably not a big revenue generator because it is just one component licensed for a malaria vaccine.

You can see a list of stocks I own at the Openicon portfolio page.

Notes on recent Analyst Conferences:

Amgen
Gilead
Vertex
TTM Technologies
SGI
Akamai
Seattle Genetics
Mylan
Microchip
Agenus
Regeneron
Adept Technology

Disclosure: In addition to Celgene and Agenus, I own Amgen, Gilead, TTM, Mylan, and Microchip. I reserve the right to buy or sell any stock listed on this page at any time. [As opposed to when I write articles, in which case I do forgo the right to trade for a couple of days in the stocks analyzed].

Amgen reminder

Just a wee reminder that this column (and my Seeking Alpha columns) can make you money:

Amgen is around $155 as I write.

When I wrote Amgen (AMGN) Initial Buy on March 24, 2014, Amgen was at $121.28

When I wrote Amgen with Onyx Pharmaceuticals: Long Term Analysis September 4, 2013 Amgen was at $113.02.

And Amgen was under $100 before March 28, 2013.

Just as with small cap stocks, even with large cap stocks there can be reasons they get ignored by investors, providing an opportunity to make better-than-index returns if you do your homework and analysis right.

But be careful. While I have done really well with the stocks I own (on a % basis), that is despite occasionally making wrong calls. For instance, AMD and DNDN were risky bets that went awry for me this year.

I own Amgen and AMD stock today. I no longer own DNDN.

You can see all my stock notes & analysis starting at http://www.openicon/confsums/listcos.html

Illumina spectacular EPS growth

My analysis of Illumina was published today by Seeking Alpha:

Illumina Sequences Profits

Non-GAAP diluted EPS was $0.77, up 71% y/y.

But buy in at this point? Not my cup of tea. Congratulations to those who already owned ILMN.

You can see all my Illumina notes here.

It is a busy day for me, as is tomorrow. It probably won't be until at least Friday that I can write up an analysis of Intuitive Surgical (ISRG) and Biogen Idec (BIIB). They have something in common, aside from being biotechnology companies: they left an important detail out of their press release. Which is why it is important to listen to analyst conferences and read SEC documents.

Intuitive Surgical had to withdraw its surgical stapler from the market. They gave no details except that there were 3 incidents that led to the stop, and that they are being very conservative in their approach to the issue.

Biogen Idec announced its first Tecfidera (multiple sclerosis therapy) death from PML. This recalls the time in the past when the first deaths associated with Tysabri caused a train wreck. I first bought BIIB at that time, and am glad I did. But is this a buying opportunity? It isn't the same level of train wreck. Watch here or at Seeking Alpha for my analysis.

Tomorrow I am covering quarter reports and analyst conferences by Celgene, Alexion, and Altera. A complete list of the stocks I cover, with links to my notes, is at Openicon.

AMD woes and wishes

I had an article published at Seeking Alpha about AMD's third quarter results and prospects:

AMD Seasonality Does Not Imply Failure

You can also see my notes on the Thursday, October 16 AMD analyst conference

AMD remains problematic. The company is the only competitor to Intel and Nvidia, and so keeps them from overcharging consumers. But the benefits to AMD investors have been non-existent for years. I own AMD stock, but it has been a serious drag on my portfolio.

One interesting thing about writing for Seeking Alpha is that AMD is the subject of intense interest there. This has to be because the online community recognizes AMD as one of the two PC CPU makers. So far (5 PM Pacific Time) there are 31 comments on the article. My typical article, which would be far more valuable to investors, gets just 3 to 5 comments. The first commenter is Ashraf Eassa, who I first saw as a Seeking Alpha writer, who had long pushed Intel and bashed AMD, and who graduated (if you can call it that) to be a regular columnist for Motley Fool. All I am saying is, based on a limited sample, that there is no correspondence between the number of comments at Seeking Alpha and the performance of the stock commented on.

This week and next week I will be covering mostly biotechnology stocks. Illumina reported record results yesterday, Intuitive Surgical reported earlier today, tomorrow morning Biogen Idec reports.

Xilinx Strong EPS growth despite weak revenue growth

So here is the article I wrote for Seeking Alpha:

Xilinx EPS up 27% y/y, But What About the Future? [October 19, 2014 at Seeking Alpha]

Altera (ALTR) will report on Thursday, which should throw some further light on the picture.

You can read my summaries of Xilinx (XLNX) and Altera analyst conferences and quarter reports by following these links:

Xilinx analyst conferences

Altera analyst conferences

These two companies are rivals in the PLD and FPGA semiconductor chip markets.

Microchip Tanks on Preliminary Q3 2014 results

Microchip issued a press release today:

MICROCHIP TECHNOLOGY ANNOUNCES PRELIMINARY NET SALES FOR SECOND QUARTER FISCAL 2015

It is not pretty, but I believe the market over-reacted.

First, second quarter fiscal 2015 for Microchip ended September 30, so it is Q3 2014 for the rest of us.

Second, it was a bad quarter only in respect to prior guidance. Microchip has been on a tear this year, and guided to $560.0 million to $575.9 million for revenue.

The preliminary revenue estimate  $546.2 million, which is well below the low end of guidance. But it is up from $492.7 million year-earlier. That is a nearly 11% y/y increase. Part of that increase is from the ISSC acquisition, but even excluding ISSC revenue is $529.3 million, which is up over 7% y/y.

What does it mean? Does this bode ill for the future?

Of course it is hard to say. Microsoft sells microcontrollers and analog chips to a very large number of customers. On a regional basis the demand was worst, compared to expectations, in China. Is there a problem in the Chinese domestic market, or a problem with end demand in Europe or the United States? Or are manufacturers just being cautious? For now, I am leaning to the just being cautious camp, because I believe Europe and China will rebound sooner rather than later. But I could be wrong.

I may even be more optimistic than Steve Sanhi, Microchip's CEO, who stated "We
believe that another industry correction has begun and that this correction will be seen more broadly across the industry in the near future.”

Rather, my guess is any problems are device specific. End markets for microcontrollers include automobiles, medical and industrial equipment. Maybe the sanctions against Russia a backfiring to hit U.S. investors.

After closing yesterday at $45.54, Microchip dropped as low as $39.02 today, but as I write it has recovered to $40.57. Microchip is a strong cash generator and pays a dividend that amounts to over 3.1% at the price I just quoted. It last paid the dividend on September 4.

Microchip has a trailing P/E ratio of 24.7, which is quite reasonable even taking into account the newly announced, slower annual growth rate.

I don't like it when a stock I own goes down, or misses guidance, but Microchip has a great long-term track record, so I see no point to selling my holdings. It will be interesting to see if the bulk of the semiconductor industry is seeing the same pain, or if it is specific to Microchip. It is very possible that demand in Q4 will make up for any slack in demand in Q3.

Bought more AMD

Just to note that I bought more AMD. I bought the same number of share I sold on 7/16 for $4.72 for $3.23. AMD reports on the 16th and I'll report on that at www.openicon.com/confsums/amd_main.html.

I believe AMD is a risky stock, but that sales of chips for Xbox and PlayStation should keep it going until its new lines of chips for servers becomes available in 2015. On the downside recently AMD is lowering prices on its graphics card chips (during the crucial holiday season) due to a new cycle of competition from Nvidia, which will likely continue until AMD releases its next round of graphics chips.

AMD represents roughly 3% of my tiny portfolio today. My largest holding is Gilead Sciences (GILD), which has broken my portfolio rules and now is about 15% of my portfolio, but I am holding it anyway in anticipation of  rapid further appreciation.

Cantel Medical fiscal Q4 results

This morning Cantel Medical (CMN) reported fiscal q4 results (quarter ended July 31). Revenue set a record and EPS was good if you account for acquisition related charges. I was going to write an article for Seeking Alpha, but last night and this morning my older (6.5 years) computer started acting up. So I am spending the day changing over to an AMD A10 based computer I built that runs Windows 8.1. Also, I have been running software even more ancient than my computer, and I have to do major upgrades. Those come over my slow rural Internet connection. So ... best get on with it.

See my notes on the Cantel Medical Q4 2014 analyst conference

Bought Opexa, Merrimack

This is just to note that I added to my Opexa Therapeutics (OPXA) position yesterday because the stock price plunged after it withdrew an attempt to raise cash by selling shares. Clearly Opexa is a long way from FDA approval, but my guess is that cash will be found, so if clinical results remain positive some day, years from now, I'll wish I had bought more at this price. On the other hand it still represents far less than 1% of my portfolio, which is appropriate for such a risky stock.

I was researching Seattle Genetics (SGEN) and Merrimack Pharmaceuticals (MACK) to add to my coverage at http://www.openicon.com and to write about for Seeking Alpha. Look for articles, maybe, next week. I went ahead and bought a small position in MACK. Wish I had bought it a year ago! Since SGEN seems to have prices in a lot of pipeline success, I'll probably just add it to my watch list for now.

I'm a bit cash constrained. If Gilead (GILD) continues to rise I will at some point sell some to generate cash to diversify into smaller biotechnology stocks. Or maybe I'll buy myself a box of cigars and pretend that I am finally a Capitalist instead of a Worker.

I like Cyclacel (CYCC), and think it is vastly undervalued, but few people agree with me. Yet.

Sources of Randomness in Stock Prices

When we follow an individual stock, or a stock market average like the Dow or Nasdaq 100, most of the time most of what we see is random movements. At one extreme the entire market can be seen as random, as espoused in A Random Walk Down Wall Street and elsewhere.

As an approximation that might be true, and so it may not be a bad suggestion that anyone who wants to participate in stocks, but does not want to be hassled by doing their own research and analysis, should just invest in index funds.

Of course we know the real world of corporate profits is not just random. Apple's stock rise is not just the result of randomness, nor is Blackberry's fall. You can make a fortune investing in the right companies when they are small and (hopefully) watching them grow.

Here I want to take a preliminary, non-scientific, look at some of the causes of "random" stock movements caused by buying and selling that are not driven by the anticipation or demonstration of increased or decreased earnings.

I began thinking about this back in the 1980's, when I was starting my own business while still working as a paralegal. I worked in a probate office, and this is what happened on an almost daily basis: stocks were sold. The stocks had typically been accumulated during a lifetime, then the owner had died, and then the estate was tied up in probate for a while. The "kids" -- often they were in their 60s -- had been waiting to inherit most of their lives. The moment it was legally possible the stocks were sold, converted to cash to be distributed.

It was rare to see anyone say, "hey, I'll sell all the stocks but Apple". Or "wait another month, the market is down today, we'll get more money if we wait a month." In fact that never happened that I recall.

So did your stock from $2 a share in an hour today? It could be bad news is circulating you have not heard about; it could be someone manipulating the price; or it could be that Wasp Savemoney, deceased, had a chunk of the company and it was dumped all at once.

Two seasonal times of selling stand out. College funds are also saved over a decade or more, only to be dissolved rather quickly starting with the first Freshman year tuition payment. When taxes are due, leading up to mid-April, so selling or failing to buy will be due to that.

When a house is bought, it may require cashing out stock to make the down. That, again, is timed to the escrow, not the ideal timing for maximizing stock value.

The financial news often accounts for stock market movements with bland terms like "profit taking." If selling is profit taking, is buying profit giving away?

A big factor in selling is portfolio limits. Wise investors do not allow themselves to become too concentrated in any particular stock. This is particularly true of professionally managed money. In my personal portfolio I am not supposed to have more than 10% in any one stock. In a large pension fund or mutual fund the percent might be 5% or even 2%.

So if a stock goes up enough, portfolio rules force managers to do some selling. They might think that the stock will continue to go up; they might have some power to make limited exemptions. But they are certainly not going to buy more of the stock, and at some point they must sell. For the manager this is not random, it is causal, but it appears random to the rest of the market.

If, like me, you manage your own investment portfolio, you want to know what is really going on. Mostly this is at the company level. You want to know factors contributing to next quarter's or next year's or next decade's profits.

But it is oh so much easier to while away the hours watching prices move. Perhaps even trying to outguess the other guessers.

Just keep in mind that people die on a daily basis, and some of them have substantial portfolios, and those almost always get sold and converted to cash. A bad flu sweeping through the more elegant nursing homes in December can cause the market to sink one day the following year.

To see a list of stocks I write about go here: William Meyers stock reports

To pick a stock randomly try my Random Stock Picker

Dot Hill Inflection Point Coming?

My newest Seeking Alpha article:

Dot Hill Nears Inflection Point

I have been invested in Dot Hill since 2004; the company has had some major ups and downs in that time. My first buy was at $7.18, and yesterday HILL closed at $3.84 and is down so far today. So you might think it has been one of my worst investments (if you don't follow me, I am known for being an early advocate for the Gilead, Celgene, Biogen triad that has been so successful since 2008).

In fact HILL has been one of my best investments. While my basic strategy is long term, buy and hold, I do sell stocks, or portions of my positions in them, when I think the market has become over-enthusiastic. And I  try to accumulate when the market is overly pessimistic. And I pay close attention: you can view a decade of my Dot Hill notes if you want.

Dot Hill is now, as a % of my investment, the third largest stock in my portfolio (after GILD and CELG). This is not just a bet on the future, it is a result of investing in HILL in the past, typically at $2 to $3 per share, but for instance I bought shares on 6/11/2012 at $1.13 per share. Others must have done better, because I recall HILL dipping under $1 briefly once or twice.

Of course I could be wrong, Dot Hill might not hit an inflection point, it might run into another rough spot. Competition is fierce in the data storage industry.

But what is interesting about opportunities like this is that so few people monitor these stocks. Not many professional analysts, not many individual investors. Of course there are thousands of micro cap and small cap stocks out there; who has the time to look at them all? I encountered HILL when I was researching another data storage stock for an investor, using it as a comparison to the company he ended buying into.

Data storage is pretty unglamorous, and since Dot Hill does not make consumer products, and most of its sales are through OEMs that rebrand the products, it has almost no name recognition.

And because Seeking Alpha pays contributors on a per-view basis, I seldom write about it. An article on a better-known stock takes about the same time to write, but can pay 2 to 10 times as much as an article on Dot Hill, or other micro caps I have in my portfolio or follow.

GlaxoSmithKline (GSK) and Gilead (GILD)

I remain optimistic about the stocks I invest in. I don't think the stock market is in a bubble, though a few select stocks are, but there are always a few stocks that are highly overvalued at any given time.

My article in Seeking Alpha, published today, is positive about both stocks:

Could GlaxoSmithKline Be A Better Investment than Gilead?

It does feel peculiar that Gilead Sciences has become such a large company in the past decade. But I can only think of one reason that Gilead is not already at $120 or even $140 per share: the vast amount of cash that would need to be invested to get it there. Rather than being in a bubble, in fact investors are rather restrained when it comes to the stock market. Despite federal bonds returning less than the rate of inflation, that is where the stupid money is. Stupid pension money, stupid 401k money. The foreign money in bonds may not be so stupid, given that some national bonds, for instance Germany's, return even lower rates.

Of course, if for some reason the U.S. economy should turn south later this year (perhaps a meteor will strike New York or Washington), markets will fall, and the doomsday specialists will say "I told you so."

I do believe the Federal debt is an overhang that will become an avalanche someday if taxes are not raised, and the earth's environment is in trouble, but those are long-term, not near-term problems for investors.

I currently own Gilead, but not GSK. Gilead is already over 10% of my portfolio, so I may sell some at any time, but my hope is to wait until it is at least $120 per share, and then sell as little as needed to bring it back in line with my portfolio guidelines.

Mylan, Adept Technology updates

I have a new article at Seeking Alpha on generic drug manufacturer Mylan (MYL):

Mylan: Deeply Undervalued On Unwarranted Approval Concerns

I began following Mylan in earnest in Q2 of 2013. I first bought some Mylan on March 20, 2014. I expect Mylan to double by the end of 2015 (expect in the sense of the center of the probability curve. Results can vary).

This is a (thankfully) slow week, but on Monday Adept Technology (ADEP) reported disappointing results. My summary is Adept Technology Q2 2014 analyst conference notes. I would like to see this robotics company grow and reward investors, but I think it is overpriced at the moment. I first bought in November of 2012 for $3.95 when it was in an even worse situation than it is now. I bought it for as low as $2.94, but when it started to grow sales again some brokerages started hyping it and I sold for as high as $17.10, which was not even as high as it went before it plunged back down to reality, which today was $8.75 per share.

At $8.75 per share market cap is $114.6 million. But annualized revenue is only in the vicinity of $60 million, and ADEP remains in the red, though close to break even. If revenues double and profits ramp the $8.75 would be justified. Adept has a good, diverse robot product line, including robots for warehouse work, so it could happen. I'll continue to report on it, but to buy back in I would need to see a lower stock price or a quarter with over $18 million in revenue with some sort of guidance to a sequentially higher quarter.

Inovio, Dendreon, and Mylan

I made two trades this week. I sold Dendreon (DNDN) and bought Mylan (MYL).

Before explaining the trades, I'd like to direct you to my newest Seeking Alpha article, just published:

Will Inovio's Deal With Roche Lead To A Cancer Blockbuster?

The article includes some data from Dendreon, as the target disease is now castrate-resistant prostate cancer. Since Roche is paying for the trials and also paying Inovio milestone payments, the risk is not very high for Inovio (INO), though the payoff will also be less if the therapy ever reaches commercialization, just a royalty. I own Inovio stock.

Dendreon? What can I say? I first bought Dendreon stock in 2005. I made a good return when it ran up to bubble levels, and sold most but not all of it at a great profit in 2010. I started accumulating it again in 2011. I sold all my stock for a paltry $1.40 a share on Tuesday. Wish I had sold on Monday. So what happened?

Rather than following the normal course of issuing a press release giving the date Q2 results would be reported, along with the time of the analyst conference, Dendreon simply issued a 10-Q to the SEC late on Monday. They did not even issue a press release saying they issued a 10-Q. So naturally everyone went and looked at the 10-Q as soon as they found out. With a suspicious eye.

In many ways Q2 2014 was Dendreon's best quarter ever. But even with an insurance refund, improved Provenge sales, and further cost reductions, they lost money in the quarter.

Dendreon owes about $600 million due in 2016. They warned that saving the company likely means the note holders will get the company, leaving the stockholders out in the cold. They apparently have lost faith that even with the addition of European sales in 2015 that the company can generate enough cash to convince someone to refinance the loan.

Well, it happens sometimes. That is why corporate bonds are safer than stock. But the bondholders may find that they have a black hole to manage, not a profit stream. On the other hand, a merger, or better than expected cash flow between now and 2016, could save the stockholders. I sold because I had better use for even the pittance I got at $1.40 per share.

So what did I do with the cash? I thought about sitting on it, and all the companies that I find attractive, both in my portfolio and out. I bought more Mylan (MYL), a generic drug maker. My best guess is Mylan's stock price will double by the end of 2015, but as Dendreon shows, I could be wrong.

Meanwhile, I cheer myself up with some stocks I remain right about: Gilead, Celgene, Amgen, Biogen, and Applied Materials.

More than ever:

Keep Diversified!

Dot Hill, Nvidia analyst conferences

"For every sad fly, there is a happy spider"

Two interesting things happened this week near me.

Dot Hill (HILL) barely met prior guidance for Q2, and investors were hoping a slew of new customers for Dot Hill's advanced storage systems would bring in results well above guidance. The stock took a major hit following the Thursday morning Dot Hill results release and analyst conference (my notes).

The main issue in the quarter was a particular customer, typically Dot Hill's second largest, bought fairly little in the quarter. This customer services large datacenter installations, and revenue variance each quarter is significant. Dot Hill believes the customers orders will resume.

In addition, July bookings have been strong, and 4 customers are likely to release major new Dot Hill based storage systems before the end of the year. Q2 was back-end loaded, so a fair amount of product went out at the end of the quarter that will book revenue in Q3.

So what did I do? I bought more HILL yesterday, basically buying back the shares I sold in March for $5.88 per share for just $3.51. Most of my shares I bought long ago for between $1 and $2 per share.

Of course Dot Hill management could be wrong, revenue and profits might not ramp in Q3 and Q4 and on into 2015. But I think it is likely they will, and Dot Hill will be far more valuable by mid 2015 than it is today. However, keep in mind that Dot Hill has disappointed in the past. Being a small-cap data storage provider is a difficult business.

The Nvidia Q2 conference seemed like it would provide no surprises until, near the end, an analyst asked about the bitcoin computing phenomena that had raised rival AMD's results in Q4 and Q1, but then hurt them when demand dropped off in Q2.

CEO Jen-Hsun Huang said why Nvidia GPU's were typically not used for bitcoin mining, or cryptocurrency in general. AMD's GPUs provide more performance per dollar. Mr. Huang argued extensively earlier in the conference (and in prior conferences) that because of its installed base and superior software, Nvidia GeForce GPU's are gamers' favorites. Maybe so, but it appears to be a well known fact in the computational community that if you want a lot of computation for your buck you want to go with AMD. The reality is that certain workloads do better with Nvidia's architecture, and certain workloads do better with AMD. I see this all the time, even within games, with some games getting better benchmarks with AMD, others doing better with Nvidia, assuming the same pricing range.

Vertex, Alexion, Gilead, Dot Hill and Mylan

And another story published at Seeking Alpha:

Vertex Price and Prospects Compared to Alexion

In addition to Vertex Pharmaceuticals (VRTX) and Alexion (ALXN), I discuss the controversy over Gilead's (GILD) pricing of its Hepatitis C cures. Vertex and Alexion are far more sensitive to the pricing issue than Gilead. However, Gilead already is overweight in my portfolio. I continue to consider Alexion and Vertex among my top choices if I add another stock to my list.

Mylan (MYL) and Dot Hill (HILL) both reported Q2 results and held analyst conferences this morning. Both disappointed the market. I remain long on both. Dot Hill in particular looks ready to ramp revenue nicely in the second half, but fell prey to traders who time horizon ranges from a microsecond to a few days.

My notes on today's conferences:

Dot Hill Analyst Conference & Results

Mylan Analyst Conference & Results

Microchip (MCHP) sales ramp explained; Regeneron quick look

I have a new article at Seeking Alpha:

How Microchip Ramped Earnings With 8-Bit Devices

Another reason Microchip (MCHP) may be undervalued is the strength of its recent acquisitions. Unlike some companies, Microchip seems to be able to pay reasonable prices to acquire smaller semiconductor companies, and then both ramps their sales and increases margins. It also may incorporate technology from the acquisitions into SoC devices (System on Chip).

I have owned Microchip continuously since 2007. It pays a nice dividend and has increased nicely in price over the years.

This morning I listened to the Regeneron conference call. It looks like there is going to be a big profit ramp in the coming months from Eyelea, followed by the likely ramping of a new blockbuster for cholesterol control starting perhaps in the second half of 2015. There is more in the pipeline too. On the other hand the P/E ratio is high, so some pipeline success is figured in. I hope to write a more detailed report about Regeneron some day soon. REGN. I first bought REGN in June of this year. You can read my Regeneron Q2 2014 notes by following the link.

Regeneron, Dot Hill, Mylan and Nvidia to report this week

This is probably the last intense week of earnings season for me. I still have a bit of cash in my portfolio, and like to try to wait until the end of the season before deploying cash, or not, or even raising more by selling some stock.

First up Regeneron (REGN) Tuesday morning, the conference begins at 5:30 AM my (Pacific) time, so I might wait to listen to the recording. In any case my notes will eventually appear at Regeneron Q2 Analyst Conference Notes. I started a very small position in REGN in June, so this will be my first conference as a stockholder. I'll be looking to see how revenue is ramping, but most of the value is still in the pipeline, so any news on that will be of great interest.

I'll be listening to supercomputer manufacturer SGI on Wednesday, but I don't expect much from them. But you never know. If the stock is cheap enough and they show signs of improving, I would consider buying back in. My notes will be at SGI Q2 analyst conference.

Thursday is the busy day. Starting with Mylan (MYL) at 7:00 AM PT, notes at Mylan Q2 2014 analyst conference. Mylan is a generic drug maker. I'll be looking for a report on biosimilars, but mainly the question is how did overall revenue come in, and what were costs and resulting earnings. I think 5 years down the road I will be happy to have started a position this year, but I don't see where a short term pop could come from.

Dot Hill (HILL) is at 8:00 AM PT. This little-known company makes data storage equipment that is rebranded by an increasing number of storage companies. It is my largest small cap holding, so I am keenly interested. At this point it is mainly a question of how much their end customers ramp sales, which is hard to predict. The stock price did extremely well in 2013, and I think will be up again significantly by early 2015, but predicting quarter to quarter sales and profits and stock price is difficult. Dot HIll Q2 2014 analyst conference.

Nvidia is the only company in this lot that has a recognizable brand name. I don't own any NVDA but I have in the past. Nvidia has great graphics engineers and a plan to capitalize on graphics computing both on mobile devices and on the cloud computers that service them. I own stock in rivals AMD and Marvell (MRVL). I would certainly considering owning NVDA at some price point, and will be watching for its cloud computing progress in this normally seasonally slow fiscal quarter, which includes July. Nvidia Q2 2014 analyst conference.

Of course many more companies report this weak, and I enjoy getting other financial writer's reports, and hearing the opinions of others in the investment community. While I will read articles from any source, I generally find that Seeking Alpha, which I write for, is consistently more helpful to me than other sites. I also read the SEC documents of a company before investing; only fools don't.

Biogen Idec long-term estimate; Amgen thoughts

I had not written about Biogen Idec (BIIB) since this article in April 2013, in which I concluded Biogen still had not completed its ascent:

Biogen Idec: Too High Too Fast?

But after listening (and taking notes on) the Biogen Idec Analyst Call Q2 2014 I decided it was worth another look. While I generally like to think of myself as a long-term investor, I will cut back or even dump a stock if I think it has become way overpriced.

Seeking Alpha accepted my article, so you can read it there (per our agreement):

Can Biogen Idec Take Wing with Tecfidera?

Meanwhile, Amgen had a good report yesterday; you can read my summary Amgen Q2 2014 results. I used to watch Amgen a few years back and thought it had sagging sales and was overpriced compared to the stocks I chose to invest in (GILD, BIIB, CELG), but last fall I took another look. Amgen by then had developed a vast pipeline and was trading at a very low P/E compared to competitors. So I bought in during the biotechnology panic this spring. There are still issues with Amgen's aging drug portfolio, but it looks like several new drugs will get approved soon and the pipeline is very, very deep.

This week: Amgen, Vertex, Akamai ...

It's another heavy week of earnings reports for me.

First, some links to some of my summaries of analyst conferences held last week:

Celgene (CELG) reported strong earnings growth of 17% y/y on July 24. I am bullish on Celgene, given its potential to expand Revlimid revenue and its pipeline, but it is not cheap right now on a trailing earnings basis.

Alexion Pharmaceuticals (ALXN) had earnings up 56% y/y. I like Alexion's model, but again a lot of future earnings growth is already built into the present price.

Agenus (AGEN) is a small-cap, development-stage company focussed on immunology, including Check Point Modulators (CPMs). In the quarter Agenus reported good Phase 2 trial results and is looking to partner with larger companies to further develop these therapies. They already have a deal with Merck to create new CPMs, and one with GSK for a component for a malaria vaccine. Watch this company.

Altera (ALTR) had a good quarter with revenue up 17% from year earlier. I believe that FPGAs (Field Programmable Gate Arrays) will continue to outgrow the overall semiconductor market, but put my money on rival Xilinx. Should have bet on Altera first; my intention was to buy both, and I still probably will.

The most interesting reports coming up this week (links are to pages where you can review past analyst conferences, if you like, and also linked to placeholder pages you can bookmark to get my summaries after the conferences take place):

Vertex Pharmaceuticals (VRTX), as follows know, is my least favorite Nasdaq 100 biotechnology stock to invest in, not because they aren't doing wonders in their therapeutic field, but because the stock price builds in way to much success compared to other companies. But maybe Vertex will return to profitability some time this year.

Amgen (AMGN) is well-established biotechnology company. I'll be watching revenue and earnings, as well as pipeline development. At some point Amgen may run into generic "biosimilar" competition for some of its therapies. There will probably be some analyst questions about that, and I would like to here the answers.

Akamai (AKAM) accelerates the Internet. Again, a great company, but I would need a lower price point to convince me to buy back in.

Microchip (MCHP) is a semiconductor stock with a reliable dividend and continuing growth potential. It is a core of my portfolio, but I would not call it cheap at today's price.

I own CELG, AGEN, AMGN and MCHP, and reserve the right to sell them or buy more of any of them at any time.

I do not own ALXN, ALTR, AKAM, or VRTX, but reserve the right to buy them at any time, which would be highly dependent on pricing.

I am an investor, researcher and financial writer. The above express my opinion, and does not constitute financial advise.

Inovio, Biogen Idec, and Gilead Sciences

Inovio got some good data, and you can read my interpretation at Seeking Alpha:

Is Inovio Undervalues after Positive HPV Therapy Results?

I've been listening to results conferences for the stocks I either own or would like to own. Two somewhat related, at least being biotechnology stocks with disease therapies, are:

Gilead Sciences (GILD) Q2 analyst conference

Gilead had outstanding results, largely based on Sovaldi, a cure for Hepatitis C. I believe Gilead should be heading to $180 or so a share. I'm not sure whose selling at $90, maybe people who bought way back when at $5 and have to reallocate, but probably people with some hope that some other drug will knock out Sovaldi, a hope that will be crushed as we move through the quarters. Gilead is generating so much cash it can use for buy backs, fighting that tide is the height of folly.

Biogen Idec (BIIB) Q2 analyst conference

Biogen has been performing great and raised guidance. In this case the stock did go up substantially following the report. It is not a cheap stock, but if you look down the road, it is highly likely to keep up a rapid pace of profit growth for years to come.

Earnings Tuesday, Wednesday: ISRG, XLNX, BIIB, GILD, ILMN

For the stocks I follow this is a big week of earnings reports. Last week I just had AMD and Seagate (STX) report, and both disappointed by being at average public estimates of analysts.

Intuitive Surgical is first up, holding its analyst conference at 1:30 today. ISRG has been having trouble keeping up the prior pace of its surgical robot sales. But a miss today followed by a stock plunge would present a buying opportunity. ISRG used to have a sky-high P/E, but now it is reasonable, and in the long run I believe surgical robots remain promising.

Xilinx (XLNX) will report at 2:00 PM. Xilinx occupies an obscure but important part of the semiconductor industry. It will be interesting to see how demand was in Q2.

Tomorrow I will be covering Biogen Idec (BIIB) early in the morning. BIIB has been a big winner for me over the last decade. I have no particular expectations for tomorrow, but I will look for anything that might change my long-term model.

Gilead (GILD) is probably the most-followed stock that will report tomorrow, at 1:30 PM. Everyone wants to know how much Sovaldi was sold in the quarter. But watch the HIV, heart and cancer franchises too. I remain very bullish on Gilead in the long run, however any individual quarter sorts out.

And last on my list is Illumina (ILMN), the maker of DNA analysis machines. Again, it will be interesting to see how the quarter went, but that should not have much effect on the long run.

You can read my analyst conference summaries and find links to my articles at Seeking Alpha at the page listing the companies I cover at OpenIcon. Links above go the my pages for the individual companies.

Disclosure: at the time this article was written I owned AMD, XLNX, BIIB, and GILD stock. I did not own the other stocks mentioned, but I am always looking at a good price point to by stocks, and reserve the right to buy them at any time. I am an investor, financial researcher and writer, not a financial advisor, so nothing in this article should be construed as advice or anything other than an opinion.

I Exit Seagate (STX); stick with AMD

Just to note that I have sold my stock in Seagate (STX). I have not decided whether to continue coverage or not. While I think of myself as a long-term investor, I am looking to beat market indexes. Seagate was priced ridiculously low in 2012, for reasons I have explained in prior posts.

I believe Seagate has now become a dividend stock. It pays a good dividend, it has good cash flow, and it has a strong stock buy-back program. However, there are other stocks I think have better growth prospects that are not fully priced in.

I bought STX for $23.13 on 6/12/2012. I sold it in halves at $59.07 on 7/8/2014 and $59.82 on 7/18/2014.

I did my usual write-up of the June quarter (fiscal Q4) Seagate results and analyst conference.

In contrast, while I did sell 1/5 of my AMD on 7/16/2014 for $4.72 per share. I thought there was enough enthusiasm about AMD to cause almost any Q1 results to disappoint. But I still hold considerable AMD (as a % of my portfolio) because I believe it is making progress with its turn around. I believe AMD is a 2015 story, when it will start selling its new server chips, chips for gaming consoles in China, and the promised 1 or 2 major new customized SoC chips for confidential clients. For more see my AMD Q1 2014 results conference.

Of course I would be open to buying more AMD or STX if the prices fell low enough and my current expectations were unchanged.

Janet Yellen, Stock Picker; I buy more Protalix

Apparently Janet Yellen believes she can pick stocks. Or at least tell people to dump their "smaller" social Internet stocks and biotechnology companies.

So there was a sale today as the ever gullible dumped stocks they picked up when some other idiot told them to buy them in the past.

I am okay with my portfolio right now, particularly my healthcare and biotechnology stocks. I believe some of my companies like Gilead, Amgen, Biogen and Celgene will report increased earnings during the remainder of 2014 and beyond, so I don't ponder their daily volatility much.

I have a number of smaller positions in riskier companies that need good Phase III clinical results and then FDA approval to get their wares to market. I was tempted to buy more today, but ever-cautious, I only picked up one:

Protalix Biotherapeutics (PLX). I doubled my tiny amount of PLX, raising it to just above 1% of my portfolio.

One of my main criteria for picking up small, risky biotechs is that market capitalization indicates that success is not priced in, at least not too much.

If you want, you are welcome to look at my portfolio positions. In most cases there are links to my coverage (analyst conference summaries and articles) of the stocks. My list is not a set of recommendations, I am just being transparent because I am a financial writer.

P.S. Janet Yellen and I have one thing in common: we both have undergraduate degrees from Brown University. Mine was in Political Science. I took two economics courses at Brown, microeconomics and macroeconomics. I started studying the Federal Reserve then, and even then I knew that some of what I was being fed was bullshit.

AMD, what to look for

Another post published at Seeking Alpha:

3 More Reasons to Stay Long AMD

This would not be the best article for someone who knows nothing about Advanced Micro Devices. But so much has been written about AMD. There have been rumors of an inventory issue (too much of it) with high-end GPU cards. That is supposed to be the result of the end of the Bitcoin mania. So now gamers can actually buy high-end AMD GPU cards at reasonable prices. If there is some excess inventory, it will work out of the system quickly. The only real problem would be if people just plain stop buying high-end graphics cards, which does not seem likely.

There is the PC unit decline (or not) issue, and the ancient market share, AMD vs. Intel issue.

And we are all waiting to see if there will really be a AMD chip in some new mass market device beyond PCs and gaming consoles.

Which will all come out when AMD reports Q2 results on July 17. As usual, I will read and listen to the presentation and put up my notes (at AMD analyst conference summaries). But if you are thinking of investing in AMD, you should listen yourself (the link will be at AMD calendar). Why give the professionals an edge?

Good luck. Keep in mind I am always looking for the long-run value; I don't try to predict stock prices in the short run.

I own AMD stock; I am a business writer, not an investment advisor.

Agenus Scores Victory Over Glioblastoma Multiforme (Brain Cancer)

Just to note that Agenus (AGEN) announced positive results in its Phase II trial for its Prophage vaccine treating glioblastoma multiforme, a form of brain cancer. The results are quite impressive. However, a larger, randomized Phase III trial will be needed to gain FDA approval, and that would take something like 3 years. Agenus is likely to partner with a larger company for the trial and commercialization of Prophage.

See the Agenus Prophage Results press release

I recently covered the broad range of therapies in the Agenus pipeline:

Agenus Platforms Provide Many Shots On Commercialization Goal May 13, 2014 at Seeking Alpha

Agenus stock closed at $3.22 yesterday and as I write has risen to $3.81, up 18%. That gives it a market capitalization of $237 million, which I think is still vastly undervalued given the pipeline.

I own Agenus stock, which I first acquired in October 2013, with my last purchase in April.

I Buy Regeneron; Comment on Vertex Pharmaceuticals

Regeneron Pharmaceuticals (REGN) has been down a bit lately, on talk of greater substitution of Avastin for Eylea, and today I finally dug into my cash and bought a tiny amount at $277.74 per share. Regeneron has a high P/E ratio, and all the dangers that implies. However, I think long-term prospects are quite good, and I don't think it likely I will be able to buy REGN much cheaper. If it goes down further, I may buy more.

Vertex Pharmaceuticals (VRTX) was the big winner today, up over 40% to end at $93.53. The news was that a new drug for cystic fibrosis had marginally positive results that may be good enough to get an FDA approval. I would not approve the drug based on the results if I sat on an FDA panel, but I don't. I also would not pay for such marginal benefits, especially given the price tags Vertex wants for its therapies. I think it is great they are working to help cystic fibrosis patients, but as an investor I am skeptical.

$118 million was how much revenue Vertex had in Q1. EPS was negative $1.00. Vertex might run up $500 million in sales this year, and probably at least that in losses.

So how do you justify a market capitalization of $22 billion with those numbers? By having the biggest Wall Street companies sing sweet songs about the future value of the pipeline.

Again, nothing against the company, and as long as the big boys can keep selling the stock to new fools, it might keep going up. But don't say I did not warn you about the danger. I believe in the power of therapeutic pipelines, that is why I bought Regeneron today and have owned BIIB, CELG, GILD and others for years. But I have seen big collapses when biotechnology pipelines did not deliver what sell-side brokers and analysts promised to gullible investors.

Another thing, how come Gilead (GILD) has been a sell according to many of the same people who are pushing Vertex? The story is Gilead's Hepatitis C drug is too expensive. But Gilead is selling a cure to a deadly disease for 85 thousand. Vertex, according to the new study, will be selling a drug that averages just 4% increase in lung volume (almost too low to detect) for over $100,000 per year. Why not worry about insurance company resistance to that kind of pricing?

Again, Vertex is a good company, and I would invest in its future at a reasonable price. But not today's price of $93.53 per share, and not even yesterday's price of $66.61. Not on current sales, and not on the trial data.

For my coverage, including summaries of analyst conferences and articles at Seeking Alpha, check out:

Regeneron (REGN)
Vertex (VRTX)
Gilead (GILD)

In any case, be sure to ... Keep Diversified!

My Gilead (GILD) Whisper: $180 per share.

I would not say it is a sure thing, but when I look at Gilead Sciences (GILD), which lately has been hovering around $80 per share, I think it will go to $180 per share by about a year from now.

I'm not going to write a Seeking Alpha article to that effect (my latest on Gilead was: Gilead Down On Merck-Idenix Deal, But Little To Fear on June 9), but the reasoning is fairly simple.

Gilead's Q1 non-GAAP earnings per share were $1.48, a 169% sequential jump and 210 jump from year-earlier. This was a result of the first full quarter of sales of Sovaldi, the new cure for Hepatitis C.

While q/q fluctuations can be expected, I expect a base EPS of $1.50 per share per quarter going forward, and likely trending above that as we head into 2015.

Which means at the end of 2014 trailing non-GAAP EPS will be in the vicinity of $3.00.

By then investors, including big institutional investors, should realize that the ride is not over, that because of new therapies coming to market, and international expansion of existing therapies, growth will continue at a good (if difficult to predict exactly yet) rate.

Which means that GILD should command a P/E premium over slower-growing stock. To me, rule of thumb, that would be a P/E of 30.

30 x $6 = $180.

Of course, non-GAAP EPS will be a bit lower, and you can get very different numbers by projecting different P/Es.

I am at my portfolio limit in GILD, and if it does go up that much, I will be "forced" to sell by my portfolio rules that limit the % I can hold of any one stock. Which is great, because I have an eye on several much smaller biotech stocks that I would like to invest in now, because they may be great in 3 to 5 years.

But keep diversified, because all stock investments involve risks, including unknown unknowns.

Gilead Sciences (GILD) Buy Op & Other Thoughts

New post at Seeking Alpha:

Gilead Sinks on Merck-Idenix Deal, in which I argue Gilead is not very threatened and remains undervalued. I am overweight in Gilead, and in for the long run, but if you don't own Gilead it is worth a look. My best guess is that the cash keeps rolling in from Hepatitis C cures, and GILD is up another 50% or so over the next year or so, and even that will leave it at a lower P/E.

I am not going to cover it, but I bought an incredibly tiny amount of Opexa Therapeutics (OPXA) on May 29. I already own Biogen Idec (BIIB), so I know a bit about multiple sclerosis. Opexa has a totally different approach, an immunological one, and results are mixed so far, but a Phase II trial is underway. The results are not due until 2016, and then usually even with positive data a Phase III trial would be needed. So it is both a long shot and a long term investment.

I think the market overall is fairly valued on a current basis, which means about 1/2 of stocks are overvalued and 1/2 undervalued. So it is a stock-picker's market. On the other hand, I believe the economy has years of expansion ahead of it, so in 3 to 5 years I expect the market to be up. In that case, even an index fund would do more for your savings than CDs or bonds. We are not in a stock market bubble yet, but if one appears, sell into it (most people buy into bubbles, that is why they are bubbles).

What stocks are overvalued or undervalued is a matter of opinion. I tend to look two to three years out, so I include the value of biotechnology pipelines.

Applied Materials, Dendreon, and Hansen Medical

Just a few notes today on three of the companies I own or follow.

Applied Materials (AMAT) had a bang-up quarter, reporting on May 15. Management has been predicting market share gain because of new tools for the semiconductor industry, some based on Applied's deeper abilities in materials processing science. Revenue was $2.35 billion, up 7% sequentially from $2.19 billion and 19% from $1.97 billion in the year-earlier quarter. GAAP EPS (diluted earnings per share) were $0.21, flat sequentially from $0.21 and up from negative $0.11 year-earlier. Non-GAAP EPS was $0.28.

Applied is on two separate cycles: the semiconductor process upgrade cycle (for instance, right now the transition from 28 nm processes to 20 nm processes) and the end-device demand cycle, which tends to follow global economic ups and downs. Long-term investors have to learn to ignore the cyclical nature, or use it to buy AMAT when it is cheap. As I write it is at $20.19, cheap if EPS keeps growing. Pays a divident of $0.10 per quarter too, working out to just under 2% per year at the current price. Applied is waiting for regulatory approval to combine with Tokyo Electron. If the merger goes well they could crush the competition. For more see my Applied Materials Q2 2014 notes.

Dendreon (DNDN) continues to make progress despite its woes. Early Phase II data in its study for its vaccine for urothelial cancer is encouraging. But unless the final Phase II data is extremely strong, we still have a large, expensive, slow Phase III trial to attempt to gain regulatory approval. In the meantime everything depends on how management reduces the cash burn. Some data due to be presented later this month may also encourage more patients and doctors to prescribe Provenge; any increase in revenue would be helpful. There is a lot of short interest in this stock as shorts bet that Provenge sales will plunge (something they've been predicting for 2 years) and the company will go bankrupt before European sales of Dendreon ramp up in Q1 2015. For more see my Dendreon Q1 2014 notes.

Hansen Medical's (HNSN) stock price has been on a downward tear since it hit  52-week high of $2.89 on February 11. It sank to $1.10 on May 12 and now has had a dead-cat bounce, probably short covering, back up to $1.31 as I speak. Hansen Medical has two catheter-cased robots, one for electrophysiology and one for vascular surgery, that are much praised but seldom sold. With a market cap of $146 million and Q1 sales of $3.7 million, you can see why it is a highly speculative, venture-capital type of bet to make. Still, there is always next quarter; they claim the sales pipeline is strong, it is just hard to get hospitals to actually commit to new capital equipment purchases. I think the questioning of Intuitive Surgical's robots has not helped. For more see my Hansen Medical Q2 2014 notes.

I own all three stocks (but not Intuitive Surgical). I reserver the right to buy more, or to sell my shares, at any time. I am an investor and financial journalist.

Agenus, Inovio, Dendreon, Dot Hill, Microchip, Hansen analyst conference notes

Top of the list, published at Seeking Alpha:

Agenus Platforms Provide Many Shots on Commercialization Goal

My notes on recent quarter results and analyst conferences:

Inovio

Dendreon

Dot Hill

Microchip

Hansen Medical

Regeneron

I had been working on the Agenus article for some time. I came up with a value of AGEN stock much higher than the current value, but I believe I was fair about it. If anything, I held back because I was a bit shocked at how valuable the company should be. If I were a billionaire I would buy the whole thing at the current market capitalization, if I could. Of course an attempt like that would send the price soaring.

I own some of all the above stocks except Regeneron. I really should pick up some REGN, despite the high P/E ratio, but my cash only goes so far.

I bought some more Mylan (MYL) stock on May 9, but now I have enough of it. Can't say what Mylan will do in the short run, but in the long run they look to do great.

Now that earnings season is slowing down, I hope to write more analysis, and I hope Seeking Alpha will continue to publish my longer pieces.

Celgene, Seagate, TTM, SGI and Vertex Pharmaceuticals

Another busy week. Here's my work that you can find for free online:

Celgene in 2015: $200 per share [at Seeking Alpha on April 29, 2014] which was partly based on my summary of the Celgene Q1 analyst call.

Other notes on quarter reports/analyst calls this week:

Seagate is muddling along, with a good (low) P/E ratio, good dividends, and ability to sustain or even grow the dividends as long as the world needs data storage.

TTM Technologies, the PCB (printed circuit board) manufacturer had a seasonally down Q1 but believes the second half of the year will be strong. The analysis here is that as TTMI generates cash and pays down the debt it used to acquire its Chinese factories, earnings will grow.

SGI continues to struggle. The stock price is too high to warrant my buying in (I closed my position
in January); a turn around is already priced in. But I just don't share SGI management's belief that they will do better in the second half.

Vertex Pharmaceuticals is in disaster mode, but Wall Street is still treating it like it is already a Gilead or Celgene. Vertex is doing great work helping Cystic Fibrosis patients, but with its Hepatitis C franchise dead, I think it is way overpriced. Way, way over priced. Ridiculously overpriced. I say that as someone who frequently argues that drug pipelines are undervalued by investors.

Next week: Microchip, Hansen Medical, Regeneron, Dendreon and Dot Hill report.

Buying the Dip: Inovio, Gilead, Celgene, Amgen, Xilinx

It's been some time since I've posted. I've been busy, not on vacation: researching stocks, fixing up my house in preparation for selling, watching the stock market gyrate, and buying some stocks I think are cheap and are going to look really, really good around 2017:

Since April 11, 2014 I have added to these positions:

Gilead (GILD)
Inovio (INO)
Celgene (CELG)
Amgen (AMGN)

I also bought my first tiny bit of Xilinx (XLNX), which I have watched for years.

I was able to buy these stocks because earlier this year I had sold all of my Adept Technology (ADEP) and bits of Hansen Medical (HNSN) and Dot Hill (HILL). I had also sold some Inovio at $3.65 per share. I bought that back at $2.57 per share.

I considered buying quite a number of other stocks as well, notably (in no particular order): Regeneron (REGN), Alexion (ALXN), and Intuitive Surgical (ISRG). In the end I went for the relatively low P/E biotechs that have proven execution and great pipelines.

I'll write about all this stocks in detail, time permitting, for Seeking Alpha (with any rejections posted here). But quickly, GILD should be trading at $120 per share right now based on its Hepatitis C franchise, HIV franchise, and pipeline of future products. Inovio is risky, but it has many shots on goal in its pipeline. If it misses a shot along the way, while others sell off I will accumulate more.

Celgene still looks to power up to over $300 per share by 2017, but it closed at $142.06 on Friday. How any long-term investor can resist that proposition, I don't know.

Amgen has a low P/E ratio and a great pipeline, and pays a dividend. I hope to buy more if cash becomes available and the price remains low.

Xilinx is a bit of a different nut. It is reasonably priced and pays a dividend, and specializes in field-programmable logic devices. Rival Altera keeps saying they are going to kick Xilinx's ass, when they start producing chips on Intel's 14 nm process. I think Xilinx, which will soon be on TSMC's 16nm process, will be able to hold their own.

I'll probably regret not having bought Regeneron and Alexion down the road, but they just did not dip low enough for my taste. Intuitive Surgical had a really, really bad quarter, but while the stock is much cheaper than it was just a month ago, it still looks pricey if Q1 is just a prelude to further surgery robot sales declines the rest of this year. I'll probably buy some at some point. I like robotics (which is why I still own a large chunk of Hansen Medical shares).

Of course in the short run anything can happen, and in the long run we are all dead. Although I try to use a 3 to 5 year time horizon for picking stocks, and tend to buy and hold, I do adjust my portfolio according to my rules from time to time (limits on how much of anyone stock I own) and also sell some into irrational upward momentum, and buy on irrational dips.

Keep diversified!

See my analyst conference summaries for select stocks at www.openicon.com.

See also William Meyers Seeking Alpha Articles

Even Republicans Won't Deal With Debt

Republican politicians like to rant against taxes and blame all taxation on Democratic politicians. So you would think that Republicans in the federal House of Representatives would present a balanced budget.

Why did the House Republicans pass a budget this week, written by Paul Ryan, that would not balance the budget (barring an economic miracle) until 2024, a decade from now?

It is not just politics as usual, even though everyone knew this budget bill, which passed 219 to 205, won't become law. It will die in the Democrat-controlled Senate, and in any case President Barack Obama won't sign it.

Take a step back and look at the bigger picture, both economic and historical. Deficit financing did not become a regular part of the American economy until the Great Depression. In 1933 progressives of both parties (Democrat and Republican), led by Franklin Delano Roosevelt, tried "pump priming," getting the economy headed back to normal by government deficit spending. Soon income tax rates were raised too. But what really ran up a deficit, and revitalized the economy, was World War II.

After World War II the U.S. had an unprecedented amount of debt, but we were the only industrialized nation that had not been devastated by the war. More important, both parties had seen what a little economic heroin could do for politicians. So while conservatives talked of balanced budgets, they became rare even in years when the economy was booming.

Now tax rates are far lower than they were from 1935 until 1980. Republicans can take most, but not all, of the credit for that. But if anything Republicans have been worse than Democrats about spending taxpayer dollars.

Ryan's budget advocates cutting back on payments for food stamps, health care, education and transportation. But it does not cut back on military and homeland security spending, or on subsidies and tax breaks for corporations and the rich. It does not prioritize dealing with the national debt. The Democrats will say its domestic spending cuts amputate important programs, but in fact Ryan's cuts are band-aid sized cuts. They are meant not to antagonize too many senior voters, just mostly the type of people who vote Democrat, if they can get a valid voter ID card.

Ryan's budget tries to please Tea Party Republicans with the smell of budget cuts without alienating the big defense corporations or too many middle class voters.

And in his heart-of-hearts, Ryan may worry that without the deficit spending his plan envisions, the economy might stall, which would reduce tax collections, increase the deficit, and make it harder for him to reward his sponsors with government contracts.

Then there is the over $17 trillion dollars of federal debt. Currently the Treasury and the Federal Reserve are pretending they are keeping interest rates low to stimulate the economy, but the rates are way under what they have been historically in a growing economy with well less than 7% unemployment and no overall inflation. The main result of the low interest rates is that the government can finance its debt cheaply. Since that is the main result, that is the real purpose.

Normal interest rates are about 5%. 10% of $17 trillion is $1.7 trillion. 5% is half of that, so $0.85 trillion. Per year, in interest alone. A trillion is a thousand billions, and a billion is a thousand millions. So take my word for it, as valueless as the dollar has become since the Great Depression, and as large a the economy has become, we are talking a high-magnitude earthquake-like impact on the federal budget and on the economy if interest rates normalize. If we actually had an old-fashioned strong economy interest rates could easily climb above 5%, if we had free markets or the Fed were to do its job of keeping inflation under control.

Folly begets folly, and investors around the world see U.S. debt as a safe thing right now. Just a switch in that attitude, which would result in investors refusing to buy bonds until interest rates were higher (like 5% on 10 year bonds), would throw the U.S. into bankruptcy.

Its kind of like global warming. You have politicians who are in denial, and you have politicians who see the problem, but are not willing to act on something decades away. Only the debt crisis is probably well less than a decade away. It could start any time, and the longer it takes, the worse it will be.

The problem may be fixable. Democrats and Republicans alike would have to give up quite a bit. Each party uses federal money, or exemptions from taxes, to buy campaign donations and votes. Each party would have to give up much of its gravy train. And each could do that, without harming the economy overall.

Homeland security spending is nearly a complete waste. Cut that budget by 90%. Cut the military budget by 50%. And yes, it would take toughter-than-Ryan cuts in food stamps and education subsidies. Cut payments to health-care organizations and doctors, focusing on high-cost low-benefit drugs, diagnostic procedures, and surgeries. Raise the IRS budget, double it, and have them go after tax shirkers at all levels.

What, cut education subsidies? Yes, cut them. I support public schools, and I served on a public school board for 8 years, and I was the most liberal member of a liberal board. But I also saw the details of how federal money is doled out. Cut the money in half, remove the red tape by 100%, and let the school boards micromanage how to best educate their pupils. Some will screw up, many will be mired in mediocrity, but most will do better with half the money.

Alternatively taxes on the rich, and in fact on individuals making $50,000 a year or more, will soon need to be doubled. That is right, doubled. Read my lips: doubled. With no exemptions for capital gains, dividends, or inheritances. Even small inheritances.

Or we could do some combination of severe spending cuts and severe tax increases.

I imagine I have alienated just about everyone by pointing out the problem and the only ways it can be solved. I know plenty of people who get food stamps and never worry about how that food is really being paid for. I know soldiers and veterans, and I know people who make plenty of money and consider themselves over-taxed even after they take their tax breaks. No one likes to hear the nation is sick, and they all have to take some medicine.

So as an analyst, my prediction is the federal government is not going to act any better than heroin addicts would act (I've known some of them too). It will continue to borrow money until no one will lend it money.

Then it will either collapse in agony or go out and hit someone over the head and take the money it needs for its addiction. And blow off its creditors. Federal bonds will be payable only in more federal bonds.

Disclaimer: I am registered to vote in California, but with no political party.

Another Buying Opportunity: Amgen

Today I bought more Amgen (AMGN). It has a low P/E ratio, pays a dividend, and has a pipeline I like. On the other hand, it is a big company, so it can't grow as fast as say, Regeneron (REGN) or even Alexion (ALXN), both of which looked mighty tempting today.

Next week AMD reports Q1 results on Thursday. The following week I have at least 5 biotech stocks reporting Q1 results. Maybe stocks will get cheaper, but my guess is with the economy reviving nicely and actual earnings coming in, buyers will be back soon enough.

Bought More Gilead; Waiting on Regeneron

Just to follow up yesterday's post, this morning I added to my Gilead (GILD) holdings. Investors today are acting like it is a surprise that Gilead will have competition in the Hepatitis C market. Had they not been paying attention?

I believe Gilead can discount its Hep C therapies substantially if necessary to dominate the market, while still having high profit margins. In fact, I have believed all along that Gilead would have done better to price Sovaldi substantially lower and encourage larger numbers of patients to sign up quickly for the treatment. With hundreds of millions of potential patients in the world, they won't run out of patients any time soon, even though the cure rate is extremely high.

I think when Q1 results come out on April 22 we will see the tip of the iceberg for Sovaldi and the coming combination therapies. Gilead had just $139 million in Sovaldi revenue in Q4, and only $50 million made it to  patients, the rest being stocking.

I am still hoping to bag some Regeneron (REGN), but even though it is off today at $294, I think it has to be well below $285 now for me to prioritize it over buying more GILD. Of course those who own Regeneron would argue differently, and they could be right.

At $65.19, the price I paid today, Gilead had a trailing P/E of 36.3. With Solvadi and other new drugs coming online, my best guess is still that Gilead will go well over $100 per share by the end of the year. But as with all stocks, Gilead is limited to less than 10% of my portfolio holdings.

For all my background research and published articles on Gilead see: William Meyers on Gilead.

Regeneron (REGN) Update

I almost became a proud owner of Regeneron (REGN) stock yesterday (April 8). I have watched Regeneron for a long time. It's Eylea therapy for macular degeneration has been ramping revenues steadily, and I like its platform and pipeline. But other investors like its prospects too, resulting in a high P/E ratio. I am cautious about high P/Es, and for good reason. If anything goes wrong, the stock price can plummet.

As I wrote about Regeneron, resulting in Regeneron Down 15% From 52-Week High: Buy? published late today at Seeking Alpha, I was reminded of the good side of REGN. When I started writing the article REGN was down almost 20% from its 52 week high.

I decided to buy a few shares. It fell quite a bit on Tuesday. So I postponed. I figured I could get it even cheaper on Wednesday. What I really like is a stock that should have a high P/E that investors have overlooked, resulting in a mediocre P/E.

Alas, when I checked REGN about 1/2 hour after the market opened today, it was up around $10 per share. Regeneron ended today at $306.26, up $19.82 in one day, and up 6.92%.

Not that I had a bad day. The top stock in my portfolio for the day were Inovio (INO), up 11.8%. But Inovio has not received FDA approval for its therapies yet, and is notoriously volatile. Not recommended for amateurs. Second up was data storage system maker Dot Hill (HILL), up 8.42%. Of my larger cap stocks the best was Celgene (CELG), which was up 6.6%. Celgene has been hit by both the recent Biotechnology deflation and by specific worries that its Revlimid may go generic sooner rather than later. However, today a look at the patent case preliminaries convinced many investors that Celgene's patents are solid. I also would point out that Celgene has a great pipeline that should start kicking in long before the Revlimid patents run out.

Hope you had a good day too. Keep diversified!

You can see my notes on the analyst conference calls of all these stocks at OpenIcon.

High-Speed Trading article and thoughts

The Wolf Hunters of Wall Street

You should read the NY Times article about high-speed trading at the above link if you haven't yet. It is fascinating in and of itself.

It confirms my belief that I can make more money investing in or trading stocks with a long-term view (1 to 3 year time horizon) than I could as a short-term or day trader. Sitting here, with a 3-second satellite delay, the trades still seem instant in human time. Of course my trades are so small that they only affect stock prices on infrequently traded small caps, and then only for a second or two.

It is kind of funny, though. Big guys, whales, getting sucked dry by a team of Russian-American computer programmers. Sometimes it isn't so bad being plankton. If I get screwed by a penny or two a share, in the long run I make it back because most of these guys have no long term strategy.

I bought some more Mylan (Mylan) today. Was the price fair today? It doesn't matter much to me: in three years, in retrospect, it will (highly likely) look like a great price.

Dendreon (DNDN) commentary

Thanks to the editors at Seeking Alpha for publishing my latest:

Dendreon Ready For A Rebound

It is a complex picture, and there are no guarantees. Stocks like Dendreon are best played only by those who are good at balancing risk.

I own Dendreon (DNDN) stock. I have always had some amount of Dendreon since I first bought it in 2004, but sold most of mine in 2009-2010, then started accumulating it again in 2013.

I take notes on Dendreon quarterly results and analyst conferences; follow the link to read them.

Dendreon sells its Provenge therapy for castrate-resistant, minimally symptomatic metastatic prostate cancer.

Amgen (AMGN) initial buy

Just to record that I bought my first Amgen (AMGN) shares this morning.

I wrote about Amgen at Seeking Alpha in: Amgen With Onyx Pharmaceuticals: Long-Term Analysis on September 4, 2013. I used to own Onyx Pharmaceuticals; it was one of my best-performing stocks when acquired by Amgen.

While I continue to search for small cap companies with potential therapies that are undervalued, I also think that sometimes larger companies become undervalued. Amgen is making solid profits and has a strong pipeline. For me that adds a lot of diversity. Also, Amgen pays a bit of a dividend, which never hurts.

I'll continue to report on and analyze this company at Amgen Research and Analysis

Keep diversified!

cancer checkpoint modulators

Having heard several times that checkpoint inhibitors or modulators were the next big thing in cancer prevention, I looked for a background article on them on the Internet. What little there is can be found in professional science/medical journals, behind pay walls, with only the abstract available. So I wrote something up that does not assume you have a PhD in biochemistry:

Checkpoint Inhibitors which is at my main finance & technology site, www.openicon.com. It may be modified over time, which is a reason I am not just simply reposting it here.

Mylan (MYL) added to portfolio

Today I added a small initial stake in Mylan (MYL) to my portforlio. Note my trading activities are nowhere near large enough to effect stock prices.

I wrote a positive article about Mylan at Seeking Alpha, Mylan Pursues Global Generics Dominance Strategy, back on September 6, 2013. The price is way up since then.  I now wish I had bought MYL back then.

Still, today's price in the $52 range is well off the 52 week high of $57.52. If it goes cheaper (without good reason) I'll buy more when the opportunity arises.

Mylan is a large cap (near $20 billion) company that manufactures and markets generic drugs. I am better known for writing and investing in small caps like Dot Hill, Adept Technologies, and Inovio. But most of my portfolio is in middle and large cap stocks.

While I don't plan to write another article on Mylan anytime soon, I am covering their analyst conferences, and your are always welcome to read my summaries at:

Mylan analyst conference call summaries

Dot Hill Declines Despite Strong Q4 Results

Dot Hill is down over 19% so far today despite strong Q4 results. Hill was (in my view) clearly undervalued and overlooked as late as January of 2014, when it could be bought in the $3 range. But then momentum players and sell-side (Wall-Street brokerage house) analysts got wind of its success, driving it to a 52-week high of $6.06 yesterday.

My last article at Seeking Alpha on Dot Hill was: Nearly Quadrupling In 2013, Dot Hill Still Has 2X Potential In 2014 posted on December 29. I meant double by the end of 2014, not by March. Of course all stock prices are dependent on actual ability to generate profits, which is notoriously hard to predict.

Given that the 52-week low is still $0.9125 (March 15, 2013), only the most idiotic momentum players got burned. I still think $6 to $7 per share by the end of 2014 is not unreasonable, unless something goes wrong on the execution side. There is upside to that if more clients (OEMs who resell HILL's storage equipment) sign up in time to ramp some revenue in 2014.

The details are worth paying attention to, so start with my summary of the quarter and the analyst call today:

Dot Hill Q4 2013 Results and Conference Call notes

There are a lot of interesting comments on the data storage industry in general in the call, including on Lenovo's purchase of IBM's server business.

I am a long-term holder of HILL. Due to its run up in 2013 it is currently my largest holding. I reserve the right to buy more if the price drops enough, and to sell some of my holdings if I think it has become overvalued. I also own some Seagate stock, the disk drive maker.

Be sure to check the SEC filings and make sure you understand the company before buying.

Keep diversified!