Wednesday, January 14, 2015

Calling Saudi Arabia's Oil Bluff

Saudi Oil Minister Ali al-Naimi keeps telling us that the world's top petroleum exporter is not going to cut production to prop up global oil markets: "We are not going to cut - If they (non-OPEC) want to cut production, they are welcome." 

“It is not in the interest of OPEC producers to cut their production, whatever the price is,” he recently told the weekly newsletter Middle East Economic Survey. “Whether it goes down to $20, $40, $50, $60, it is irrelevant.”

As in the ultimate bluffing game, Liar's Dice, Ali al-Naimi is looking into the eyes of his opponents - from the deepwater drillers off the coast of South America and Western Africa to the unconventional (shale) U.S. producers - and making such claims with arrant confidence. 

Though it's true that Saudi Arabia and other Gulf oil producers enjoy significant advantages in crude oil extraction - production costs of only $5 - $10 a barrel - contrary to accepted thinking - the monarchies in the Middle East cannot withstand long periods of persistently low crude prices.

With youthful unemployment rates ranging from 22% - 40% in the under 25-set, Saudi Arabia, Qatar, Kuwait and their oil neighbors maintain political order in their respective kingdoms only through "cradle-to-grave" social welfare programs.

In 2013, oil accounted for roughly 90 percent of Saudi Arabia's overall budget income and Kuwait at 92 percent, according to Reuters' calculations based on official data.

As suggested in this Jeffries fiscal spending chart, such largesse is unsustainable. Ergo, as in the dice game, it's time for U.S. producers to challenge the putative supremacy of the Saudis by calling their bluff: "liar!"


Thursday, October 09, 2014

Price Transparency Benefits Hospital Patients

Internet access has ushered in an era of price transparency, where shoppers wielding smartphones check prices before deciding where to buy items such as washing machines and flat-screen televisions. Could making price information readily available contribute to a reduction in certain health-care costs, too? Research suggests so. 

To date, while some may suspect that price-transparency initiatives would reduce health-care costs, there has been little published evidence to support the supposition. Part of the difficulty is that patients don’t respond to health-care prices as they do to the prices of other consumer goods. Patients with health insurance are mostly insulated from actual care costs, so they have little incentive to choose care based on price. Patients may also believe, sometimes wrongly, that the more expensive the health care, the better the quality. 

Associate Professor Hans B. Christensen, Assistant Professor Mark G. Maffett, and PhD student Eric Floyd examine the effects of price transparency on costs associated with hip-replacement surgery. The procedure is relatively standardized, produces similar outcomes, and is often obtained on an elective basis, allowing the patient flexibility and sufficient time to shop for an orthopedic surgeon and site prior to receiving the operation. 

The variation in price tags for hip-replacement procedures illustrates the need for greater transparency: despite the seeming homogeneity of the operation, the researchers document total charges ranging from $16,269 to $93,805. Would a consumer, cognizant of this variation, seek out the less-expensive services? 

Relying only on data obtained from states with price-transparency regulations, Christensen, Maffett, and Floyd find evidence that implementing price-transparency regulations reduced the prices charged for elective, uncomplicated hip replacements by an average of about 7%.

Read more at Capital Ideas: With price transparency, hospitals charge less

Monday, September 29, 2014

Watching Television for Allergy Relief


Looking to master the quiet sneeze or get relief from those itchy, watery eyes? If so, consider watching television, at least long enough to catch an allergy commercial. Research by Professor Emir Kamenica, with Robert Naclerio of the Pritzker School of Medicine, and Anup Malani of the University of Chicago Law School, suggests these advertisements may improve the efficacy of drugs for some allergy sufferers.


Pharmaceutical companies spent $4.8 billion in 2006 alone on direct-to-consumer advertising in the United States, four times more than they spent in 1996. The spending is controversial, as commercials can motivate patients to seek prescriptions for the drugs advertised, regardless of whether that’s medically necessary. Kamenica, Naclerio, and Malani wondered if the commercials cause placebo-like effects in patients. 

Read more at Capital Ideas: Itchy, watery eyes? Try watching TV

Friday, September 26, 2014

Can Conatus Pharmaceuticals Duplicate Intercept's Success?

Conatus Pharmaceuticals (CNAT-$6.03) is developing a first-in-class, orally active pan-caspase protease inhibitor, called emricasan, which is designed to reduce the activity of the caspase family of related enzymes that mediate inflammation (measured as serum ALT) and cell death, or apoptosis (measured as biomarker cCK18).

It is postulated that by inhibiting hepatocyte apoptosis and subsequent profibrogenic activity, emricasan’s dual mechanism of action could offer a viable therapeutic option to slow progression across the entire spectrum of fibrotic liver disease(s).  

The share price of CNAT has slipped some 35% from its summer high of $9.48 a share, due to a pullback in small capitalization stock valuations and an announced delay for release of topline results from a pivotal NASH trial.

To read about possible upside, value-creating catalysts at CNAT, subscribe to PropThink.com, one of the top-rated biotech stock blogs: WHY CONATUS FELL OUT OF BED IN THE SECOND HALF

Editor David J Phillips no longer holds a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

Monday, September 08, 2014

Keryx Biopharmaceutical's Kidney Drug Approved - What Now?

Keryx Biopharmaceuticals, Inc. (KERX-$17.01) announced that the FDA approved Ferric Citrate (formerly known as Zerenex) for the control of elevated serum phosphorus levels in patients with chronic kidney disease (CKD) on dialysis. The share price declined more than 5% on the news, however, on investor concerns that an unexpected safety warning – the drug package label must include the potential risk of “iron-overload” – could slow market share uptake.

Given hemochromatosis is a known risk with the iron-based phosphate binding, the sell-off had more to do with a “profit-from-the-news” event than the putative warning label.

Premium subscribers at PropThink.com were one-step ahead of Wall Street, having been told earlier: “Given uncertain commercialization prospects for the oral phosphate binder Zerenex in obtaining meaningful market share in the dialysis-treatment space due to managed care and competitive risks, investors might look to lock in existing gains with a suggested options hedge strategy – at least until a clearer picture emerges on the potential use of Zerenex in managing elevated serum phosphorus levels and iron deficiency anemia in non-dialysis dependent (NDD) CKD patients.”


Editor David J Phillips no longer holds a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

Tuesday, August 19, 2014

PropThink Readers Profit from Amicus Therapeutics Buy Recommendation

Premium readers over at PropThink.com are already up 15% since our buy recommendation was issued on Amicus Therapeutics [FOLD] on August 7 at $4.00 per share.

Though the investment premise remains intact, investors might want to either lock in existing short-term gains, or buy September 5 calls as downside insurance against any near-term clinical surprises.
Investment Thesis
Albeit the investment thesis is focused on monotherapy use of its proprietary, pharmacological chaperone migalastat in Fabry Disease, there are value-creating assets that should become more visible in late 2015. In the treatment of Pompe disease (a glycogen storage disorder caused by deficiency of an enzyme called acid α-glucosidase), Amicus is looking to leverage its proprietary Chaperone-Advanced Replacement Therapy  platform to improve currently marketed ERTs through co-administration of a pharmacological chaperone prior to ERT infusion, and/ or to develop next-generation ERTs that consist of a proprietary lysosomal enzyme therapy co-formulated with a pharmacological chaperone.
Those investors looking for additional insight into our thoughts on FOLD and visible catalysts, such as Study 012, might consider opening their wallets and purchasing a subscription to PropThink.com.



 Editor David J Phillips no longer holds a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

Tuesday, August 12, 2014

OncoGeneX Checkup


Ignore OncoGeneX’s (OGXI-$3.15) reported second-quarter 2014 loss of 47 cents per share. Investors, instead, should focus on existing positives and visible price catalysts coming up in the next 12-months, including:


  • Management: "Based on our current expectations, we believe our capital resources will be sufficient to fund our currently planned operations into the third quarter of 2016. " Company recently completed a $22.4 million cash raise.
  • The SYNERGY Trial: Results of the SYNERGY trial will be presented at the European Society for Medical Oncology (ESMO) 2014 Congress (September) in Madrid.
  • Management addressed previous unknown  raised in a recent PropThink article on ENSPIRIT trial too: "We expect to evaluate both progression-free survival, or PFS (PFS rate at 14 weeks in 170 patients), and overall survival, or OS (OS at 100 events), during the first interim futility analysis"; The first of two analyses is expected to be conducted in 2014.
  • The Borealis-2 Trial (investigator-sponsored, randomized Phase 2 trial evaluating apatorsen in combination with docetaxel treatment compared to docetaxel treatment alone in patients with advanced or metastatic bladder cancer who have disease progression following first-line platinum-based chemotherapy) could be a big win, as more than 50% of patients with urothelial cancer of bladder discontinue FIRST-LINE treatment with cisplatin either due to non-responsiveness and/ or toxicity.

Continue reading at PropThink: NO ONE”S EXCITED ABOUT ONCOGENEX, WHICH MAKES IT WORTH A LOOK

Editor David J Phillips holds a financial interest in OncoGenex common stock. The 10Q Detective has a Full Disclosure Policy.