| April 13, 2014 | | | | | | | |  | | | | This FDA Approval Could Be Your Next 33% Gain | | | - An April 17 reminder...
- Then, the real look behind an IMF report on North American oil… a solution for your "second income" problem… an advantage tax procrastinators may have over early filers and more!
- Plus, our brand-new catalyst expert, Rick Pearson, gives you a specific ticker that could pop 33%, thanks to a recent FDA approval...
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| | |  Peter Coyne, tipping our hand to you…
In this week's Sunday investment review, Rick Pearson, one of the newest members of our team, is giving away another specific play you can use to bag 33% by next month. Rick, you may recall from this past week, is going to help you find special catalysts that will create big shifts in a company's share price. In fact, he's going to unveil the secret behind what he calls "Newton's Profit Triggers" on April 17. That's this upcoming Thursday. If you've never heard of such a trigger -- don't worry. The rationale behind its name and the explosive power it has to deliver fast returns in just one day is all explained in detail for free. All we ask is that you register beforehand by clicking here and submitting your email. As a sign of goodwill -- and to show off some of Rick's investment method -- he presents you with a freebie investment pick, below. Scroll down for more... | Five Investment Reviews You Won't Want To Miss **************************************** |
| | | | | | | "Hidden" Treasury Document Plans to Devalue Your Money
A U.S. Treasury document plans to purposely devalue your money potentially within the next 12 months.
But it may have created the safest (and easiest) investment opportunity in 30 years.
Click here for all the details. | | | | | | The Sunday Investment Review Presents…
| | | | This FDA Approval Could Be Your Next 33% Gain | | | | by Rick Pearson | | |  My No.1 rule for a catalyst trade is to find a situation where there is substantial upside, but limited downside. It is important to find a spark that could make money, but it is also just as important to keep your eye on the risk involved with the downside.
With this in mind, Momenta Pharmaceuticals (MNTA) appears to be a great bet stacked in our favor. There is tremendous potential for upside, but a very solid floor of value beneath the current price.
Momenta is a small pharmaceutical company focused on developing both generic and novel medicines. The company was founded in 2001 by MIT professors based on technology discovered and developed at MIT, and is headquartered in Cambridge, Mass.
The company received FDA approval for its first drug, a generic version of Lovenox, in 2010. It is currently awaiting FDA approval of its application for its most promising drug, M356, a generic version of Teva's (TEVA) Copaxone, which is a treatment for flare-ups in multiple sclerosis patients.
| Momenta has been badly beaten up this year, falling 36% YTD. | The first thing you will notice about Momenta is that the stock has been badly beaten up this year, falling 36% YTD, even as other biotechs have been soaring. The reason for this is that the stock had been sitting at five-year highs in January due to excitement over near-term prospects for M356.
Here is the story…
The patent for branded Copaxone (held by Teva Pharmaceuticals) was originally set to expire in September 2015. This meant that there would be no possibility of near-term competition from Momenta or anyone else.
However, a Federal Circuit Court ruling changed that expiration to May 2014… sending Momenta's shares soaring to five-year highs earlier this year.
On March 31, the Supreme Court agreed to hear the appeal. That's what triggered the tumble from $14 down to $11.
So now we need to handicap two things:
- When will M356 get approved?
- When will Copaxone come off patent so Momenta can actually sell the drug?
As for approval, M356 is currently under review by the FDA. On its last conference call, management stated that, "We have not received any questions that we believe would indicate our application is off track… We continue to expect approval this year." Teva has filed to block the approval of this generic equivalent by the FDA on several occasions, but the FDA has denied all of these petitions. This is a great sign for Momenta and M356. | | | | | | |
| The "New" War That Could Rocket Oil Past $220 in 2014
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Bunker down against soaring energy costs with ONE "safe haven" financial plan that could protect you and pay impressive gains. Click here now. | | | | | | | | The FDA has often provided preferential treatment to drugs that do not have generic equivalents. As a result, I expect that M356 stands a high chance of being approved as soon as May 2014. Again, another great sign for Momenta and M356.
Given that the patent expiration of branded Copaxone is stuck in the Supreme Court, I don't expect Momenta to gamble it and begin marketing before the ruling is handed down. The worst-case scenario is that the drug begins marketing in September 2015, as originally planned. Better-case scenario: The Supreme Court reaffirms the lower court's ruling and Momenta can begin marketing sometime earlier (but we have no way to know when). The timing of these outcomes remains uncertain.
The only real thing that matters here is that as soon as M356 gets approved, it will be on track to start penetrating the multibillion-dollar multiple sclerosis market with a new generic equivalent. Even if ultimate marketing of the drug does not begin until 2015, investors should immediately rerate the stock to a much higher level.
So let's get back to the attractive upside-versus-downside profile of Momenta.
Momenta is not a cash-strapped, pre-revenue biotech with hopes pinned on a single drug. The company already had revenues of over $35 million in 2013, even without M356.
| What all of this means is that there is a strong cushion of safety for Momenta. | Momenta also ended the year with a cash balance of $246 million against a current market cap of $580 million. The company has even been cash flow positive in each of the past two years. What all of this means is that there is a strong cushion of safety for Momenta, even if M356 gets delayed for marketing purposes.
As for the upside, Teva's branded Copaxone brings in over $4 billion in annual revenue. As a generic drug and one that is subject to competition, M356 might expect to bring in perhaps $100-200 million in annual revenue and $30-60 million in net income.
This could easily support a valuation of around $600-900 million on the stock, after backing out the cash. That implies an upside share price target of around $18-20, so just shy of a double from current prices.
Expect the catalysts to unfold in two stages. First will be the approval of M356 (likely in the next one-two months). Second will be the final ruling by the Supreme Court, which will determine the launch date for M356.
At current prices of $10-11, Momenta is an attractive buy. By the time the stock hits $20, it will likely be fully valued and it will be time to take profits. Consider buying momenta (MNTA) below $12.00. Be ready to sell at prices over $18.00.
Regards,
Rick Pearson
for The Daily Reckoning
P.S. I hope you'll register for the briefing I'm unveiling on April 17th. You're going to learn about lots of plays just like MNTA -- man with much higher potential returns. The key is understanding the triggers that set the plays off. I call them "Newton's Profit Triggers". On the 17th you can learn all about them. However, I do ask you register right now by clicking right here. It doesn't cost a dime to register or watch. | | | | | | |  Rick Pearson walked away from a seven-figure salary at 33 and started investing for himself. Before that he clocked almost a decade at a major bank's London, New York and Hong Kong offices.
Rick isn't afraid to go the extra mile. In Hong Kong, he actively rooted out Chinese companies committing fraud — even personally staking out warehouses and factories and questioning employees and management.
In his search for catalysts that move stocks higher, he leaves no stone unturned… He'll enter a stock at $1.80, say, and exit at $10 — those are the moves you'll make in Agora Financial's Catalyst Trader. | | | | | | | BE SURE TO ADD dr@dailyreckoning.com to your address book.
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