Targeted Strategies for Today's Evolving Markets

Mission Market Pulse

 

 

Amarin Corp. (AMRN)

Amarin is engaged in commercializing and developing therapeutics to improve cardiovascular health. Vascepa(R) is Amarin's first FDA-approved product as an adjunct to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia. Amarin refers to this as the MARINE indication.

In its first year of commercial operations, Vascepa recorded (non-GAAP) revenues of $28.1 million, as compared to no revenues in 2012. This figure is comprised of $26.4 million in recognized revenue and recorded deferred revenue of $1.7 million at December 31, 2013. The company recorded (non-GAAP) adjusted net loss per share of $1.26 for 2013, as compared to an adjusted net loss of $0.87 for the same period in 2012.

Amarin also increased its patents issued or allowed in the United States to 40, and halved the number of worldwide staff to reduce costs and better match the operational size of the company. Furthermore, Amarin made significant progress throughout multiple areas of the Vascepa commercialization plan, growing the Vascepa prescriber base to more than 16,000 physicians.

Moving forward, Amarin CEO John F. Thero says the company will focus on expanding Vascepa to improve treatment options for patients with mixed dyslipidemias, which is the combination of elevated LDL cholesterol and triglyceride and decreased high-density liproprotein (HDL).

Vascepa was given three years of marketing exclusivity by the U.S. Food and Drug Administration (FDA) in connection with the MARINE indication, and the company expects to see continued sales growth throughout 2014. Plans for this growth include the launch of multichannel awareness campaigns, including medical education and promotional educational programs, disease state and other direct personal campaigns, managed care education, and presence at key medical association and scientific meetings.

 

 

American Superconductor Corp. (AMSC)

American Superconductor has established itself at the forefront of the global multi-billion dollar wind energy and power grid markets. After 26 years in the industry they now boast some of the most advanced systems, as well as individual components available in the space today. Spanning the entire energy value range with platform solutions tailored to the exact customer’s needs, from generation to transmission and eventual distribution, AMSC is a powerhouse provider of value-added wind and grid hardware/software.

AMSC brings a whole host of electronic controls/systems, as well as turbine designs and ancillary engineering services to some of the planet’s biggest and best manufacturers/operators via its Windtec™ Solutions division. The company can take a project from turbine conception (designs range from 1.65 MW to 10 MW) through to seamlessly hooking infrastructure up to the grid, providing entire systems or just the component the customer wants. AMSC Wind Turbine Controls and Systems help push the performance envelope to the maximum, especially in the fierce offshore arena, where the industry hungers for ever more powerful gen plants that can wring every last kilowatt-hour out of the wind’s energy. Durability, maximum uptime and availability, as well as precision quality/control are all vital factors in the equation here and smart control systems like AMSC’s wtECS™ (Electrical Control System) helps make wind more and more competitive as a source by slashing the levelized cost of electricity production (LCOE – the price, including all costs, at which electricity needs to be generated from a source to break even over the project’s lifetime).

AMSC’s Generator and Drivetrain Solutions are second-to-none in the industry today when it comes to LCOE reduction and they are available in a variety of formats. From a robust yet simple Direct Drive, to the widely used DFIG format (doubly-fed induction generators, including brushless), AMSC is a recognized leader. With solutions ranging up to full-scale conversion drivetrains, the company’s HTS Direct Drive (using power dense superconductors), and their patented SuperGEAR™ drivetrain, which gets rid of the converter and transformer altogether, AMSC has attained a considerable engineering mastery that is prized throughout the sector. Superconductors present specific, daunting manufacturing challenges and AMSC has a long track record for successfully fabricating high-temp superconductors.

The company’s Gridtec™ Solutions were in the news recently (Sept 10), with the biggest and most respected provider of turnkey high voltage solutions in South Africa, CONCO (Consolidated Power Projects), tapping the company’s D-VAR® STATCOM Renewable Interconnectivity Solution to hook up the largest wind farm in South Africa to the grid. This is a huge deal for AMSC, being the first D-VAR STATCOM (static synchronous compensator) sale into South Africa and with such a prestigious customer, it bodes well for the company, especially considering that AMSC was chosen for their proven ability to meet even the most stringent of grid code requirements. The complete compensation and voltage control capabilities of the D-VAR, which has fully dynamic reactive VAR compensation, makes the platform ideal for renewable power plants and continuous interconnectivity. AMSC currently has over 20 power grid operators worldwide using the D-VAR STATCOM solution and has orders for more than 100.

The company’s D-VAR RT is a great in-turbine retrofit that lets operators do unit-level voltage control upgrades and their Wind-RT™ Systems go even further, having been developed specifically to meet Chinese grid code specs. With sub-20 millisecond turbine isolation on power dips and immediate modulation, the Wind-RT is a simple, cost-effective low voltage ride through (LVRT) solution that helps maintain a constant voltage profile, keeps the turbine magnetized and running at a constant speed/torque, then smoothly reconnects the unit to the grid once voltage has been stabilized.

Back in 2011 the company sued then startup and customer, now Chinese wind powerhouse, Sinovel, for breaching the company’s trialware scheme on the control codes programmed into their wind turbine controller firmware and this unresolved issue is a potential major option value for the company.

By offering some of the most advanced and efficient control, grid interconnection, power capacity/reliability, and power conversion hardware on the market today, AMSC has managed to forge strong ties with key industry players. With HQ near Boston, Massachusetts, and operations in Asia, Australia, Europe and North America, AMSC is well positioned to continue dominating substantial territory in the wind and grid space as utilities and regulators continue to adapt their policies.

 

 

China Commercial Credit, Inc. (CCCR)

China Commercial Credit has amassed a considerable microcredit empire in the thriving eastern coastal province of Jiangsu. Founded only five years ago, the company now services over 360 SME (small-to-medium enterprise) clients, as well as farmers and individuals with direct loans and loan guarantees. The company’s primary footprint is in and around Wujiang City (1.5M people) where the company has its headquarters, a city which has boomed on the back of Jiangsu Province (79M people in 2011) having one of the highest population densities in all of China and being home to many of the world’s top electronics equipment exporters.

Prevailing legislation in China has brought in banking reforms that have opened up microcredit lending at competitive rates for SMEs, farmers, and individuals (who previously were unable to borrow from State-owned and commercial banks), sending CCCR’s business model through roof. The entire microcredit space in China is expanding rapidly now, with some 5.6k microcredit companies across the country managing an outstanding loan balance of $83B in the aggregate (September 2012, PBOC). Mounting demand from these SMEs, who have historically been a massively under-served market and relegated to high interest rate, often illegal lenders, creates a fertile soil for CCCR’s growth strategy.

Via the company’s subsidiaries and other contractual arrangements, CCCR is helping to stimulate this entire business sector and aiding China’s concerns about inflation, fulfilling the CBRC (China Banking Regulatory Commission)/PBOC 2008 guidance mandate with a new type of financial vehicle that can jump-start the microfinacing of small borrowers. By fusing the loan and services umbrella of state-owned and commercial banks, while tapping into such a large and healthy under-served market, CCCR is poised to seriously leverage their stable relationships with local branches of both types and capture considerable market space in the process. The company is looking to grow their lending capacity through revenue generation and an increase in the registered capital of their primary operating unit, Wujiang Luxiang (just over $44M as of March 31), subsequently moving to acquire choice targets in the microcredit space in and even around Jiangsu (Zejiang and Shanghai microcredit companies generating returns in the 15.68% and 11.56% range respectively).

Offering fixed interest rates to the borrowers, CCCR has been pulling in one to twelve month loan size, duration, and rate returns of $16k to $320k (as of March 31, 2013), on an average annual interest rate of 15.01%, further shoring up third party lending opportunities with guarantees to the SMEs. Strict underwriting protocols have brought back a sub 5% extension rate and because the company really works hand-in-hand with its customers as well, they have a huge turnover in renewed loans, accounting for 73.26% of the total outstanding direct loan balance in 2012 (Dec 31) and a full 90.30% as of March 31 this year. Keep in mind that none of the company’s direct or renewed loans are for more than a 12-month term and that the Jiangsu microcredit space is ripe for acquisitions, with roughly 465 companies chasing just under $16B total loans outstanding last year and it is easy to see the company’s springboard strategy for growth.

The credit crunch policy in China has really bolstered the microcredit arena in general and since the CBRC lifted restrictions on commercial banks in 2004, allowing them to operate outside the city in which they were located for the first time, the M&A furnace has gotten hotter and hotter, with smaller local commercial operations forming into regional banks. The increasingly important role that SMEs play in the Chinese economy (around 60% of GDP and 80% of employment in 2012) will only sweeten the pot for CCCR, who will be squarely focused on expanding their direct loan and guarantee infrastructure among them, as well as among individuals and farmers.

Management’s solid underwriting skills really have been a major key to the company’s resounding successes and the General Manager of Wujiang Luxiang is the principal decision maker and leader of the management team across all subsidiaries, with his authorization required on all key aspects of the loans (based on their risk management department’s assessment report). This is an incredibly efficient little company in a province where the average return on capital for microcredit companies is 10.70% and where there is strong future growth potential due to historically underserved borrowers simply not addressed by state-owned and commercial banks.

 

 

CodeSmart Holdings, Inc. (ITEN)

CodeSmart Holdings, Inc., through its subsidiary The CODESMART™ Group, Inc., is a premier national subject matter expert for ICD-10 education and compliance in the United States. Its flagship product, CODESMART™ UNIVERSITY, is a well-respected online program of study for existing coders, new coders, clinicians, and healthcare roles of all types.

CODESMART™ University was created through the combination of a leading panel of ICD-10 subject matter experts and a major four-year accredited university, which contributed the nation's top course designers and a platform that already provides interactive education to more than 60,000 students per year in degree programs. The ICD-10 training provided includes live professors who work with and guide students through the programs of study in ICD-10.

CodeSmart Holdings has built its reputation by providing customized training to hospitals, health systems, and physician’s practices nationwide, in addition to Puerto Rico, as well as a host of other services. The company is well positioned to help the healthcare industry address the unprecedented number of mandates coming into effect in the next two years.

In addition to the revenue generation from its on-line training offerings, the company provides additional services to increase brand awareness and generate additional streams of income. The company also offers ICD-10 preparation for healthcare providers, outsourced coding, code auditing, and on-site workshops that can be simultaneously accessed online via webinars. With a strong marketing campaign and business model addressing today’s rising healthcare concerns, CodeSmart is poised for rapid growth.

 

 

Discovery Laboratories, Inc. (DSCO)

Discovery Laboratories is a specialty biotechnology company dedicated to advancing a new standard of respiratory critical care. The company’s technology platforms include a novel proprietary KL4 surfactant and proprietary drug delivery technologies being developed to enable efficient delivery of aerosolized KL4 surfactant and other inhaled therapies.

Discovery Labs' strategy is to initially focus on neonatology and improve the management of RDS in premature infants. In support of this mission, the company believes that its RDS product portfolio has the potential to become the new standard of care for respiratory distress syndrome (RDS) and, over time, enable the treatment of a significantly greater number of premature infants.

Discovery Labs’ proprietary capillary aerosol generator (CAG) is initially being developed as part of the AEROSURF® program. AEROSURF is a novel investigational drug-device combination product being developed to deliver Discovery Labs' KL4 surfactant in aerosolized form to premature infants with RDS. The appeal of AEROSURF is its potential use for the administration of KL4 surfactant to premature infants without invasive endotracheal intubation.

 

 

Kreisler Manufacturing Corp. (KRSL)

Kreisler Manufacturing, through its wholly owned subsidiary Kreisler Industrial Corporation, manufactures precision metal components and manifold and tube assemblies for use in military and commercial aircraft engines and industrial gas turbines.

With design and manufacturing facilities in North America, Kreisler has established a global customer base that includes Rolls-Royce, Siemens, Pratt & Whitney, General Electric, Mitsubishi, Honeywell, Volvo, and more.

The company’s ISO 9000 registered quality system and aerospace-certified manufacturing processes complement its in-house design, engineering, and manufacturing capabilities by ensuring that processes are under statistical control and that products meet mil spec and other quality standards.

Kreisler has earned NADCAP accreditation for internal manufacturing processes, including welding, nickel plating, as well as special chemical processes such as passivation and titanium cleaning.

 

 

NanoString Technologies, Inc. (NSTG)

NanoString Technologies wowed markets this week with Monday’s news that their Prosigna™ Breast Cancer Assay platform received 510(k) clearance from the FDA. An automated and easy to use molecular diagnostics platform based on the company’s proven gene expression technology nCounter®, which has helped see over 100 peer-reviewed studies come to publication since 2008, Prosigna is now able to be placed in qualified labs all over the country.

The company has taken their proven nCounter Dx Analysis System and structured a platform around the PAM50 gene signature, resulting in an in vitro diagnostic assay that is fully self-contained (including consumables), yet still offers an amazingly powerful mapping solution to profile gene expression that can readily assess a patient’s risk. Prosigna is designed specifically as a prognostic tool for assessing susceptibility to distant recurrence and thus can give oncologists and pathologists a quick way to test their breast cancer patients and give them an idea of their future chances.

The target window is survival at 10 years and Prosigna is indicated for hormone receptor-positive breast cancer postmenopausal women with one to three positive lymph nodes who’ve done the standard surgery and locoregional treatment. The platform has its own scoring system, the Prosigna Score, which indicates risk of recurrence and a second score which is computed using the Prosigna Score and the overall positive/negative status of the patient’s lymph nodes.

Prosigna landed EU regulatory clearance back in 2012 and launched just this February, so the FDA’s quick decision is a clear endorsement of the platform’s extremely precise, quantitative methodology. This thing is robust too, it actually does single-tube multiplexing of all 50 Prosigna genes in one reaction (using single-molecule imaging) and you don’t need to amplify the reaction as with some other assay technologies because the Prosigna platform is incredibly sensitive and can pull readings with remarkable efficiency, outputting a simple digital bar code. NanoString isn’t screwing around with the product execution either; Prosigna is completely automated, making the tedious and laborious job of testing simpler and easier than what caregivers have come to expect.

The company really has thought this through superbly and is drawing heavily on their established, clinically actionable genomic mapping technologies to offer oncologists and pathologists a really good way to assay small tissue samples and tell the patient what their chances are like. The product execution should have shareholders beaming.

A huge boon for breast cancer sufferers and one that is not a moment too soon either, with the most recent year of data aggregated by CDC (2009) showing over 211.7k cases in the U.S. alone, as well as a tragic 40.6k casualties. These are our mothers, sisters, and daughters dying of what is now the most common cancer among U.S. women (aside from non-melanoma skin cancers) and markets reacted accordingly to the news as shares jumped 66.40% to close $12.68 on Tuesday.

 

 

Stemline Therapeutics, Inc. (STML)

Stemline Therapeutics is engaged in the development of oncology products that target both tumor bulk and cancer stem cells (CSCs). Whereas most cancer therapies target only the tumorm mass, leaving CSCs unaffected and leading to a recurrence of the tumor, Stemline's therapies are specifically designed to attack the tumor and CSCs to induce response and prolong survival.

The company's development portfolio includes candidates SL-401 and SL-701, which have demonstrated clinical activity, including durable complete responses (CRs), in phase 1/2 studies of patients with advanced hematologic and brain cancer, respectively.

SL-401 is a novel targeted therapy that attacks both tumor bulk cells and CSCs of multiple hematologic cancers, including blastic plasmacytoid dendritic cell neoplasm (BPDCN) and acute myeloid leukemia (AML). SL-401 targets the interleukin-3 receptor (IL-3R), which is over-expressed on tumor cells and CSCs but only minimally expressed on healthy cells. This specific activity leads to an improved safety profile with minimal off-target effects. In the phase 1/2 trial of single agent SL-401, five of six BPDCN patients achieved tumor shrinkage (83% overall response rate), and there were three CRs. In addition to BPDCN, SL-401 has shown very promising single agent activity in patients suffering from relapsed/refractory AML.

SL-701, an off-the-shelf, subcutaneously injected peptide vaccine comprised of several synthetic peptides, is being advanced into later stage trials of adults with second-line glioblastoma multiforme (GBM), the most common and aggressive type of brain tumor, and children with brainstem and non-brainstem glioma. The candidate is designed to stimulate the immune system in a very targeted manner to cross the blood-brain barrier and attack tumor cells located anywhere in the brain. In phase 1/2 clinical trials, SL-701 was shown to be safe and well-tolerated, with injection site reactions and fever the only notable adverse events. These trials also showed single agent efficacy, with an overall response and disease stabilization rate of 59% (13/22) in adult patients with recurrent/refractory high-grade gliomas, including recurrent/refractory GBM. The overall response and disease stabilization rate in pediatric patients with gliomas was 86% (19/22).

 

 

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