I got an email yesterday  from one of my members (Jeff D.) asking me my opinion on what happened to Labopharm, Inc. (DDSS).  Jeff was at a loss to explain why DDSS’ shares dropped so preciptiously after getting FDA approval on one of their signature drugs.  In some ways, so am I.

Headlines like this one:

Labopharm Receives FDA Approval For OLEPTRO(TM)

usually means that a drug stock will rocket upwards.  Not in DDSS’ case.  The stock lost 40% of its value in just a few days.   Read full release here

You can see from the chart here just what I am talking about:

Stocks dropping on news of approvals is not uncommon ( see BDSI, NRIFF, PK and others), but it is still unexpected.   DDSS, the company, actually has a lot going for it.  It has income (no profits), cash in the bank, good ratios, manageable debt….and a big payday coming some time this year.  I have read where DDSS is in talks with several larger pharmaceutical firms regarding the commercialization of their newest drug, Oleptro.  I can only imagine the frenzy at DDSS offices as they take this surprise announcement and try and turn it into revenues.

I am not terribly surprised at the drop given the rise in the share price in anticipation of approval.  And, I am betting that DDSS will come back and come back strong.  Since I am a technical analyst, I will share one last chart with readers that backs up my contention.

This chart shows how volatile the stock has been and I think it is illustrative of the recuperative powers of DDSS.  You can see that the stock is trading within normal ranges and has shown great historical elasticity.  I would not be too worried about this dip and, in fact, would see this as a buying opportunity.  Having said that, there is support at $1.75 and $1.40.  I don’t think it will drop to those levels, but…you never know.

DDSS is both a short-term and a long-term hold.  In the short-term, I could see the stock regaining much of its recent losses.  It certainly seems like the sellers are out.  In the long-term, DDSS could be a “gold mine”.  I will watch with great interest for news on how they will commercialize this and what the financial ramifications are for the company.

I didn’t spend any time in this blog on drug pipelines and other pharma standards.  I expect that my readers will do their own DD.  Here is DDSS’s website link for your own research.

Trade like you mean it!

Jeffrey Dean

Editor-in-Chief

Note on 2/12/10:  DDSS is getting hammered.  The market did not like the news of their $20MM  offering.   DDSS blew through the $1.75 support and is headed down to the $1.40 level.  MIght be best to take an EVEN more cautious approach to this one.

A little company called Green Energy Live, Inc. (GELV) literally came out of nowhere in December of 2009 for my members.  A MASSIVE gain of 120% was the highlight of a very good December for Soup members.

Well, GELV is back! I track companies that we have done alerts for in the past and am excited to bring this one back to members.

Everyone knows that past performance is no predictor of the future, so I am not guaranteeing anything.  However, I still like GELV and think that it might be a great trade, again! continue

Jazz Pharmaceuticals Inc. (JAZZ) is a specialty pharmaceutical company focused on developing and commercializing products to meet unmet medical needs in neurology and psychiatry. The marketed products and late-stage product candidate of the Company include Xyrem (sodium oxybate) oral solution, LUVOX CR (fluvoxamine maleate) extended-release capsules and JZP-6 (sodium oxybate). The other product candidates in clinical development are JZP-8 (intranasal clonazepam), being developed for the treatment of recurrent acute repetitive seizures in epilepsy patients who continue to have seizures while on stable anti-epileptic regimens; JZP-4 (sodium and calcium channel antagonist), being developed for the treatment of epilepsy and bipolar disorder; and JZP-7 (ropinirole gel), being developed for the treatment of restless legs syndrome. continue

Featuring COP’s production update, SNE’s new laptop; JAZZ’s $7M stock placement; ASCA’s quarterly dividend; and SKX’s $250M credit line.

Today’s Stock Alerts Include: ConocoPhillips (NYSE: COP), Sony Corp. (NYSE: SNE), Jazz Pharmaceuticals Inc. (Nasdaq: JAZZ), Ameristar Casinos Inc. (Nasdaq: ASCA) and Skechers USA Inc. (NYSE: SKX).

ConocoPhillips (NYSE: COP) Stock Alert - COP Sees Q2 Production Up, but Warns on Lower Crude and Natural-gas Prices and Refining Difficulties

ConocoPhillips (NYSE: COP) recently provided an interim update on its second-quarter 2009 results, saying it expects to report a more positive production results from last year’s period. The press release indicated there was an increase of more than 100,000 barrels as production climbed from 1.75 million barrels to 1.86 million. The comparative figures include production from the company’s Syncrude unit but exclude its 20% stake in Russia’s Lukoil. continue

This morning’s stock-alert lineup features mixed results, with JAZZ continuing another day of impressive gains, surging nearly 17%; SQNM and ESLR also managed significant gains while LEA lost 7%.

Today’s Stock Alerts include: Sequenom Inc. (Nasdaq: SQNM), Evergreen Solar Inc. (Nasdaq; ESLR), Jazz Pharmaceuticals Inc. (Nasdaq: JAZZ), Lear Corp. (NYSE: LEA), Alcoa Inc. (NYSE: AA) and Research in Motion (Nasdaq: RIMM).

Sequenom Inc. (Nasdaq: SQNM) Stock Alert - SQNM Shares Decline following Day-Earlier Gains on Investigation Rumors

Sequenom Inc. (Nasdaq: SQNM) shares surged 7.09% to $4.38 this morning. Shares of diagnostic testing and genetics analysis company were bolstered on yesterday’s rumors that the company was close to wrapping up an investigation on the mishandling of its Down Syndrome test data. It can be remembered the company fell 75% in late April on word that some employees had mishandled data and results for its Down syndrome test. Following that news, the company said it would delay the launch of the test. continue

SPNG and JAZZ

SPNG - I wrote an article on SPNG when it was at 2.1 cents.  You can read it here.  I thought they were going up, but didn’t have any idea that it could be so “up”.  I had 100K shares and made a very tidy profit….I wished that I had stayed in.  But, I took my profit and I am thankful for that.

The question is , “Do I get back in”.  I am watching SPNG run again today.  I tried to buy at .181, but didn’t get filled.  It has already run to .19.  Here is what we know:

- SPNG has made a feast of good news for its investors.  They appear to really have made a huge advance in exposure leading to sales.  The latest jump can be tied to their annnouncement that they are being sold in Costco.  What will be telling with that relationship will be if they re-order.  I have had dealings with Costco and they will make or break companies.  If the product doesn’t sell, Costco will ship all the product back and SPNG will refund Costco’s money.

- SPNG is driving eyeballs to their product. Successful cross promotions with MLB and Sponge Bob is increasing the profile of SPNG exponentially.  They are being sold on television, even.  On our board, our members have mentioned seeing ads for SPNG everywhere.

- They are making money….well, at least they are driving top-line revenue.  With the increased ad spending and other costs, I will be curious to see what.

- Becoming a NASDAQ company.  Hanging over this whole stock equation is the stated desire of management to become a reporting company.  It will require a reverse split of some huge number due to their bloated capital structure, but will be a good thing in the long run.

Conclusion: the stock has already popped the magic .20 range and it is marching on.  Remember that it is in uncharted territory and could fall off fast.  It is so far above the 50 and 200 MA that they almost have no relevance to the stock or its direction.  Watch the chart and keep a tight stop.

JAZZ

JAZZ, in my opinion, is a creature of good news.  It has shot up an amazing 300% since Wednesday gapping up sharply in early trading on that day and continuing a multi-day run.  Any pharma company that releases news has the potential to shoot up like JAZZ did.

To look at the chart, you can see that both the MACD and stochastics are still bullish, but the question is “how much farther can it run).  Their financials are terrible - huge losses  (although narrowing somewhat) and some very real liquidity concerns.  The shares opened up sharply today, but have given back some of that gain.  It doesn’t appear that heavy profit-taking is going on, but be careful.

Conclusion:  Watch for a short opportunity on this one.  I don’t think the run will continue and JAZZ will be pushed back to the $1 mark within the next few weeks.