K-V Pharmaceutical (NYSE: KV-A) – Catches a Spark to a 42% Gain

The very volatile K-V Pharmaceutical Company (NYSE: KV-A) caught a spark Friday and jumped 42% higher through the day. There was no news of relevance listed on the company’s wire all day long nor on its website, so investors speculated as to the cause, filling message boards with their fervor. We found the driver for you though, so now you can make an informed investment decision for the short and maybe even the long-term.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

K-V Pharmaceutical (NYSE: KV-A) – Catches a Spark to a 42% Gain

Relative tickers: Nasdaq: AATI, Nasdaq: FTWR, Nasdaq: BCON, Nasdaq: VLYWW, Nasdaq: LPHI, Nasdaq: RUE, Nasdaq: SZYM, Nasdaq: INHX, Nasdaq: TKMR, Nasdaq: HMPR, Nasdaq: ACRX, Nasdaq: SEAC, Nasdaq: KGJI, Nasdaq: CDTI, Nasdaq: PFED, Nasdaq: MRVL, Nasdaq: RXII, Nasdaq: QUIK, Nasdaq: CZFC, Nasdaq: CRMT, Nasdaq: SPPRP, Nasdaq: FEED, Nasdaq: ALXA, Nasdaq: VNET, Nasdaq: LAVA, NYSE: KV-A, NYSE: KV-B, NYSE: ARL, Nasdaq: ACTV, NYSE: ZLC, NYSE: DEXO, Nasdaq: SQNS, Nasdaq: FXCM, NYSE: MSO, NYSE: DAC, NYSE: FRC, NYSE: BZH, NYSE: DRL, NYSE: CIS, NYSE: RUSL, NYSE: MDS, NYSE: END, NYSE: MTR, NYSE: LAS, NYSE: AVD, NYSE: UAN, NYSE: MNI, NYSE: RL, AMEX: URG, AMEX: EGX, AMEX: GHM, AMEX: UQM, AMEX: GBG, AMEX: DNN, AMEX: DMC, AMEX: INV, AMEX: PAL, AMEX: URZ, AMEX: GPL, AMEX: BRD, AMEX: COVR, AMEX: BONE, AMEX: QRM, AMEX: RBY, AMEX: PIP, AMEX: CNR, AMEX: WGA, AMEX: HDY, AMEX: SSY, Nasdaq: AMGN, Nasdaq: BIIB, Nasdaq: GILD, Nasdaq: LIFE, Nasdaq: TEVA, NYSE: WPI, Nasdaq: MYL, NYSE: PFE, NYSE: JNJ, NYSE: GSK, NYSE: SNY, NYSE: NVS, OTC: RHHBY.PK and NYSE: AZN.

It looks as though the fuel behind the big move in KV-A shares Friday was news that OrbiMed, the world’s largest healthcare focused investment firm, with some $5 billion in assets under management, upped its stake in K-V Pharmaceutical to 10.53% since March. It looks as though the news, which was not understood until after the close, was not as hot as the rumor though, as the stock was down after hours. It seems speculators thought there was some operation-relevant news leaked, and the real news just didn’t live up to traders’ dreams.

It’s still very relevant that OrbiMed increased its interest, which was 7.23% in March. This quickly heated stock has a 52-week range of $0.61 to $13.55, and took most of that ground starting in February, when one of its drugs gained FDA approval. Makena reduces the risk of premature birth in pregnant women. When approved in early February, it sent the stock up 131% in a day, and to its peak in March. Makena was the first drug approved by the FDA that is specifically indicated to reduce premature birth risk.

It appears Makena is still competing with unapproved compounds of approved drugs that match Makena’s make-up. It also appears that K-V has had to lower its price to ensure the drug was the chosen option of women at risk of premature birth. It looks to me as though this is what took the steam out of the KV-A locomotive in March.

The stock started Friday at $2.39 and closed at $3.38. It was down about 3.25% after hours though, as nimble money trying to catch a lift on its momentum looked to get out after the non-operational news broke. Given a three-day weekend, that made sense for a lot of traders. My feeling is that the stock might give more ground on Tuesday when it reopens under less cloudy skies, given the story will be well known by then. That said, this stock has long-term appeal, based on the little I currently know about it. If the “right price” and the market opportunity are attractive enough, OrbiMed, the specialist investor, may know exactly what it’s doing.



Other top gainers on the day included Advanced Analogic Technologies (Nasdaq: AATI), FiberTower (Nasdaq: FTWR), Beacon Power (Nasdaq: BCON), Valley National Bancorp (Nasdaq: VLYWW), Life Partners (Nasdaq: LPHI), rue21 (Nasdaq: RUE), Solarzyme (Nasdaq: SZYM), Inhibitex (Nasdaq: INHX), Tekmira Pharmaceuticals (Nasdaq: TKMR), Hampton Roads Bankshares (Nasdaq: HMPR), AcelRx Pharmaceuticals (Nasdaq: ACRX), SeaChange International (Nasdaq: SEAC), Kingold Jewelry (Nasdaq: KGJI), Clean Diesel Technologies (Nasdaq: CDTI), Park Bancorp (Nasdaq: PFED), Marvell Technology (Nasdaq: MRVL), RXi Pharmaceuticals (Nasdaq: RXII), QuickLogic (Nasdaq: QUIK), Citizens First (Nasdaq: CZFC), America’s Car-Mart (Nasdaq: CRMT), Supertel Hospitality (Nasdaq: SPPRP), AgFeed Industries (Nasdaq: FEED), Alexza Pharmaceuticals (Nasdaq: ALXA), 21Vianet (Nasdaq: VNET), Magma Design Automation (Nasdaq: LAVA), K-V Pharmaceuticals (NYSE: KV-A, NYSE: KV-B), American Realty Investors (NYSE: ARL), The Active Network (Nasdaq: ACTV), Zale (NYSE: ZLC), Dex One (NYSE: DEXO), Sequans Communications (Nasdaq: SQNS), FXCM, Inc. (Nasdaq: FXCM), Martha Stewart Living (NYSE: MSO), Danaos (NYSE: DAC), First Republic Bank (NYSE: FRC), Beazer Homes (NYSE: BZH), Doral Financial (NYSE: DRL), Camelot Information (NYSE: CIS), Direxion Daily Russia Bull (NYSE: RUSL), Midas (NYSE: MDS), Endeavor Int’l (NYSE: END), Mesa Royalty Trust (NYSE: MTR), Lentuo International (NYSE: LAS), American Vanguard (NYSE: AVD), CVR Partners (NYSE: UAN), McClatchy (NYSE: MNI), Polo Ralph Lauren (NYSE: RL), Ur Energy (AMEX: URG), Engex (AMEX: EGX), Graham (AMEX: GHM), UQM Technologies (AMEX: UQM), Great Basin Gold (AMEX: GBG), Denison Mines (AMEX: DNN), Document Security Systems (AMEX: DMC), Innovaro (AMEX: INV), North American Palladium (AMEX: PAL), Uranerz Energy (AMEX: URZ), Great Panther Silver (AMEX: GPL), Brigus Gold (AMEX: BRD), Cover-All Technologies (AMEX: COVR), Bacterin International (AMEX: BONE), Quest Rare Minerals (AMEX: QRM), Rubicon Minerals (AMEX: RBY), PharmAthene (AMEX: PIP), China Metro-Rural (AMEX: CNR), Wells-Gardner Electronics (AMEX: WGA), HyperDynamics (AMEX: HDY) and SunLink Healthy (AMEX: SSY). Industry relatives include Amgen (Nasdaq: AMGN), Biogen Idec (Nasdaq: BIIB), Gilead Sciences (Nasdaq: GILD), Life Technologies (Nasdaq: LIFE), Teva Pharmaceutical (Nasdaq: TEVA), Watson Pharmaceuticals (NYSE: WPI), Mylan (Nasdaq: MYL), Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), GlaxoSmithKline (NYSE: GSK), Sanofi-Aventis (NYSE: SNY), Novartis (NYSE: NVS), Roche Holding (OTC: RHHBY.PK), AstraZeneca (NYSE: AZN).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Leading Loser - BioMimetic Therapeutics (Nasdaq: BMTI)

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In Tuesday’s trade, there were many big losers, but the leading loser in terms of market capitalization, was BioMimetic Therapeutics (Nasdaq: BMTI). The stock shed 35.32% of its value, or $4.73, on its way to close at $8.66. We've sifted through the public information available and think we've pinpointed the reason for decline. Perhaps we've also shed light on what lies ahead for the company and stock.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative Tickers include: AMEX: PAL, Nasdaq: HEAT, Nasdaq: NSPH, Nasdaq: PANL, Nasdaq: RCON, Nasdaq: ADES, NYSE: HRZ, Nasdaq: ENER, Nasdaq: AEY, Nasdaq: BBGI, Nasdaq: FFBHD, Nasdaq: USNA, Nasdaq: MNKD, Nasdaq: MOBI, Nasdaq: GRAN, AMEX: ORS, AMEX: BLD, Nasdaq: ASTC, NYSE: TMM, NYSE: ETM, NYSE: RTSA, Nasdaq: TBOW, Nasdaq: INSW, Nasdaq: AMCN, Nasdaq: VRML, Nasdaq: BCAR, Nasdaq: DIOD, Nasdaq: SNSTA, Nasdaq: CTIB, Nasdaq: PLCC, Nasdaq: BBXT, Nasdaq: USAT, NYSE: BSX, Nasdaq: RENN, NYSE: CVOL, NYSE: MDC, NYSE: MCP, NYSE: NQ, Nasdaq: YOKU, Nasdaq: GMXR, Nasdaq: BRFS, NYSE: AOB, NYSE: BID, NYSE: GMT-P, NYSE: DM, NYSE: MY, NYSE: CMM, NYSE: QIHU and NYSE: DHX.

Leading Loser: BioMimetic Therapeutics (Nasdaq: BMTI)

The company reported results Monday, but that was likely not the reason for its precipitous decline. Rather, speculation may have turned sour around BMTI’s Thursday scheduled meeting of the Orthopaedic and Rehabilitation Devices Panel of the Medical Devices Advisory Committee around the company’s Augment Bone Graft. On May 12, 2011, the committee will discuss, make recommendations, and vote on information related to the premarket approval application (PMA) for the Augment Bone Graft, sponsored by Biomimetic Therapeutics, Inc. The intended use of the device is as an alternative bone grafting substitute to autologous bone graft in applications to facilitate fusion in the ankle and foot without necessitating an additional invasive procedure to harvest the graft.

If expectations for a positive committee meeting result, which could lead to faster FDA approval, were built into the shares, it seems fear or fact helped to remove some of that expectation Tuesday. The Associated Press reported that information on the FDA’s website implied the advisory panel might not recommend BioMimetic’s treatment for near-term approval. We’re not sure exactly which material on the FDA’s website AP is citing as they did not link to it in the article, but we expect it was not the one we have linked to here. Perhaps the AP is referring to the findings that the FDA said it would publish two days ahead of the meeting, which we could not locate on the FDA’s site. If there is no data, perhaps the market is simply reacting to the lack of it, and reading into that. AP refers to specific arguments though, but we wonder if they do not represent old information. We’re putting a call into the company and FDA today, and will update this article if we discover the document referred to here or receive other useful insight. The company will be greatly restricted to information it can provide, given the pending news, but we're just looking for the public FDA data which is supposedly behind the stock's move on Tuesday.

We did not find the material that we reviewed convincing anyway, and the company’s CEO stated in BioMimetic’s earnings release that he expected approval later this year. We would not expect anything less from a biased insider. Yet, AP notes incomplete trials and inadequate data, which certainly could delay progress toward approval.

When a company’s future seems to hang on only one product, as seemingly evidenced by the stock movement, the commensurate risk can drive high volatility in those shares. Perhaps BMTI is just further away from approval though, rather than impending rejection, in which case the shares should eventually recover, keeping all other things constant and assuming it had the capital to keep the timeline. It would seem though that the risk is being properly discounted on this important event, but that does not necessarily say it will prove correct or not, or whether shorts or longs will win out. One things seems certain, the stock is going to keep moving this week, especially Thursday and Friday after the FDA meeting. The question is, which way will it move?

It appears the company’s cash might last it for less than two years, so the approval process is critical to its ability to raise further capital and to market its leading offering. Without a positive response Thursday, BioMimetic’s access to capital might be less fluid as well.

As far as its results went, BMTI’s revenues came in higher than the average of three analysts’ forecasts at Yahoo Finance (Nasdaq: YHOO), but short of the high estimate. Still, that is far less important than the approval of this Augment Bone Graft application. Clearly, at this stage of development, the approval process is the hinge between open or closed capital markets, growth or decline, and finally profit or loss.



Other price losers included North American Palladium (AMEX: PAL), SmartHeat (Nasdaq: HEAT), Nanosphere (Nasdaq: NSPH), Universal Display (Nasdaq: PANL), Recon Technology (Nasdaq: RCON), ADA-ES (Nasdaq: ADES), Horizon Lines (NYSE: HRZ), Energy Conversion Devices (Nasdaq: ENER), ADDvantage Technologies (Nasdaq: AEY), Beasley Broadcast Group (Nasdaq: BBGI), First Federal Bancshares of Ark (Nasdaq: FFBHD), USANA Health Sciences (Nasdaq: USNA), MannKind (Nasdaq: MNKD), Sky-Mobi (Nasdaq: MOBI), Bank of Granite (Nasdaq: GRAN), Orsus Xelent Technologies (AMEX: ORS), Baldwin Technology (AMEX: BLD), Astrotech (Nasdaq: ASTC), Grupo TMM S.A.B. New American (NYSE: TMM), Entercom (NYSE: ETM), iPath Short Extended Russell 2000 ETN (NYSE: RTSA), Trunkbow International (Nasdaq: TBOW), InsWeb (Nasdaq: INSW), Airmedia (Nasdaq: AMCN), Vermillion (Nasdaq: VRML), Bank of the Carolinas (Nasdaq: BCAR), Diodes (Nasdaq: DIOD), Sonesta International (Nasdaq: SNSTA), CTI Industries (Nasdaq: CTIB), Paulson Capital (Nasdaq: PLCC), BankAtlantic Bancorp (Nasdaq: BBXT), USA Technologies (Nasdaq: USAT), Boston Scientific (NYSE: BSX), Renren (Nasdaq: RENN), C Tracks Exchange Traded Notes (NYSE: CVOL), MDC Holdings (NYSE: MDC), Molycorp (NYSE: MCP), NetQin Mobile (NYSE: NQ), Youku.com (Nasdaq: YOKU), GMX Resources (Nasdaq: GMXR), BRF-Brasil Foods (Nasdaq: BRFS), American Oriental Bioengineering (NYSE: AOB), Sotheby’s (NYSE: BID), GATX Preferred (NYSE: GMT-P), Dolan (NYSE: DM), China Ming Yang Wind Power (NYSE: MY), China Mass Media (NYSE: CMM), Qihoo 360 (NYSE: QIHU), Dice Holdings (NYSE: DHX).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.