REPUBLICANS

Kevin Brown: “What struck me about yesterday’s David Frum piece [“It’s Time We Republicans Finally Admitted That Paul Krugman Might Be Right”] was this line: ‘Can it be that our enemies were right?’ Really, David? Enemies? Disagreeing on politics or economics is one thing, but equating those who disagree with you with North Korea, terrorists, the French? (That last one is tongue in cheek, I point out.)”

A GRAND TIME TO BE RICH AND POWERFUL

As widely reported yesterday, the Congressional Budget Office found that from 1979 to 2007, average inflation-adjusted after-tax income grew by 275% for the top one percent, compared with 18% for people in the bottom fifth (and not quite 40% for people in the middle three fifths). And as noted yesterday, the Republican front-runners believe the top one percent need still further help, which the bottom 99% would wind up providing.

HOUSING HOPE

Not having been able to get the Republican controlled Congress to do anything (they literally control the House and have essentially controlled the Senate by “filibustering” anything a majority might otherwise pass – those being “snicker quotes” around the word filibustering, as my old mentor, New York Magazine editor Sheldon Zalaznick used to call them . . . in this case because the senators, in their wisdom, long since removed the requirement to actually stand up all night talking in order to filibuster a bill) . . . the President is doing all he can to get the economy moving and help families that are hurting without the approval of Congress. Tuesday, he announced an important rules change that could help a million or so homeowners whose homes are under water (worth less than the mortgage balance) refinance at the prevailing interest rates. That will save them thousands of dollars a year, make it easier for them to stay in their homes, make it less likely those homes will go into foreclosure blighting their neighborhoods further, and making the loans more secure for the lenders, because a borrower is less likely to default if his payments are lower. Helping a million families isn’t enough; but a million here and a million there, and – to paraphrase Everett Dirksen – pretty soon you’re talking about real progress.

STUDENT LOAN HOPE

Yesterday, as reported by CBS:

Speaking to a crowd of college students in Denver, Colorado, the president outlined a new “Pay As You Earn” plan. The proposal would expedite the timeline for an already-approved loan repayment plan that would lower monthly federal student loan payments for Americans whose burden of debt is disproportionate to their earning abilities.

According to the original plan, which Congress approved in 2010, borrowers would be able to reduce their monthly payments from 15 to ten percent of their discretionary income as of 2014. Additionally, that plan dictated that the balance of their debt would be forgiven after 20 years of payments rather than in 25 years. On Wednesday, the president said he would use an executive order to make those benefits available to borrowers as early as 2012.

☞ To keep taxes on the rich at historic lows, Republican prefer to cut funding to state universities, which drives up tuition (and thus student debt). They also opposed the President’s plan – passed along with the health care bill – that removed the banks from getting in between student borrowers and the federal government that was guaranteeing the loans anyway.

UPDATES

Guru:

TTNP ($1.51 up 24 cents yesterday but still below the $1.77 some of us paid this summer): “The company met with the FDA Tuesday and received the green light to file for approval. There had been some concern after the last call that they did not have enough patients treated for at least six months, but based on our analysis and what they said came out of the meeting yesterday, it appears that they do have enough. I believe a green light to file for approval from the FDA is what most partners were looking for, so I expect they will be able to close a partnership – or possibly sale of the company – fairly soon. Can make a case for $4/share without working too hard. Stay tuned.” As always: only with money you can truly afford to lose. These things do NOT always work out.

DVAX ($2.75, about unchanged from first mention): “The ACIP division of the CDC formally voted to put diabetics under age 60 on the list of ‘high risk’ people who should get vaccinated. They also voted that diabetics over 60 ‘may’ get vaccinated as well. There was no formal recommendation for a specific vaccine, since the two approved vaccines are virtually identical, but they did report that the current vaccine does not produce adequate protection in a significant portion of diabetic patients. DVAX recently presented data from their Phase III trial showing very high levels of protection: much higher than in the currently approved vaccine. DVAX has an ‘investor day’ Thursday [i.e.: today] and it expects to file for approval this quarter, setting up potential approval in 2012. Although small cap biotech stocks can be very volatile, DVAX should trade into the $4-$6/share range next year on approval.” As always: only with money you can truly afford to lose. These things do NOT always work out.

CRME ($3.38, down from $4.60 nearly a year ago): “I do believe it will be higher in a year. Merck has consolidated its position and now owns rights to the intravenous and oral forms. The intravenous is approved in Europe and is generating sales. In the US, we await a decision on whether Merck will restart the US phase III or whether it has enough safety data (efficacy is not in question) to file for approval in the US. Merck is expected to start the Phase III oral soon. The biggest problem is that we are at the mercy of Merck to provide the news. However, there is no question that the product works and is safe in its indication. The competitor from Sanofi has lots of problems. So I believe next year we will have a successful intravenous outcome in the US and be close to a successful oral outcome. On that basis, I expect it to move towards 7/share.” As always: only with money you can truly afford to lose. These things do NOT always work out.

KERX ($2.92, way down since first mention at $5.25): “They have results of a Phase III trial in colorectal cancer out by the end of the year or early 2012. There is some real controversy about this one. KERX recently published a Phase II trial in 38 patients. It looks flawless and highly successful. I don’t see any holes in the data. The caveat is that 38 patients is a very small number. IF there were imbalances at baseline in only a few patients, then such imbalances could skew the data to make it look like it is working when it is not. The molecule, perifosine, is structurally similar to miltefosine, which was studied extensively for cancer and abandoned for lack of efficacy. The perifosine Phase II was done as an adjunct to capecitabine, an approved drug for colorectal cancer. Neither perifosine nor miltefosine as a single agent has a meaningful effect on cancer. There is a valid mechanism to back perifosine’s benefit, but mechanism data don’t guarantee success. So while I can say the Phase II data look as good as they could for a small trial at this stage, there is a lot of risk based on the history of these types of compounds. Behind perifosine in their pipeline is Zerenex, an iron-based agent for high phosphate in dialysis patients. There is no question it works – it has been launched in Japan. We are awaiting the results of a one year-safety study and expect it to be positive. Some analysts show a valuation model in which at $3/share there is no value ascribed for perifosine. I think such a valuation is aggressive and expect that if the colorectal cancer data does not work, the stock will drop a point or more. There then should be a recovery in anticipation of Zerenex data, but Zerenex will also require a commercial partner. So under the outcome that perifosine doesn’t work, I expect the stock could be 2-3/share a year from now. IF the perifosine data succeeds, I expect the stock to be 6-10/share next year, but it is high risk.” Thus: only with money you can truly afford to lose.

ALXA ($1.35, up 35% from first mention): “They just announced they will have an FDA advisory panel meeting Dec 12. ALXA has a device that delivers an approved drug for acute schizophrenia in a puff to the lungs, allowing it to get very rapidly into the blood. The onset of action is faster than taking the drug orally or as a shot. There is no question it works and several opinion leaders have spoken favorably about the therapy. The FDA has been concerned, however, that in the trials, patients with asthma or COPD saw some decline in lung function. The company proposes to exclude those patients from the label. Since this product is used only acutely – one or two puffs in the emergency room – I don’t think the issues in asthma or COPD patients should derail the product. I expect the panel will vote ‘yes.’ I note, however, that the FDA has been very cautious on drugs administered to the lung that are not for lung diseases. It did approve Pfizer’s inhaled insulin for diabetes (a product no longer being marketed), but has not approved a similar product from MannKind despite numerous attempts. Inhaled insulin is taken chronically, so a very different situation from ALXA. Still, I’m not sure what the FDA’s perspective is on ALXA and they have been cautious about these ‘inhaled delivery’ products. If the panel votes yes, ALXA should trade to the range of 2-3/share.” Only with money you can truly afford to lose.

 

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