The share price for Vical Incorporated (NASDAQ:VICL) jumped over 15% earlier this month on the news that a U.S. patent had been granted for its Vaxfectin-formulated DNA influenza vaccines.

Now with the addition of rumors of a buyout offer from generic drug giant Teva Pharmaceuticals Ltd. (NASDAQ:TEVA), this company is rapidly becoming a superstar!

We saw the potential for Vical here at TFN. Readers that acted on our FREE recommendation of VICL in our Aug. 20 Report, The Top 6 Swine Flu Vaccine Stocks Under $20 are sitting on gains of around 46%!

The rumors could prove true

In early August, Vical announced an agreement with a subsidiary of Teva (Abic Marketing Limited) allowing Abic exclusive marketing rights for the company’s drug Allovectin-7 in Israel.

In return, Vical is to receive upfront and milestone payments.

The company is currently enrolling patients for the Phase III trial of Allovectin-7 in Israel for the treatment of metastatic melanoma.

Teva may perceive Vical as a worthwhile purchase. If you own shares of Vical, we recommend you hold on for now.

Source: Vical (VICL) Just Keeps on Giving

I’ll believe that when I see it. When was the last time the government completed any project on budget?

And I’m not the only one with doubts.

Health Systems Innovations, a health care consultant that has worked with private health insurers, estimates that Senator Kennedy’s bill would cost $4 trillion over 10 years.

Ouch…

Should a health care plan be passed that even resembles anything like the current proposals, $2 trillion in final costs would be a minor miracle.

A trillion here, a trillion there. Pretty soon, you’re talking about real money.

As these health care reforms gather momentum, I’m going to explore a few more investments that should thrive in the face of a major health care system overhaul, regardless of any health care reform plan that may be passed…

Health Care Reform : Protecting Against Inflation With Bond Funds

Despite the President’s popularity, he’s not likely to get everything he wants. Some sort of compromise is to be expected. One thing we can assume is that the cost of any health care reform plan – regardless of whose it is – will be a 13-figure number (i.e. more than $1 trillion).

On a macroeconomic level, that would likely be inflationary and cause bond prices to decline. So if you’re a bond bear, here are two instruments for you…

• UltraShort 20+ Year Treasury ProShares (NYSE: TBT): This ETF is not for the faint-hearted. It seeks to perform at twice the inverse results of the Lehman Brothers 20+ Year U.S. Treasury Index. So if the Index drops 5%, TBT should rise about 10%.

• ProFunds Rising Rate Opportunity (RRPIX): This is a mutual fund that also seeks the inverse performance of the bond market. Its results aim to correspond to 125% of the inverse of the daily movement of the 30-year Treasury bond.

Profit From Health Care Reform with Biotech & Selling Put Options

Recently while researching stocks that would profit during the health care reform process, I discussed the attractiveness of investing in biotech companies that treat rare diseases.

One of the companies I’ve recently discussed, Genzyme (Nasdaq: GENZ), had a major setback when it disclosed problems at one of its manufacturing facilities. The stock price took an immediate hit.

I believe these difficulties are temporary and I still like the company. But if you’d prefer to reduce your risk further, you can look at selling put options on GENZ at a lower strike price. My colleague Lee Lowell just talked about a put selling strategy earlier this week.

I explained to Lee why I like GENZ, but wanted a good put-selling trade for investors who want to own the stock at a lower price. Here’s what he suggested…

• Sell the October 2009 $47.50 puts, currently trading at $1.50 on the bid. This means for every put that you sell, you will collect $150.
• Keep in mind that one put contract represents 100 shares.

• If GENZ never sees the $47.50 strike, you keep the $150.

• If the stock drops to or below $47.50 at expiration, you’ll be required to buy the stock for $47.50 (100 shares of GENZ for every put contract you sell). But remember that you collected $1.50 already, reducing your cost basis to $46 per share.

So if you like GENZ, but would prefer to own it at a lower price, this is one trade to consider.

Health Care Reform: Two Biotech Companies Set For Profits

I’ve recently suggested a few other biotech stocks to my subscribers, including:

• Best-in-class generic drugmaker Teva Pharmaceuticals (Nasdaq: TEVA).
• Another generic drugmaker to look at is Watson Pharmaceuticals (NYSE: WPI). Watson just announced its acquisition of privately held Arrow Group, a generic biotech drugmaker, with significant international operations.I like this move by Watson, as it broadens the company’s reach both in products and markets served.

The bottom line is that while health care reform could very well change the investing landscape within the sector, you can always find opportunities if you know where to look.

Good investing,

Marc Lichtenfeld

Source: Health Care Reform: Five Ways to Profit With Biotech Stocks & Bond Funds

For example, Health Systems Innovations, a healthcare consultant that has worked with private health insurers and the McCain presidential campaign, estimates that Senator Kennedy’s bill would cost $4 trillion over 10 years.

Should a healthcare plan be passed that even resembles anything like the current proposals, $2 trillion in costs would be a minor miracle.

A trillion here, a trillion there. Pretty soon, you’re talking about real money.

In my column last week, I offered three biotech stocks that should perform well, regardless of any healthcare reform plan that may be passed. As those reforms gather momentum, I’m going to explore a few more investments that should thrive, even in the face of a healthcare system overhaul…

Make Money From Bond Market Trouble

Despite the President’s popularity, he’s not likely to get everything he wants. Some sort of compromise is likely. But it’s safe to assume that the cost of the healthcare plan will be a 13-figure number (i.e. more than $1 trillion).

On a macroeconomic level, that would likely be inflationary and cause bond prices to decline. So if you’re a bond bear, here are two investments for you…

• UltraShort 20+ Year Treasury ProShares (NYSE: TBT): This ETF is not for the faint-hearted. It seeks to perform at twice the inverse results of the Lehman Brothers 20+ Year U.S. Treasury Index. So if the Index drops 5%, TBT should return rise about 10%.

• ProFunds Rising Rate Opportunity (RRPIX): This is a mutual fund that also seeks the inverse performance of the bond market. Its results aim to correspond to 125% of the inverse of the daily movement of the 30-year Treasury bond.

How To Buy Genzyme For $47.50

In last week’s column, I discussed the attractiveness of biotech companies that treat rare diseases.

But one of those names, Genzyme (Nasdaq: GENZ), had a major setback this week when it disclosed problems at one of its manufacturing facilities.

I believe these difficulties are temporary and I still like the company. But if you’d prefer to reduce your risk further, you can look at selling put options on GENZ at a lower strike price.

And when it comes to selling puts, look no further than Lee Lowell. He’s the master at this strategy and is currently riding a 100% winning streak since his Instant Money Trader, which focuses exclusively on this strategy, began last November.

I explained to Lee why I like GENZ, but wanted a good put-selling trade for investors who want to own the stock at a lower price. Here’s what he suggested…

• Sell the October 2009 $47.50 puts, currently trading at $1.85 on the bid. This means for every put that you sell, you will collect $185.

• Keep in mind that one put contract represents 100 shares.

• If GENZ never sees the $47.50 strike, you keep the $185.

• If the stock drops to or below $47.50 at expiration, you’ll be required to buy the stock for $47.50 (100 shares of GENZ for every put contract you sell). But remember, that you collected $1.85 already, reducing your cost basis to $45.65.

So if you like GENZ, but would prefer to own it at a lower price, this is one trade to consider.

Add Watson To Your Watchlist

In my column last week, I also suggested best-in-class generic drug maker Teva Pharmaceuticals (Nasdaq:TEVA).

Another generic drug maker to look at is Watson Pharmaceuticals (NYSE: WPI). Watson just announced its acquisition of privately held Arrow Group, a generic biotech drug maker, with significant international operations.

I like this move by Watson, as it broadens the company’s reach both in products and markets served.

The bottom line is that while healthcare reform could very well change the investing landscape within the sector, you can always find opportunities if you know where to look.

Source: Four More Ways To Profit From U.S. Healthcare Reform

The Obama administration is the latest to step up to the plate and take a swing. And with Congress currently chewing over the details of its plan, it has healthcare investors shaking in the knees, wondering how an overhaul of the system will impact biotech, pharma, medical devices, insurers and other medical stocks.

Are their fears rational? And what are the best stocks to play? I’ve got three for you…

An American Healthcare Utopia

Imagine a world where poor Americans no longer have to ration their medication. A world where parents don’t have to worry about how to pay for their sick child’s medical bills. A world where preventative and educational programs will hopefully keep people from getting ill in the first place.

Great aims, of course.

But what does it mean for the biotech sector?

Investors worried about how an insurance revamp will affect biotechs should know that the impact will be limited. Insurance already covers most high-priced biotech drugs.

In addition, many companies have programs in place to help patients who can’t afford the medicine.

In fact, if everyone has healthcare insurance, biotech companies could theoretically even see a bump up in revenue, as those patients previously receiving assistance would now be covered.

There is another provision, however that has the potential to roil biotech stocks…

The Waxman Way

Representative Henry Waxman (D-California) wants to see lower prices for high-priced biotech drugs.

As you may know, some biotech drugs can be exorbitantly expensive. For example, it’s not uncommon for cancer therapies to cost in the tens of thousands of dollars for a full cycle of treatment. And drugs that treat rare diseases can costs six figures per year.

To combat this, Waxman wants to see…

~ The introduction of generic biologics in the marketplace. But he wants it quicker than is possible right now.

~ The allowance of generic drugs onto the market after five years. Industry trade groups, on the other hand, want to see biotech patent exclusivity for at least 12 years.

This second proposal in particular is a problem for biotechs…

The “All Risk-No Reward” Plan

Having such a short timeframe for them to capitalize on their drug discoveries will likely dissuade them and their financial backers from pouring the cast amounts of necessary capital into the R&D for a drug.

Consider, for example, that it takes an average of $800 million and 8-10 years for a biotech company to bring a drug to market. It’s therefore ludicrous that they’d spend longer studying the drug than they would be allowed market exclusivity on it.

In addition, in the first year or two following FDA approval, a company very often goes to considerable effort to educate doctors about the benefits and risks of the new drug. So it typically takes a few years for sales of the drug to climb – and in many cases, the company may only be hitting its peak sales after five years.

To pull the rug from under them, just when employees and investors are being rewarded for years of patience and hard work, makes no sense.

There’s another problem with Waxman’s logic…

Note To Henry: Biotech Is Not The Same As Pharma

Waxman’s insistence that generic biotech drugs get to market faster could have serious ramifications on patients’ health.

Remember that biotech drugs are very different from pharmaceutical drugs. They’re made from living cells and are thus much more difficult to replicate than a traditional synthetic pharmaceutical product. So any slight difference in the manufacturing process can produce disastrous results.

With that said, you might think that the future for biotechs looks a little shaky. After all, just because something makes common sense, it doesn’t mean the government will follow.

So for that reason, I think it is apropos to consider some investments that should do well even if Waxman’s proposal becomes law.

Three “Wax-Beating” Biotech Investments

• TEVA Pharmaceuticals (Nasdaq: TEVA): This is the best generic drug maker and should become a big player as generic biotech drugs gain momentum. TEVA isn’t cheap, but the company is expected to grow its earnings by nearly 20% per year over the next five years.

• BioMarin (Nasdaq: BMRN): I’m a fan of biotech companies that specialize in treating rare diseases. Firms like this can navigate past Waxman’s proposals because with the market for rare diseases being so small, it will likely not be in a generic drug maker’s financial interest to go after that market with a lower priced offering.In this area, consider BioMarin, which has three drugs on the market that treat rare diseases and affect tiny patient populations. For example, MPS VI is a debilitating disease that causes severe deformities, stunted growth and other problems. BioMarin’s Naglazyme is the only drug on the market for the 2,000 known patients in the developed world affected by MPS VI. The drug costs $350,000 per year per patient.

• Genzyme (Nasdaq: GENZ): This is a large-cap biotech company that conducts research in many different areas. It also has drugs that treat rare genetic disorders, including Fabry’s disease and Gaucher disease. Like TEVA, GENZ shares are pricey, but you get what you pay for. Genzyme is also a best-in-class biotech company, particularly in enzyme replacement therapy.

Good investing,

Marc Lichtenfeld

Source: Not Even Government Interference Will Damage These Three Stocks

Indeed, its largest first-quarter investments included:

• $50.9 million in Vanguard Emerging Markets ETF (NYSE: VWO)
• $1.5 million more iShares MSCI Brazil Index ETF (NYSE: EWZ)
• $1.1 million more into in iShares FTSE/Xinhua China 25 Index ETF (NYSE: FXI)
• $877,700 into Van Eck’s Market Vector Russia ETF Trust (NYSE: RSX)
• $817,300 into iShares MSCI Mexico Index Index (NYSE: EWW)
• $390,400 more into iShares MSCI South Africa Index (NYSE: EZA)

Harvard’s fund also took a first-time, $45.5 million position in iShares MSCI South Korea Index ETF (NYSE: EWY), as well as two foreign titans – a $16.7 million stake in China Mobile Ltd. (NYSE ADR: CHL) and a $12.6 million stake in Israel’s Teva Pharmaceuticals Industries Ltd. (NASDAQ ADR: TEVA).

Obviously, an institution such as Harvard does its homework before making such an aggressive play call, and committing so much money to the emerging economies of the world – global regions whose stock markets took even bigger hits than the United States’ Standard & Poor’s 500 Index.

Since the market bottomed out at 676.53 on March 9, the S&P 500 has gained an impressive 34.2%.

During that same span, however, the ETFs that received Harvard endowment dollars have handily trounced the performance of that U.S. bellwether index. Just as an example: Vanguard Emerging Markets ETF is up 58.1% and iShares FTSE/Xinhua China 25 Index ETF has gained 51.2%.

And the overall MSCI Emerging Markets Index ETF (NYSE: EEM) – which measures a 26-country-tracking index of the same name – is up 55.2% since the bottom.

Emerging Market Professors

One of the market professors Harvard is listening to is Robert G. Doll Jr., vice chairman and chief investment officer for private equity fund BlackRock Inc. (NYSE: BLK). Doll said earlier this week that the global economy has likely seen the worst of the worldwide financial crisis, and that developing economies are already emerging from recession.

“If, in fact, we have seen a bottom in markets and economies are going to recover, the emerging parts of the world will recover the most and the fastest,” Doll told Bloomberg News. “After all, their recessions were largely unwanted inventory build-up and not the credit bust in the Western world.”

Earlier this month, Doll said he believed the S&P 500 would fall from its current levels (which it had), and then rally to end the year at around 1,000 – for a gain of about 11%.

“Emerging markets, if they are going to do better than that, are going to do closer to 20%,” Doll said. “There are some that already have. Some have done better than that.”

A couple weeks before Doll’s vote of confidence, Mark Mobius, famed investor and head of Templeton Asset Management Ltd., said that emerging-market stocks are building a base to enter a bull market at the end of the year, Bloomberg reported.

“We are at the base-building period for the next bull market,” Mobius told Bloomberg while attending a conference in Indonesia. “What I see happening is perhaps this continuing till the end of the year, and then a breakout.”

Many of these emerging and developing economies are on the cusp of breaking out, but are being held back by the drought of others. The ultimate catalysts that set them loose will be falling interest rates and easing inflation, Mobius said.

In the first week of May, about $4 billion was pumped into emerging-market equity funds. It was the largest weekly inflow since December and the eighth-largest on record, MarketWatch reported. Most of that went into ETFs, and long-term positions at that.

Not coincidentally, the specific countries seeing the largest inflows are represented in Harvard’s portfolio. Brazil posted its second-largest weekly inflow on record. China, India and Russia also saw huge gains, MarketWatch reported.

Those four markets – Brazil, Russia, India and China – comprise the so-called “BRIC” economies of the world.

Emerging Market ETF Plays

How to capitalize on emerging markets reemergence from recession depends on your risk tolerance. And risk levels can vary by country and investment sector.

Carl Delfeld, head of global investment advisory firm Chartwell Partners, noted that while the U.S. financial sector is the chief culprit of the global financial crisis, some healthy-capital foreign banks are currently very nicely positioned because they didn’t get involved in the bad U.S. debt, and because they have the fastest-growing growing base of consumers in the fastest-growing markets.

And a good way to play this trend could be the soon-to-be available Global Shares Dow Jones Emerging Markets Financial Titans ETF, Delfeld writes in the May 25 issue of Forbes magazine. Of the fund’s top-10 holdings, four are China-based, three Brazil and two India.

More speculative investors might be interested in another new ETF, the WisdomTree Dreyfus Emerging Currency Fund (NYSE: CEW), a basket of 11 equally weighted emerging market currencies that are rebalanced every quarter.

The currencies in the fund are the Brazilian real, Mexican peso, Chilean peso, Israel shekel, Turkish lira, Polish zloty, Chinese yuan, South Korean won, Taiwan dollar, Indian rupee and the South African rand.

For more general plays on specific countries, Harvard’s list of new investments could be a good starting point.

Money Morning Contributing EditorHoracio Marquez recommended iShares MSCI Brazil Index (EWZ) in his popular “Buy, Sell or Hold” column last October. It’s also one of the five emerging market ETFs that Money Morning’s Martin Hutchinson recommended earlier this year. Others included iShares MSCI Chile Investable Index (ECH), iShares MSCI Taiwan Index (EWT) and iShares MSCI Singapore Index (EWS).

Source: Looking For the Next Global Profit Play? Take a Look at These Emerging Market ETFs

David Fessler from Investment U offers us his advice on the two stocks:

Cubist Proves Saving Lives Isn’t Good Enough

With the recent surge in cases of MSRA (methicillin-resistant staphyloccus aureus), or at least a surge in reporting, one would think it was good news for Cubist Pharmaceutical’s (Nasdaq: CBST).

It may have been, had Cubist not been blindsided by a business-rocking revelation Tuesday.

MRSA is a big problem. It’s a widely prevalent and pervasive bacteria found in hospital facilities, and it’s the most common cause of staph infections. Patients contract these infections from catheters, surgeries or I.V. drug needles.

As we use (some would say over-use) anti-biotics to treat infections, only the resistant germs remain. Each successive generation of bacteria are more resilient to treatment and we continually need stronger and stronger drugs to fight them.

They’re called “superbugs” in the press, but that’s not too far from the truth. We are running out of ways to treat these outbreaks. Current estimates put the annual cost of treating MRSA infections at over $10 billion dollars.

And it’s only going to get worse…

That’s why Cubist Pharmaceuticals had really hit a home run with its antibiotic Cubicin – one of the few ways left for hospitals and doctors to fight back.

Introduced in 2003, Cubicin was first prescribed as a treatment for serious skin infections caused by bacteria that invade the body during surgery. However, in 2006, the FDA approved Cubicin to treat bloodstream infections from blood-resistant staph bacteria.

Things looked good for Cubist, until this week.

Teva Pharmaceuticals Files For Generic Cubicin

An Israeli drug company, Teva Pharmaceuticals (Nasdaq: TEVA) has just filed with the FDA to start production of a generic form of Cubicin. Even though Cubist’s patents extend to 2016 and 2019.

How so? Teva contends that either Cubist’s patents were not valid in the first place, or Teva can produce a generic without infringing on those patents.Of course, Cubist intends to challenge Teva through litigation, which automatically puts Teva’s plans on hold for 30 months, according to FDA rules.

Even more of a problem, Cubicin is the one and only product that Cubist Pharmaceuticals sells. It’s all indicative of the kinds of intellectual property problems that plague pharmaceutical development.

Cubicin costs about $100 per day (depending on details), while Teva’s generic would be expected to cost much less. Of course, that’s good news for patients worried about medical bills.

But still, if Cubist, and other pharmaceuticals can’t protect the profitability of their products, then there would be no incentive to spend millions in research and development to create new products and save lives.

It’s one of those ugly problems where both sides are right… and wrong.

Using Price Controls As Alternatives

The alternatives? Price controls. Ugh. Single-payer system. Blech. Publicly-funded research. Yikes.

One of the better “outside the box” suggestions is a prize-based system. Wherein the government or well-funded charities take a necessary, but unprofitable drug needing ailment, and fund a large cash prize to be delivered to those who make the first successful cure.

By balancing the prize, the cost of R&D, and the revenues that could be made on an affordably priced drug, it could be the most cost effective means of providing incentives to provide a public good.

But somehow, I don’t see such progressive thinking passing through the U.S. legislative system.

I’d love to see comments on successful reform of the pharmaceutical industry.

In any case, investment in Cubist has now become a binary pass-or-fail proposition. If Cubist wins, shares will surge. If Teva wins, Cubist is likely a penny stock.

But at least we’ve got something to cure an infection.

Source: Cubist Pharmaceutical’s (CBST): Stock of the Day

Sara says local drug companies with strong product brands will be among the main targets.

They say when the U.S. sneezes, the whole world catches cold…Well, it’s time for a trip to the drug store. More and more often, that means Central and Eastern Europe.

For our Taipan VIP subscribers who attended our August Global Summit conference in San Francisco earlier this month, you may remember me mentioning a couple companies. Big names… Internationally recognized companies like Teva Pharmaceuticals (NASDAQ:TEVA) and Sanofi-Aventis (NYSE:SNY). They’ve set up shop in places like Hungary and the Czech Republic.

Hungary is one of the most developed pharmaceutical and biotechnology sectors in Central and Eastern Europe. Hungary boasts the strongest biotech sector among the twelve new EU member states. That has enticed seventy core biotech companies to set up shop in Hungary up to now and 170 companies have some kinds of biotech related activities. The reason? Cost savings. Companies can save 30-50% compared to Western European enterprises.

But there’s another side to the drug industry and it’s increasingly finding a home in this very region.

I’m talking about generic drugs.

This industry has seen some remarkable growth. Between 2003 and 2006, the generic drug sector has grown at an annual rate of 19% in Central and Eastern Europe. More recently, this area has grown by about 9% a year, and rakes in about $10 billion in sales.

McKinsey Quartery estimates that international companies can bring in somewhere in the neighborhood of $1 billion in additional sales each year.

One of the ways international companies become big player in these markets is through acquisition. With the growth of Central and Eastern European economies, small local companies have sprouted up everywhere.

These smaller companies have at times made quite an impression on market share. Names like Zentiva and Egis Pharmaceuticals might ring a bell to investors. Both are traded as pink sheets here in the U.S. and on a number of German exhanges.

Sanofi-Aventis hold a large stake in Zentive (about 24.9%), and even tried to take the company over. The offer was rejected, though. Another French company, Servier, owns 50.91% of Egis.

For now, drug companies, and especially generics, are still in a major growth spurt. Look for companies who have strong product brands. That’s different from company brands, and it really opens up the playing field for those smaller regional manufacturers.

This could spur even more acquisitions, so be on the look out!

Source: Cold War Drug Store