Mast Therapeutics Spec BUY

Target: US$3.00

Mast Therapeutics is a biopharmaceutical company
focused on its Molecular Adhesion and Sealant
Technology (MAST) platform to treat serious diseases
with significant unmet needs. Its lead product,
investigational agent MST-188, shows potential in
patients with sickle cell disease.
All amounts in US$ unless otherwise noted.

Life Sciences — Biotechnology
Investment recommendation
Reiterate BUY; $3.00 target on MST-188 potential in sickle cell disease
crises. MSTX’s lead candidate, MST-188, binds to hydrophobic surfaces on
damaged cells to reduce cell adhesion and blood viscosity. We expect
positive data from the Ph3 EPIC trial to show reduced length of SCD vasoocclusive
crisis (VOC) and we think recently acquired AIR001, nebulized
nitrite for PAH, complements MST-188 well. We see large market potential
for MST-188 given the unmet need in SCD and potential for combo-Tx. Our
$3.00 target is based on a pNPV analysis.
Investment highlights
 MSTX yesterday announced signing of a definitive agreement to buy
Aires in an all-stock transaction. Aires will bring along its Ph2 orphan
asset AIR001, a nebulized form of nitrite (converted in vivo to nitric
oxide) for pulmonary arterial hypertension (PAH). Nitric oxide is
thought to have potential benefits for PAH, SCD and CV disease (e.g.,
heart failure) by promoting vasodilation and regulating smooth muscle
proliferation, clotting and white blood cell adhesion.
 Aires cash balance to offset cost of AIR001 development in 2014.
Aires will bring ~$3M net cash to MSTX, which should cover ~$2M in
expected current R&D obligations from the Ph2 PAH trial currently
closing down and an investigator-sponsored PAH/HF trial.
 Next value inflection catalysts now likely from Ph2 strategies in ALI,
HF although largest inflection remains EPIC SCD data in Q4/16. We
expect next major data around H2/15 from a Ph2 acute limb ischemia
trial MAST intends to initiate soon. We think Ph3 EPIC enrollment is
on track to finish by EOY 2015 with new enrollment criteria
expansion, and we expect more updates on Ph2 ALI trial and plans for
AIR001 plans in the coming quarters.

Uranium Sector Hopes For China Buyouts

Cameco Corporation --- Uranium - Fuel - Electr...
Cameco Corporation — Uranium – Fuel – Electricity – Mining …South West Industrial Saskatoon, Saskatchewan, Canada (Photo credit: Wikipedia)

Nov 15

Cameco* (CCO : TSX : $16.84)
Paladin Energy (PDN : TSX : $0.86)
With China expected to grow its nuclear power program from the 15 currently operating reactors to 67 by 2021, of which 26 are under construction, does it surprise you that China is planning on step up (acquiring?) uranium mining projects in foreign countries?

According to the China Daily, China National Nuclear Corp. (CNNC) will speedup overseas uranium mining exploration, focusing on Australia, Africa and Central Asia, to meet growing uranium demand. Sun Qin, Chairman of CNNC, the state-owned energy company which runs more than 40% of China’s nuclear facilities, said, “We have no worries about uranium resource reserves, as we will enhance efforts on exploring the resources both at home and abroad…We will step up uranium mining projects in foreign countries…The target overseas markets include Australia, Africa
and Central Asia.”

Currently 95% of China’s uranium imports come from Kazakhstan, Namibia, Australia and Uzbekistan.
China recently reported that a large leaching sandstone-type uranium deposit had been discovered in northern China’s Inner Mongolia autonomous region. Most uranium watchers in the West shrugged their shoulders when they heard the news. With the number of publicly listed uranium companies trading at multi-year or all-time lows, does it make sense that the Chinese are willing to “explore” for new resources instead of buy? Why not look to acquire uranium mining projects around the globe?  The answer may be that  the Chinese believe regulatory and government approval is  difficult to get in certain countries

Uranium – Seasonal Update On Potential Catalysts

A billet of highly enriched uranium that was r...
A billet of highly enriched uranium that was recovered from scrap processed at the Y-12 National Security Complex Plant. Original and unrotated. Source: (Photo credit: Wikipedia)

Cameco  (CCO : TSX : $22.55)
Denison Mines   (DML : TSX : $1.40)
Paladin Energy   (PDN : TSX : $1.45)
Uranium One      (UUU : TSX : $2.47)

August 21

Since the beginning of August, shares of Cameco are up almost 13%; an increase of over $1 billion in market cap. For some time now, we have been highlighting that August is historically the seasonal low for the uranium sector and should provide excellent entry points into high-quality uranium-related equities. Magnifying the potential this year is how severely beaten down the uranium sector valuations are (started with Fukushima and continued with this year’s sell-off in resource markets) and the large number of potential bullish catalysts that are lining up for the sector over the next 6-18 months.
Adding to the enthusiasm in the sector is the need for utilities and large producers to think and plan with a long-term focus. Last week, we saw evidence of this, as two deals were announced suggesting that global utilities believe: i) Prices are very attractive at current levels; and ii) Securing future supply is an important concern.

Paladin announced that it has entered into a  long-term off-take agreement with an undisclosed utility that includes a significant pre-payment of $200 million, and the United Arab Emirates (UAE) announced that it has awarded six fuel contracts valued at $3 billion for its first nuclear power plant, expected to start up by 2017. The UAE also stated that it “expects to return to the market at various times to take advantage of favourable market conditions and to strengthen its security of supply position.” Of note, the Middle East’s largest player, Saudi Arabia, has 16 nuclear reactors planned over the next 20 years.