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Harry Newton's In Search of The Perfect Investment Newton's In Search Of The Perfect Investment. Technology Investor.

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8:30 AM Wednesday, July 20, 2005: It feels good. We're smack in the middle of second quarter earnings reporting season and numbers are good. This is the heaviest week. You're seeing a lot of "earnings top forecast." Today 176 companies report. I'm increasingly sanguine about the stockmarket's prospects for the rest of the year. I've shifted a few more funds into equities.

Cramer's picks are popping -- the following day: On Monday's "Mad Money" he picked Caterpillar (CAT) and said it will report "monster" second-quarter earnings on Thursday. Yesterday CAT rose a whopping $2.58, or 5% -- a testimony to Cramer's growing power. Be interesting to watch the earnings numbers tomorrow. You can get a recap of Cramer's 'Mad Money' show on the following day. Click here.

Cramer's picks tend to be large cap. He is clearly worried about what his growing influence could do to a small cap: Bounce it and then crash it. Not good. Big caps are not always the place to be, however.

NovaDel appeals: Yesterday I met with the management of NovaDel Pharma (NVD), a company I own. The story here is:

+ A great core technology platform.
+ Promising potential products, awaiting eventual FDA approval.
+ Good clinical, experimental indiications product works.
+ Low market cap at present -- only $41 million. Stock price is $1.15.
+ Huge long-term potential.
+ Great motivated management.
+ Low-risk, double pronged business strategy, which appeals.

NovaDel sprays drugs into the mouth. That's its technology and its patents. Going through the mouth gets drugs into the body faster than pills, which have to go through the stomach and then the liver before they start to work. NovaDel has picked six "big" drugs. It's formulating the generic version of these drugs into a lingual spray, testing them and getting FDA approval. Two choices at that approval point:

1. License the drug to the big pharma which owns the branded version.
2. Sell a generic version lingual version of the spray itself.

To big pharma, NovaDel brings a big benefit -- extending patent protection on drugs, now being sold as pills. A new delivery mechanism means a new patent. To NovaDel, this strategy could play well for many years. Drugs losing patent protection in 2006 sold over $20 billion in 2002 (and probably more this year).

Here are the drugs and the big markets, NovaDel has initially picked to develop lingual (mouth-spray) products.

Brand Name
Annual Drug sales today
Nitroglycerin Acute Angina
$60 million
Ambien Sleeplessness
$1,500 million
Imitrex Migraines
$1,200 million
Zofran Anti-nauseant (e.g. after Chemotherapy)
$1,300 million
Xanax Anxiety
$922 million
Diprivan Anesthetic
$507 million

I really like the last one -- anesthetic. NovaDel has this neat idea that doctors would use the spray for quick in-house procedures. Today there's no general anesthetic for that purpose, unless you inject Diprivan. Hence, NovaDel has identified a brand new market.

To sum up, NovaDel is two to three years from decent profits. It will need to raise more money along the way. As it achieves progressive FDA approvals (and it will -- there is no question in my mind), its stock should pop. There is a sort of predictable market cap appreciation with biotech firms -- relating o FDA approvals and licensing deals signed. If you have broadband, you can see NovaDel's investor presentation. Click here. You'll need PowerPoint, or the free PowerPoint Viewer, which you can download: Click here.

Replacing Apple's iPod battery. They're easy to change. To buy a replacement battery, click here. To see how to do it, click here.

Useless factoid of the day: One third of Taiwanese funeral processions include a stripper.

Our friend the Muslim comedian, Goffaq Yussef, doesn't exist.

And better, several smart readers spoke his name out loud and got the message. Meantime, the jokes were funny. If you missed them, click here.

Noah and the flood, circa 2005
In the year 2005, the Lord came unto Noah, who was now living in the United States, and said, "Once again, the earth has become wicked and overpopulated and I see the end of all flesh before me. Build another Ark and save two of every living thing along with a few good humans."

He gave Noah the blueprints, saying, "You have six months to build the Ark before I will start the unending rain for 40 days and 40 nights".

Six months later, the Lord looked down and saw Noah weeping in his yard...but no ark. "Noah", He roared, "I'm about to start the rain! Where is the Ark?"

"Forgive me, Lord," begged Noah. "But things have changed. I needed a building permit. I've been arguing with the inspector about the need for a sprinkler system. My neighbors claim that I've violated the neighborhood zoning laws by building the Ark in my yard and exceeding the height limitations. We had to go to the Development Appeal Board for a decision.

Then the Department of Transportation demanded a bond be posted for the future costs of moving power lines and other overhead obstructions, to clear the passage for the Ark's move to the sea. I argued that the sea would be coming to us, but they would hear nothing of it.

Getting the wood was another problem. There's a ban on cutting local trees in order to save the spotted owl. I tried to convince the environmentalists that I needed the wood to save the owls. But no go!

When I started gathering the animals, I got sued by an animal rights group. They insisted that I was confining wild animals against their will. They argued also the accommodation was too restrictive and it was cruel and inhumane to put so many animals in a confined space.

Then the EPA ruled that I couldn't build the Ark until they'd conducted an environmental impact study on your proposed flood.

I'm still trying to resolve a complaint with the Human Rights Commission on how many minorities I'm supposed to hire for my building crew. Also, the trades unions say I can't use my sons. They insist I have to hire only Union workers with Ark building experience.

To make matters worse, the IRS seized all my assets, claiming I'm trying to leave the country illegally with endangered species.

So, forgive me, Lord, but it would take at least ten years for me to finish this Ark."

Suddenly the skies cleared, the sun began to shine, and a rainbow stretched across the sky. Noah looked up in wonder and asked, "You mean, you're not going to destroy the world?"

"No," said the Lord. "The government beat me to it."

Recent column highlights:
+ Hana Biosciences appeals. Click here.
+ All turned on by biotech. Click here.
+ Steve Jobs Commencement Address. The text is available: Click here. The full audio is available. Click here.
+ The March of the Penguins, an exquisite movie. Click here.
+ When to sell your stocks. Click here.

Harry Newton

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. That money will help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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