In his growth-oriented Nate's Notes, the advisor cautions, "I believe we are looking at a situation in which we will either lose most of our money, or triple (or better) our investment in a fairly short period of time."

"Working against the company is the fact that there has never been an inhaled insulin product approved for commercial use that has worked very well.

"Thus, if MannKind’s product manages to both win FDA approval and achieve commercial success, MannKind will truly be treading where no one has gone before.

"Indeed, an inhaled insulin product is one of those ideas that has been around forever, but, for all its promise, has never really resulted in anything but heartache for investors over the years.

"For example, though Pfizer managed to get its inhaled insulin drug (Exubera) approved a few years ago, the product was pulled from the market in late 2007 after generating only $12 million in sales.

"While this implies that MannKind may be facing an uphill battle, it should be kept in mind that Pfizer’s product required users to become proficient at loading and 'pressurizing' a cumbersome apparatus – and releasing the powder and inhaling it with precisely the right technique.

"But MannKind has managed to develop a much more compact and discreet device for delivering inhaled insulin.

"AFRESA passed its Phase III clinical trials with what appear to be sufficiently robust results to warrant approval for the control of hyperglycemia in patients with type 1 or type 2 diabetes, a New Drug Application has been filed with the FDA based on those results, and a ruling is expected early next year.

"In anticipation of approval, the company recently acquired an insulin production facility in Germany from Pfizer. If approved, this facility will nicely complement MannKind’s existing facility in Danbury, Connecticut.

"An additional 'intangible' value associated with this story is that it is still being led by its founder (and largest stockholder), Aflred E. Mann, who has started -- and then sold -- several biomedical companies.

"We again caution that the stock has already made very nice run in recent months (and thus may be due for a pullback before new highs are set again. In addition, the stock has the potential to be even more volatile than your typical development stage company.

"Further, a delay or denial of approval from the FDA will almost certainly results in a major 'haircut' in the stock price. As such, you do not want to become too overweighted in the stock until after the risk surrounding approval has been removed.

"For now, we would encourage speculative investors to start building a position in the stockso that you at least have a bit of 'skin in the game', as the saying goes.  We rate the stock a buy under $10 and a strong buy on any pullbacks under $7."
 

"The company will continue to benefit from Genetech's extensive antibody experience as they continue to run all development for Immunogen's T-DM1.

"In addition, the armed antibody companies can offer significant patent extensions for naked antibodies after they lose patent protection. This additional patent protection is a significant long-term value, especially given the very strong current and projected sales for naked antibodies.

"Companies will spend lots of money to protect/extend patents on blockbuster drugs. Thus, we believe that a premium buy-out from Roche or one of their competitors could happen in the next few years as antibodes become even more pervasive in the drug sector.

"Given the recent pull back in IMGN’s share price from the low $8 level to $7 after the stock's recent secondary offering -- the company sold 5,000,000 shares of its common stock at $7 per share raising $33 million -- we are raising our buy limit to $8 to reflect our growing confidence in the company and it’s significant long-term growth potential.

"While dilution is rarely positive, the fact that the company raised cash after the stock has almost doubled in price over the last year makes it much easier to digest.  Additionally, IMGN has not raised cash in a very long time, making it that much more tolerable as they run a tight fiscal ship.

"With the offering out of the way, we expect more positive news flow either in the form of additional partnerships or more data on T-DM1 later in the year. We believe that T-DM1 is a potential blockbuster drug candidate that will provide the company with a very good revenue stream.

"Any other progress from the company’s pipeline would just be icing on the cake. In addition, any progress in the pipeline would probably trigger a buyer to try and buy them at a premium.

"With cancer antibodies expected to be the largest class of drugs, armed antibodies represent both better drugs and excellent patent extension vehicles. Overall, we believe that Immunogen is an undervalued antibody play. We rate the stock a buy under $8 with a target of $17."
 

In his The Complete Investor, he explains, "We think that many miners are exceptional bets today. And among our favorite gold investments is one that we hold in our small cap value model portfolio: NovaGold Resources (ASE: NG)."

"That’s not to deny the risks, such as possible shortfalls in production, sudden price increases, environmental costs, and so on. Still a miner that can increase production and maintain or boost margins will outperform the metal over time.

"NovaGold -- and its relationship with Barrick (NYSE: ABX) -- illustrates particularly well the potential a superior miner can have even when gold prices are flat.

"Barrick, now Nova’s partner in developing one of the world’s largest gold deposits, proves that miners can rise independently of a bull market in gold. Between the mid-1980s and early 1990s, Barrick climbed more than fifty-fold on extraordinary increases in gold production.

"Production of gold, copper, and silver from Nova’s major properties, Donlin Creek and Golore, may come close. The Donlin discovery, one of the largest ever in North America, is estimated to contain at least 54 million ounces of gold.

"How much gold is this? In 2006 with gold trading below $700, Barrick offered to buy Nova for the equivalent of $16 a share. Then as now Barrick had a 50% interest in Donlin.

"Today, in the midst of a credit crunch, Nova has been beaten down to where it trades at some 80% below Barrick’s 2006 bid. Barrick still has a 50% interest in Donlin, whose potential reserves are considerably higher than in 2006.

"Moreover, the other significant holding of Nova is Galore, which represents one of the largest undeveloped copper deposits in the world.

"What are the risks? The only meaningful one is that the company does not get the financing to develop the properties. But that’s extremely unlikely given Barrick’s 50% interest in a deposit that would more than double its North American gold resources.

"Clearly any company that has no production and is dependent on others for its continued existence has to be rated as highly speculative. That said, from a risk/reward perspective you won’t find a better play than NovaGold."
 

Because we are heading into a holiday weekend, volume was on the light side.

Declining stocks outpaced advancing stocks by a 4 to 1 margin. The biggest loser on the day was Discovery Labs (Nasdaq:DSCO). The stock was cut in half after the FDA delay evaluation of the company's infant respiratory distress drug, Surfaxin.

Other top declining stocks include another biotech, Sepracor (Nasdaq:SEPR) which dropped 18% after it released disappointing trial results for a depression drug. The decliners list was littered with regional bank stocks too, including Park Bancorp (Nasdaq:PFED) down 25%, and Starling Banks (Nasdaq:STBK) down 17%.

Ironically, several regional banks made today's top advancing stocks list. Crescent Banking Co. (Nasdaq:CSNT) led the way with a 47% gain. OakRidge Financial Services (Nasdaq:BKOR) rose 25% and Virginia Commerce Bancorp (Nasdaq:VCBI) rose 17%.

NaviSite (Nasdaq:NAVI) rose 23% on heavy volume on news of a lawsuit settlement. And Matrixx Initiatives (Nasdaq:MTXX) rounds out the big winners with a 18% gain.

*****And so it begins. I'm talking about earnings estimate revisions for banks. And yes, they are headed lower. First up is Morgan Stanley (NYSE: MS). Credit Suisse analyst Howard Chen was expecting a profit of $0.80 a share. Now he says a $0.40 loss is more likely.  

Oppenheimer's Chris Kotowski dropped his expected $0.20 per share loss to $0.94 per share.  

Ironically, part of the reason for the downward revisions is Morgan Stanley's credit quality. But even this is misleading. Accounting rule changes earlier this year allowed falling prices for a company's debt to be treated as a profit on the assumption that the company could show a paper profit by buying back debt at a price lower than what it was sold for.  

Make sense. If you sell a bond at $1 and can buy it back for $0,50, you've essentially made $0.50. But of course, no banks actually did this. They didn't have the cash on hand to buy back debt, because one of the reasons a company's debt falls in value is because investors realize the company has assets that are worth less. In the case of the banks, these impaired assets are often non-performing loans or mortgage related securities.  

As these assets fall in value, the banks have to hold more loss reserves. That, of course precludes them from buying back their own debt.  

*****It should be obvious that accounting rules allowing banks to treat falling prices for its own debt as profits is a complete sham. The measure is a bookkeeping trick designed to let the banks appear healthier while they get their act together. It's just buying time.  

Will it be enough time? I don't see how that's possible, and I've outlined my reasoning over the last few days. Basically, unemployment is still rising (the unemployment rate hit 9.5% today) and the improvement in the housing market appears to be temporary based on foreclosure sales and government mortgage assistance. Some see "green shoots" here. I don't. 

*****There's at least one IPO market getting ready to heat up. No, it's not the U.S. It's China. As many as 100 Chinese companies may be getting ready to list their shares in Hong Kong. And many will come calling for inclusion on U.S. indices as well.  
The first company that will float their shares to the public will be a holding company that's constructing high-speed railroads between Shanghai and Beijing. The $5 billion China expects to raise will go to expand other railways. 
Bloomberg reports that since China announced its $585 billion stimulus plan, it's more than doubled its spending on railroads.  

This is more evidence that China is one of the few countries in the world that can actually grow its economy without taking on massive debt. I view this as very bullish and it's why I've been recommending Chinese stocks frequently in my SmallCapInvestor PRO advisory service. To discover what we're buying to take advantage of China's stimulus spending, click HERE. 

*****Here's TradeMaster Daily Stock Alerts' Jason Cimpl with his weekly video chart analysis. I've really been enjoying his analysis. And his TradeMaster readers enjoy the profits it leads to. But I'd like to hear from you.

*****Finally, I want to wish everyone a great 4th of July holiday. And if you're driving, do it safely. Let's get everyone home safe. I'll talk to you on Monday.

Also included among the results: CardioNet Inc. (Nasdaq:BEAT), Force Protection Inc. (Nasdaq:FRPT), Wind River Systems Inc. (Nasdaq:WIND), Spectrum Pharmaceuticals Inc. (Nasdaq:SPPI), Acura Pharmaceuticals Inc. (Nasdaq:ACUR) and Fuqi International Inc. (Nasdaq:FUQI).