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Hello Readers,
And so, the beat continues, or should we say “death knell”. Yes, that sounds terribly pessimistic, but there is cause for some optimism. We may have seen the worst. The key for the market’s intermediate future rests with President-elect Obama, who has been remarkably silent since his half-baked press conference three days after election day. During his two-year campaign, Mr. Obama had a lot to say. What the markets need is for him to come out onto his driveway and start telling us what he really plans to do and he needs to do it RIGHT NOW, not wait until January 20. And yes, our Current Portfolio continues to get shredded along with everything else. So, please, Mr. President-elect, start telling us about those changes.
Here are the headlines since the last Newsletter about companies in our Current Portfolio. Dates in parentheses are when we first recommended them.
Vimicro (VIMC) (11/5/08). Reports quarterly revenue at high end of guidance; balance sheet still looks strong.
Guidance Software (GUID) (11/5/08). Quarterly numbers beat analyst view; balance sheet still looks good. Company said to reject $4.50 per share takeover offer.
Oilsands Quest (BQI) (10/20/08). Provides operational update and will present at the Canaccord Global Energy Conference on November 18.
Akeena Solar (AKNS) (10/20/08). Has second best quarter ever; balance sheet still looks pretty good. Highlights seven new commercial installations during third quarter.
SCM Microsystems (SCMM) (10/5/08). Introduces new mobile terminal for the German Electronic Health Card. Receives volume orders of Smart Card Readers for U.S. government security programs. Quarterly numbers not glowing; balance sheet still looks good.
Lexicon Pharmaceuticals (LXRX) (9/20/08). Drug candidate LX1032 for carcinoid syndrome successfully completes Phase 1 clinical trials.
Endeavour Silver (EXK) (9/5/08). Releases quarterly report.
Insure.com (NSUR) (9/5/08). Named as a “Best List” web site by Kiplinger’s Personal Finance for third year in a row.
ICAgen (ICGN) (8/5/08). Balance sheet still looks good.
Hythiam (HYTM) (7/20/08). Quarterly numbers not great; balance sheet still looks good.
Applied Energetics (AERG) (7/5/08). Quarterly report upbeat; balance sheet looks good. Exchanges common stock for the majority of its outstanding convertible preferred stock.
Neurobiological Technologies (NTII) (7/5/08). Recent balance sheet still looks good.
Energy Focus (EFOI) (6/5/08). U.S. Energy Department names company an Energy Star Partner. Recent numbers show good revenue growth but company tames future forecast; balance sheet still looks pretty good.
Microvision (MVIS) (5/20/08). Latest numbers not good; balance sheet still looks fairly strong. Company claims its new MEMS scanning mirror exceeds key performance target necessary to be included in Pico projectors for mobile handsets.
GlobalSCAPE (GSB) (5/20/08). Quarterly report so-so. Announces FileExpress solution. Joins Cisco technology program, completes interoperability testing. Receives certificate of networthiness from U.S. Army.
Kopin (KOPN) (4/20/08). To present at the UBS Global Technology conference on November 19.
Replidyne (RDYN) (4/5/08). Merges with Cardiovascular Systems.
Biolase Technology (BLTI) (4/5/08). Recent numbers show continued revenue growth with wider losses; balance sheet still looks good.
Rodman & Renshaw (RODM) (3/20/08). Recent numbers not good, reflecting market turmoil; balance sheet still looks good. Names new director of research.
ActivIdentity (ACTI) (3/5/08). To release financial results on November 20.
IncrediMail (MAIL) (2/20/08). Reports pretty good quarterly numbers; balance sheet still looks good.
Amicas (AMCS) (1/20/08). Partners with Arkansas’ largest radiology practice. Latest quarterly results not good but not bad; balance sheet still looks very strong.
Nanophase Technologies (NANX) (1/20/08). Latest balance sheet still looks good.
Hollywood Media (HOLL) (1/5/08). Recent quarter shows slight revenue decline but an ugly loss; balance sheet still looks good.
Move, Inc (MOVE) (1/5/08). Post pretty lousy numbers, indicative of the housing turmoil; balance sheet still looks okay.
Catalyst Pharmaceuticals (CPRX) (12/20/07). Recent balance sheet still looks okay.
Hollis-Eden Pharmaceuticals (HEPH) (12/20/07). To present at the Lazard Capital healthcare conference on November 18. Provides update on clinical programs and reports a $29 million cash/equivalents position.
Santarus (SNTS) (11/20/07). Prevails on claims disputed by Par Pharmaceuticals at Markman Hearing. Latest quarterly numbers look pretty good; balance sheet still appears to be okay.
Continuecare (CNU) (11/20/07). Increases share repurchase program. Recent quarterly numbers look good, as does balance sheet.
Sunesis Pharmaceuticals (SNSS) (11/5/07). Presents clinical trial data of Voreloxin in patients with Acute Myeloid Leukemia and ovarian cancer. Recent balance sheet still looks pretty good.
Nucryst Pharmaceuticals (NCST) (10/5/07). New Acticoat silver coated anti-microbial barrier dressing receives approval from Health Canada. Latest numbers show drop in revenues but losses almost zero; balance sheet still looks pretty healthy.
XATA Corp (XATA) (9/20/07). Quarterly and year-end numbers show increase in revenues and paring of losses; balance sheet still seems okay.
Wave Systems (WAVX) (9/5/07). Releases quarterly numbers and other releases. This is on the “Endangered List”.
SIGA Technologies (SIGA) (8/20/07). Latest numbers and balance sheet not real good. To present ST-246 progress at World Health Organization confab on November 19.
AP Pharma (APPA) (8/5/07). Latest balance sheet still looks good but this one is making us nervous as company cuts 18 jobs to save cash.
Heska (HSKA) (7/5/07). Quarterly report shows sharp revenue drop but company still posts a profit; balance sheet still looks okay. Names new president and COO.
Xenonics (XNN) (6/5/07). Ships new SuperVision LRS to Columbia. Says it is likely to double revenue in FY2008 versus FY2007 and expects to double revenue again in FY2009 over FY2008.
Oncolytics Biotech (ONCY) (6/5/07). ONCY investigators present interim REOLYSIN Phase II Sarcoma trial data; other news releases about REOLYSIN. Balance sheet still looks good.
Hana Biosciences (HNAB) (5/5/07). Balance sheet really weakens. We are placing this on the “Endangered List”.
ECtel (ECTX) (5/5/07). Recent quarterly report shows good revenue growth but losses widen; balance sheet still looks good.
TTI Telecom (TTIL) (3/5/07). Recent numbers show drop in revenues but increase in profits; balance sheet still looks good.
Urologix (ULGX) (2/20/07). Latest numbers look lousy; balance sheet still seems okay.
Endologix (ELGX) (1/20/07). Company rejects recent takeover offer from Elliott Associates. Powerlink XL System clinical data to be announced on November 20. To present at Stephens investor conference on November 18.
Neose (NTEC) (12/20/06). Reports quarterly numbers. This is on the “Endangered List”.
AdvanSource Biomaterials (ASB) (12/20/06). Recent balance sheet seems okay.
YM Biosciences (YMI) (11/5/06). Offer made to acquire company at between 50 cents to 60 cents a share. This is on the “Endangered List”.
Proxim Wireless (PRXM) (11/5/06). Announces quarterly results. This is on the “Endangered List”.
Hydrogenics (HYGS) (9/20/06). Releases upbeat quarterly report; balance sheet still looks good.
Advanced Life Sciences (ADLS) (7/20/06). Recent balance sheet weakens. We’re placing this on the “Endangered List”, another sign of the times.
NTN Buzztime (NTN) (7/5/06). Recent numbers not great but company optimistic; balance sheet not bad. However, we’re placing this on the “Endangered List” because stock price has gone really south.
TRI-S Security (TRIS) (5/5/06). Closes exchange offer for 10% convertible promissory notes due 2008. Recent numbers show good revenue growth but wider losses; balance sheet not that good as cash position becomes negligible.
Pharmos (PARS) (4/20/06). Reports 3rdQT results. On “Endangered List”.
ThermoGenesis (KOOL) (4/5/06). Seems the stock took a hit because of wider losses due to a voluntary product recall; balance sheet still looks good.
Adherex (ADH) (2/20/06). Balance sheet still looks good as stock drops to 6 cents. On “Endangered List”.
MIND C.T.I. (MNDO) (2/5/06). Gives upbeat assessment in quarterly report.
8×8 (EGHT) (1/20/06). CFO is named president.
Digital Angel (DIGA) (12/20/05). Releases quarterly numbers. On “Endangered List”.
RAE Systems (RAE) (10/5/05). Releases pretty good-looking quarterly numbers, but stock still tanks – really starting to hate this market – balance sheet looks good.
EntreMed (ENMD) (9/5/05). Releases quarterly numbers. On “Endangered List”.
Zi Corp (ZICA) (8/5/05). Releases quarterly report. On “Endangered List”.
B.O.S. (BOSC) (1/5/05). Launches PointAct, a family of Microsoft SharePoint software-based applications for RFID solutions. Receives notice on increase by nearly $10 million of the value of an existing frame agreement with airline industry customer. To announce earnings on November 20.
Nova Measuring (NVMI) (11/5/04). Recent numbers not great; balance sheet still looks good.
Network Engines (NENG) (6/5/04). Quarterly report shows good revenue growth but some pretty bad losses; balance sheet still seems okay.
TMNG Global (TMNG) (4/20/04). Recent numbers not good; balance sheet still looks alright.
Our picks for this Newsletter are another biotech and a general entertainment company, both trading on NASDAQ.
ACADIA PHARMACEUTICALS, INC. (NASDAQ: ACAD) – $1.44. Twelve-month hi-low has been $15.30 – $1.11. Based in San Diego, CA, with about 140 employees, this biotech has 37.1 million shares outstanding, $75.53 million in total current assets, $78.2 million in total assets, little debt, and $11.96 million in total liabilities. Institutional ownership is around 75%. One analyst gives the stock a “strong buy”, one a “moderate buy”, and seven have it as a “hold”. www.acadia-pharm.com
Yes, Acadia Pharmaceuticals, Inc. has been trampled with about everything else in this market, most hard hit have been the small biotechs. However, the company has a good-looking balance sheet, a nice analysts following, and several interesting drug candidates in its pipeline. It should be noted that over the next three years the company can raise up to $60 million through common stock sales, which could, and probably has, put pressure on its stock price.
Founded in 1993 as Receptor Technologies, and public for over 14 years, Acadia focuses on discovering and developing small molecule drugs for treating central nervous system disorders. The company has six programs in clinical development and several additional ones in various stages. Its candidates include Pimavanserin for treating Parkinson’s disease psychosis, which is in Phase III trials; Pimavanserin as a co-therapy for schizophrenia, in Phase II trials; ACP-104 for treating schizophrenia, in Phase IIb clinical trials; Pimavanserin for sleep maintenance insomnia, in Phase II trials; AGN-XX and AGN-YY for neuropathic pain, in Phase II trials; and AC-262271 for glaucoma, in Phase I trials.
Acadia’s developing pipeline also consist of ACP-105 for endocrine indications in IND-track development stage; ACP-106 for neuropsychiatry and sleep indications in IND-track development stage; Serotonin program for neuropsychiatry and sleep indications in preclinical stage; pro-cognitive antipsychotic (PCAP) program for schizophrenia in preclinical stage; Muscarinic program for neuropsychiatry and other indications in preclinical stage; and Cannabinoid CB1 program for obesity in preclinical stage. The company has collaboration agreements with Allergan to discover and develop new therapeutics for ophthalmic indications, selective muscarinic drugs for treating glaucoma, and new therapeutics for neuropathic pain.
The company is typical of most small biotechs in that it has little revenue and mega losses. For the quarter ending 9/30/08 the company lost $15.61 million.
Acadia has a lot in its pipeline, a healthy balance sheet, and, if needed, a source for future funding.
Our 24-month target for the stock is $2.50 to $2.75
For more information, contact ACAD’s Lisa Barthelemy at 858-558-2871; ir@acadia-pharm.com
THE ORCHARD ENTERPRISES, INC. (NASDAQ: ORCD) – $2.50. Twelve-month hi-low has been $10.50 – $1.06. Located in New York City with about 70 employees, this general entertainment company has 6.3 million shares outstanding, $23.46 million in total current assets, $54.56 million in total assets, little debt, and $18.1 million in total liabilities. Institutional ownership is around 5%. One analyst gives the stock a “moderate buy”. www.theorchard.com
Our thinking here is that no matter how terrible the economy gets, people will still buy music and videos. The Orchard Enterprises, Inc. has a decent balance sheet and growing revenues, though we do hope they can start paring the losses, soon.
Public for over three years, The Orchard licenses and globally distributes more than 1.3 million songs and over 5000 video titles through hundreds of digital stores, such as iTunes, eMusic, Google, Netflix, V CAST, and mobile carriers, including Verizon Wireless, Vodafone, and Bell Canada. With operations in 29 regions worldwide, the company generates income for its label, retailer, brand and agency clients by making these music/audio recordings and videos available for purchase at the online stores and through marketing and promo campaigns; branded entertainment programs; film, advertising, gaming and TV licensing, and other services. Through its recently acquired TVT Distribution division, The Orchard also offers physical distribution solutions of music in CD and vinyl format for select record label partners.
During October, The Orchard ranked as the fastest growing company in the New York region in Deloitte’s Technology Fast 50 Program. The brokerage firm Canaccord Adams gave the stock a “buy” rating with a target of $6.00. Also, the company landed two top regional Mexican music labels, further expanding its leadership in Latin music.
For FY2007, ending 12/31/07, revenue was $28.5 million with about $24.4 million in losses compared to FY2006 revenue of $7.7 million and around $6.5 million in losses. During the first nine months of the current FY, ending 9/30/08, revenue was $41.18 million with $2.49 million in losses.
The company is definitely in a vogue business and seems to have found the right formula for piling up revenues. Now, it needs to get a handle on the losses, which it appears to be doing.
Our 24-month target for the stock is $4.50 to $5.00.
For more information, contact ORCD’s Jaclyn Ranere at 212-300-2839; jaclyn@theorchard.com
Look for the December 5, 2008 Newsletter to be posted on 12/1 or 12/2.
Happy Thanksgiving,