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Hello Readers,
Since the last Newsletter, we closed two more positions; one for a gain and one for a loss. We will be posting them, soon, on the Track Record page.
MAKE MUSIC, INC. (1/20/09). Closed position 2/22/10 at $5.76 for a 52% GAIN.
AMERITYRE (12/5/07). Closed position 2/22/10 at 52 cents for a 77% LOSS.
For the last month, or so, MakeMusic had been slowly creeping upward and finally pierced our 50%-plus goal; we did not see any real reason that gave the stock impetus. We closed Amerityre for a loss; the company moved to the Bulletin Board, recently.
Surprise, surprise. The markets are about where they were two weeks ago. Our viewpoints about the overall picture remain unchanged. The Fed chairman speaks in optimistic jargon while keeping rates at zero, which, in reality, means that the economy still stinks. Recent upticks in jobless claims, plunging consumer confidence numbers, and sagging single-family home sales just deepens our anxieties.
Here are the headlines since the last Newsletter about companies in the Current Portfolio; dates in parentheses are when we first recommended them. We are not giving updates about companies on the “Endangered List” unless we feel the news to be highly significant.
Rosetta Genomics(ROSG)(2/20/10). Joint study by ROSG and NYU Langone Medical Center identifies single microRNA biomarker for prognosis of mesothelioma patients.
Zagg, Inc(ZAGG)(2/20/10). Partners with Best Buy Canada and Future Shop.
Cytokinetics(CYTK)(2/5/10). Announces non-clinical data from multiple programs presented at the Biophysical Society annual meeting.
NIVS IntelliMedia(NIV)(1/20/10). Restates certain financial results from the 9/30/09 fiscal period. Announces preliminary results of 2009 operations.
Corcept Therapeutics(CORT)(12/20/09). To raise $18.2 million in secondary offering. Initiates a Phase 1 study of its lead selective cortisol receptor (GR-II) antagonist – CORT 108297.
Oxigene(OXGN)(11/20/09). Balance sheet still looks okay, but company may need to raise more by year-end.
Solta Medical(SLTM)(10/5/09). To buy Aesthera Corp. for $5.25 million. Recent numbers not bad; balance sheet still looks good.
BioSante Pharmaceuticals(BPAX)(9/20/09). Reports positive LibiGel safety data in Phase III program. Company rated among top 15 on the Biotechnology Patent Scoreboard as published in the Wall Street Journal.
Investors Capital(ICH)(9/20/09). Posts profitable 3rdQT results; balance sheet still looks good.
Anadys Pharmaceuticals(ANDS)(8/20/09). Oppenheimer downgrades stock as company says study results of its hepatitis C drug was only slightly more effective than the placebo. This is not real good news. Recent balance sheet still looks okay.
BioClinica(BIOC)(8/5/09). Launches optimizer to improve clinical trial supply planning. To present at six different conferences during March.
Salary.com(SLRY)(7/5/09). Announces new retail industry job models and competencies. CEO steps down. Several product releases.
Durect Corp(DRRX)(4/20/09). Pares losses compared to previous FY; balance sheet still looks good. DRRX and Nycomed amend POSIDUR license agreement to separate funding and control of US and EU clinical programs and expand territory.
SuperGen(SUPG)(2/5/09). To announce FY results on March 1, the day we post this Newsletter.
Market Leader(LEDR)(12/20/08). Revenues drop but losses get pared; balance sheet still looks good.
The Orchard(ORCD)(11/20/08). Signs Boy George, Cornershop and Jethro Tull. Names new CEO.
U.S. Geothermal(HTM)(8/5/08). $10 million US DOE grant program begins at Raft River.
Bridgeline Software(BLSW)(6/5/08). Revenues decline in recent quarter compared to a year ago; balance sheet still looks good. Several releases on the iAPPS Content Manager.
Biolase(BLTI)(4/5/08). Announces global launch of iLase Personal Laser for dental market.
ActivIdentiy(ACTI)(3/5/08). Plans $10 million stock buyback.
Hollis-Eden(HRBR)(12/20/07). Changes name to Harbor BioSciences. To receive patent for Apoptone cancer treatment.
Sunesis Pharmaceuticals(SNSS)(11/5/07). Poised for Phase 3 trial of Voreloxin in acute myeloid leukemia after completing formal end of Phase 2 meetings with FDA.
XATA Corp(XATA)(9/20/07). Shareholders approve turnpike acquisition terms.
Radcom(RDCM)(7/20/07). Introduces mobile data service optimization.
TTI Team Telecom(TTIL)(3/5/07). Recent numbers show revenue drop but red ink turns black; balance sheet still looks good.
Endologix(ELGX)(1/20/07). To present at the Roth confab on March 15. Reports some pretty good-looking 4thQT and FY numbers; balance sheet still looks good.
The Inventure Group(SNAK(3/5/06). Releases pretty nice revenue numbers; balance sheet still looks okay.
Our picks for this Newsletter are a biotech and a diagnostic service provider; both are listed on NASDAQ and both have half a dozen analysts following them.
ACHILLION PHARMACEUTICALS, INC. (NASDAQ: ACHN) – $2.30. Twelve-month hi-low has been $3.89 – $1.10. Located in New Haven, CT, with about 50 employees, this biotech has 26.7 million shares outstanding, $21.66 million in total current assets, $23.32 million in total assets, little long-term debt, and $10.2 million in total liabilities. Institutional ownership is around 17%. Seven analysts rate the stock as a “strong buy” and two have it on “hold”. www.achillion.com
Once again, our spirits pick up when we see a small horde of analysts behind a small company like Achillion Pharmaceuticals, Inc. It also helps that they have some promising products and a healthy balance sheet, recently made healthier with nearly $20 million in net proceeds from a secondary offering, which is not reflected in the above numbers.
Founded in 1998, and trading on NASDAQ for less than four years, Achillion focuses on developing antivirals for treating chronic hepatitis C and HIV infection; and resistant bacterial infections. Its products include ACH-1095, a NS4A antagonist that is in late-stage preclinical studies for treating chronic hepatitis C infections; ACH-1625, a protease inhibitor, which is in the preparation for Phase I initiation for treating chronic hepatitis C infections; ACH-702, a preclinical candidate with potency against a spectrum of bacterial pathogens, including methicillin-resistant staphylococcus aureas for drug resistant bacterial infections; and Elvucitabine, which completed Phase II studies for treating HIV infections. Achillion has a collaboration agreement with Gilead Sciences to develop commercial compounds for use in treating hepatitis C infection, which inhibit viral replication through a mechanism of action.
In early February, Achillion entered into a marketing partnership with GCA Therapeutics to sell Elvucitabine in China, Hong Kong and Taiwan through a joint venture with Tianjing Institute of Pharmaceutical Research.
Achillion is pretty typical of most small biotechs in that it has little revenue and mega-losses. For example, during the quarter ending 9/30/09, revenue was negative with net losses of $6.4 million.
This is one of those times when we say there are people smarter than us. Seven analysts with the “strong buys” probably know a little more than we do.
Our 24-month target for the stock is $4.00 to $4.25.
For more information, contact ACHN’s Mary Kay Fenton at 203-624-7000; mfenton@achillion.com
CLARIENT, INC. (NASDAQ: CLRT) – $2.12. Twelve-month hi-low has been $4.43 – $1.45. Based in Aliso Viejo, CA, with about 330 employees, this diagnostic services provider has 78.4 million shares outstanding, $35.32 million in total current assets, $51.31 million, little long-term debt, and $18.14 million in total liabilities. Institutional ownership is around 36%. Six analysts give the stock a “strong buy” and two have it as a “hold”. www.clarientinc.com
And, yet another one with a horde of analysts following it. Besides that, Clarient, Inc. has a decent balance sheet and has had consistent revenue growth over the last three years, which may say something about its products.
Founded in 1993, and public for over a dozen years, Clarient provides oncology diagnostics services to community pathologists, biopharmaceutical companies, and researchers in the US. It provides various cancer diagnostic and consultative services, including technical laboratory services and professional interpretation, such as reports and analyses through its Internet-based application, PATHSITE; and commercial services to biopharmas and other research organizations, ranging from drug discovery assistance to developing directed diagnostics through clinical trials. The company also offers hematopathology testing for leukemia and lymphoma. It has collaboration agreements with Natural Selection, Inc. to use its genomic mathematic capability to supplement protemic mathematic capability to help develop novel cancer makers; as well as with Prediction Sciences to commercialize a novel breast cancer test.
In early February, Clarient announced the commercial launch of a new lung cancer test, Clarient Insight Dx Pulmotype Test, that helps physicians classify specific types of lung cancer to identify which therapies may be most effective. At the end of January, the company said it expects to continue the growth track it has been on during FY2010, and that it is very confident that this will be its first year of positive net earnings.
For FY2008, ending 12/31/08, revenue was $73.73 million with $9.65 million in losses compared to FY2007 revenues of $42.99 million and $8.76 million in losses. During the first nine months of FY2009, ending 9/30/09, revenue was $68.34 million with $3.37 million in losses.
Putting aside all of those analysts with the “strong buys”, which is impossible to ignore, we like the revenue growth and the company’s own expectations for the next year.
Our 24-month target for the stock is $3.50 to $3.75.
For more information, contact CLRT at 949-425-5700.
Look for the March 20, 2010 Newsletter to be posted on 3/16 or 3/17.
Thank you,
George