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Hello Readers,
Since the last issue, we closed one position for a gain:
ORTHOVITA (12/20/01). Closed position 6/8/04 at $5.06 for a 51% GAIN.
Orthovita finally nudged above our 50% threshold probably due to increased expectations over their biomaterial to repair vertebral compression fractures.
Should we press the “replay button” and repeat what we have been saying for the last few months? Yes, we are still bullish, but the markets will probably continue their current sloppiness until Bush’s poll numbers improve (if they improve), and we get a better vision of just how high rates will go over the next few months.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
Genetronics (GEB) (10/5/00). Granted FDA Fast Track designation for its MedPulser Electroporation therapy system for head and neck cancer. GEB and Chiron present results on electroporation-enhanced DNA vaccine delivery.
Arotech (ARTX) (6/5/01). At some point, the stock should catch on with all of the good news the company has been spewing over the last six months or so. Awarded over $4 million in new orders. Launches forward field charger that provides energy independence for the foot soldier. Roth Capital initiates coverage.
ViroLogic (VLGC) (7/20/01). Stock price comes under pressure due to VLGC’s pending purchase of Aclara BioSciences for $200 million, which the Motley Fool bills as a “very logical deal”. However, Deutsche Securities downgrades stock, which we believe to be a questionable knee-jerk reaction.
VASCO Security (VDSI) (2/5/02). Launches Digipass 850 integration toolkit for PKI environments. HSBC Brazil to use VDSI’s Digipass GO3 for business Internet banking.
Argonaut (AGNT) (4/20/02). Announces results of annual meeting. Presents methodology on “improved throughput protein precipitation using a novel filtration microplate”.
Generex (GNBT) (8/5/02). Demonstrates efficacy of oral delivery of insulin. Initiates late pre-clinical studies to prepare for vaccine trials in patients with Her-2/neu positive ovarian cancer.
Cyro-Cell (CCEL) (5/5/03). Announces plans for new facility. Two weeks ago, stock was around 60¢ before soaring to current levels, probably due a “Reagan Bounce” of all things. The President’s death brought stem cell research back into the spotlight. Remember, CCEL claims that their stem cells come only from the umbilical cord and not the fetus.
Targeted Genetics(TGEN) (10/5/03). AAV technology highlighted in vaccine symposium. Preclinical results demonstrate complete suppression of rheumatoid arthritis during study. TGEN signs exclusive license pact with N.I.H.
V.I. Technologies (VITX) (11/20/03). VITX to merge with privately-held Panacos Pharmaceuticals sometime in the third quarter which will expand the pipeline into antiviral therapeutics. Since we do not yet know Panacos’ financial picture it is difficult to comment on the merger at this time.
Active Power (ACPW) (11/20/03). Doubles energy of its extended runtime product.
Actuate (ACTU) (1/5/04). Partners with Altech Star to provide global technology services. Company reports that now nine of the top ten financial services firms in the U.S. use ACTU’s Enterprise reporting application platform. ACTU to support Korea Telecom’s drive to grow market share. Makes further inroads into China market with Bank of China win.
Transgene (TRGNY) (3/5/04). Signs collaboration pact with Merial to develop products for animal health. Presents data on MVA-MUC1-IL2 cancer vaccine.
OpenTV (OPTV) (3/20/04). StarHub launches digital cable platform using OPTV technology.
Socket Communications (SCKT) (3/20/04). AppForge mobile development software integrated with Socket scanners.
Palatin (PTN) (4/5/04). Presents data on obesity compounds. Reports that its impotence drug is safe and effective.
AVI BioPharma (AVII) (4/20/04). Presents results showing inhibition of dengue virus with its NEUGENE antisense compounds.
GoRemote (GRIC) (5/5/04). Adopts PCTEL’s solution for mobile enterprise solutions.
EMCORE (EMKR) (5/20/04). Announces distribution pact with Beijing University of Posts and Telecom to distribute EMKR’s fiberoptic cable, TV, and satellite products in China.
GlowPoint (GLOW) (5/20/04). Partners with SoHo Video Solutions as first wholesale distributor to offer integrated video communications bundle. GLOW, ReView, and Sony Electronics team up to deliver video solution for small and mid-sized businesses. Introduces new “individual video access” service class. Anticipates strong Q2 revenue growth.
Network Engines (NENG) (6/5/04). NENG to supply Captivate Network with appliances.
Bindview (BVEW) (6/5/04). Janney Montgomery Scott initiates a “buy” on the stock. BVEW named “Best Security Solution” by Windows & .NET Magazine and SQL Server Magazine.
Our picks for this Newsletter are two NASDAQ-traded companies – one is a nanotech and the other a telecom services provider.
ALTAIR NANOTECHNOLOGIES, INC. (NASDAQ: ALTI) – $2.30. Twelve-month hi-low has been $4.40 – 73 cents. Based in Reno, NV, with about 20 employees, this nanotech has 48.8 million shares outstanding, $11.69 million in total current assets, $19.2 million in total assets, and $3.32 million in total liabilities, of which $2.73 million is long-term debt. Institutional ownership is around 3%. Two analysts rate the stock a “moderate buy”. http://www.altairnano.com
Most of our previous nanotech picks have fared pretty well over the years, so why not try another one like Altair Nanotechnologies, Inc. that recently received a nice infusion of cash and that owns what appears to be nifty proprietary technology.
Founded over a dozen years ago and public for nearly five, Altair owns a proprietary technology for making nanocrystalline materials of what it calls unique-quality and in large quantities. To date, ALTI has been awarded four U.S. patents on its platform technology. The company says it can manufacture commercial quantities of a wide variety of these materials with narrow particle distribution sized from five to 100 nanometers. Altair is manufacturing metal oxide-based nanomaterials with applications in pharmaceuticals, titanium pigment, titanium metal and drug delivery. These materials have potential applications in fuel cells, solar cells, advanced energy storage devices (batteries), thermal spray coating, cosmetics, and material protection.
Altair has two divisions. Their Nanomaterials Division focuses on making such products as nano-structured materials for developing fuel cells and NanoCheck, which is ALTI’s product for preventing algae growth in pools and spas. The company’s newly-formed Life Sciences Division is developing nano-based pharmaceuticals such as RenaZorb, ALTI’s lead drug candidate for the removal of phosphate in patients with end-stage renal disease.
At the end of April, Altair announced that its new thermal spray product, TiNano Coat, demonstrated superior mechanical properties in a competitive study performed by the National Research Council of Canada. In March, ALTI signed a memorandum of joint development work with Hosokawa Micron Intl. Also, around that time, the company announced plans to spin off its mineral recovery systems group to shareholders.
Since Altair is in the R&D stage, don’t expect eye-popping numbers, anytime soon. For FY2003, ending 12/31/03, revenue was $72,851 with $6.2 million in losses. During the 1stQT of this FY, ending 3/31/04, revenue was $139,749 with $1.7 million in losses; and ALTI also reported a sales backlog of $642,000.
Nanotech will be hot for some time and any nanotech company that can bring its products to market and begin generating some nice revenues could see a good run on its stock. That’s the bet with Altair.
Our 24-month target for the stock is $4.00 to $5.00.
For more information, contact ALTI at 775-858-3750.
ZI CORPORATION (NASDAQ: ZICA) – $2.19. Twelve-month hi-low has been $4.45 – $2.01. Located in Calgary, Alberta, Canada, with about 170 employees, this telecom services provider has 39.5 million shares outstanding, $6.4 million in total current assets, $9.88 million in total assets, little debt, and $5.46 million in total liabilities. http://www.zicorp.com
Periodically, we scan the Deloitte & Touche Technology Fast 500 list for potential small stock plays and Zi Corporation jumped out at us. Deloitte ranked it # 362 in 2003 due to the company’s 729% growth over the previous few years. And, Zi is ranked 49th on the Canadian Technology Fast 50.
Public for about ten years, Zi makes what it calls “intelligent interfaces” software that is embedded in mobile devices to simplify the data entry and interaction process. The company’s core technology product is eZiText, which is a predictive text input solution that predicts words or phrases for use in messaging and other text applications in over 40 languages and dialects.
The company’s other products are eZiTap, which provides multi-tap input and is aimed at the youth market where multi-tap is used to create unique and fun vocabulary and texting solutions; and eZiNet, ZICA’s data indexing and retrieval solution that reduces the number of key strokes required to access any type of data regardless of where the information is stored.
ZICA has embedded licensing pacts with more than 100 original design and equipment makers. Its products have embedded in over 480 unique handset models in nearly every global market.
Zi also holds two separate investments in e-learning. The first is a 45% equity interest in Magic Lantern Group. The other is a 100% equity interest in Oztime, which includes EnglishPractice.
At the end of the month, ZICA announced that Agere Systems has pre-integrated eZiText into a broad portfolio of solutions for mobile handsets. At the end of April and in February, the company made further Asian inroads by signing licensing pacts with handset makers in Korea, Hong Kong, and the Chinese mainland.
For FY2003, ending 12/31/03, revenue was $14.49 million with $4.4 million in losses compared to a year earlier revenues of $13.2 million and $40.25 million in losses. During the 1stQT of this FY, ending 3/31/04, revenue was $3.02 million with $1.46 million in losses. Sometimes there are companies that just seem to have a “good feel” to them and ZICA appears to be one of them.
Our 20-month target for the stock is $4.00 to $5.00.
For more information, contact ZICA’s Dale Kearns at 403-233-8875; investor@zicorp.com
Because of the July 4 holiday, look for the July 5, 2004 Newsletter to be posted anytime between 7/1 and 7/6.
Thank you,
George