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Hello Readers,
No need to do a double take. We did not close any positions since the last Newsletter, and that is pretty much a reflection of how the markets have been acting. We seem to be in one of those “consolidation” periods where the markets have had a pretty good run and need to decide what to do next. Other than the usual bugaboos of energy, interest rates, and global terrorism, we are not too worried, since we still feel very optimistic about the markets for the balance of this year. However, we will feel even better if NASDAQ can get out of the 2500s; see our last few Newsletters about that rant.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we last recommended them.
Hana Biosciences (HNAB) (5/5/07). Recent balance sheet still appears to be in good shape.
ECtel (ECTX) (5/5/07). Quarterly numbers not great; balance sheet still looks pretty good. CFO resigns and a new SVP of products is named. TheStreet.com gives the stock a “sell” rating, but despite all of this negativity, the stock hasn’t dropped much.
Gene Logic (GLGC) (4/20/07). Removed from NASDAQ Biotech index, but we don’t see this as a big deal. Partners with Abbott to discover new development paths for multiple clinical drug candidates, which should be a big deal.
VocalTec (VOCL) (4/20/07). Presents expanded VoIP/NGN solution suite. Chosen by Nauka Svyaz for their VoIP network build out. Lukoil to deploy VOCL’s Essentral solutions for next generation network in Russia.
DepoMed (DEPO) (4/5/07). Quarterly report pretty upbeat. Cash/equivalents still appear to be healthy. Third Point LLC discloses 8.2% stake.
Immunicon (IMMC) (3/20/07). Quarterly balance sheet still seems good.
CommTouch (CTCH) (3/5/07). Shows a 1st QT profit and growing revenues; even top part of balance sheet grows.
TTI Telecom (TTIL) (3/5/07). Quarterly results could have been better; balance sheet still looks strong.
Neurobiological Tech (NTII) (2/20/07). Names new project manager for clinical stroke program. Recent numbers show some revenue growth. Gets $1.9 million royalty payment from Memantine sales.
Urologix (ULGX) (2/20/07). Recent numbers disappointing; balance sheet still looks very good.
Eon Communications (EONC) (2/5/07). Announces general availability of its eNterprise family of VoIP telephones. CheMeng Int’l expands use of eQueue contract center solution to support customers in all Chinese provinces.
UQM Technologies (UQM) (2/5/07). To complete bus retrofit for Denver’s RTD.
Critical Therapeutics (CRTX) (1/5/07). Stock received a huge boost when the FDA okayed a respiratory care product of its partner Dey, L.P., an affiliate of Merck. Quarterly report pretty positive; balance sheet still looks very strong.
Neose Tech (NTEC) (12/20/06). Balance sheet now looks healthy thanks to a $40.5 million secondary offering.
Lantronix (LTRX) (12/5/06). Quarterly results a mixed bag; balance sheet looks okay. Enters remote product services equipment market.
WJ Communications (WJCI) (12/5/06). Introduces new family of high-linearity and low-current amplifiers for broadband RF and IF applications. To present at Thomas Weisel confab on May 23 and at JP Morgan conference also on that date. Quarterly numbers in line with guidance; balance sheet still looks good.
Target Logistics (TLG) (11/20/06). Posts 18th consecutive profitable quarter; balance sheet still looks okay.
YM Biosciences (YMI) (11/5/06). Gets upbeat article at the Motley Fool. 1st QT balance sheet still looks to be very healthy.
Terabeam (TRBM) (11/5/06). Subsidiary’s WiMAX rated compliant with key Avaya IP telephony solutions. Quarterly results so-so; balance sheet still looks okay.
Autobytel (ABTL) (10/5/06). Company swings to a profit; balance sheet still looks good. MyRide.com launch set for next month.
Hydrogenics (HYGS) (9/20/06). Receives contract from German company to provide fuel cell power unit for Berlin hydrogen bus. Quarterly report claims a $30.8 million backlog; balance sheet still looks pretty good. Receives non-compliance letter from NASDAQ, however, we’re not too concerned about this just yet.
TVI Corp (TVIN) (9/5/06). We’re placing this on the “Endangered List”. TVIN posted a sizeable loss and its audit panel finds some questionable deals; balance sheet’s cash position has disintegrated.
Advanced Life Sciences (ADLS) (7/20/06). Recent quarter’s balance sheet still seems okay. Cethromycin shown effective against anthrax in study.
NTN Buzztime (NTN) (7/5/06). Recent numbers could be better; balance sheet still looks good.
Kintera (KNTA) (5/5/06). Quarterly numbers look good; as does balance sheet. Wins CA innovation award.
TRI-S Security (TRIS) (5/5/06). Quarterly results look okay; so does balance sheet. Awarded $30 million contract to provide security services for federal facilities in WA state. Also, gets $17 million contract to provide security for the Statue of Liberty.
Pharmos (PARS) (4/20/06). Quarterly balance sheet shows a fairly healthy cash position.
ThermoGenesis (KOOL) (4/5/06). Announces record QT revenue results for 3rd QT 2007; balance sheet also seems pretty strong.
Cytogen (CYTO) (3/20/06). 1st QT results not bad; balance sheet still looks good.
TII Network (TIII) (3/20/06). Quarterly numbers okay; as is balance sheet. Gets $6 million order for recently-developed HomePlug products.
Lipid Sciences (LIPD) (2/20/06). Recent balance sheet looks good.
Adherex (ADH) (2/20/06). Balance sheet now looks pretty healthy, thanks to a secondary offering in February.
Gateway (GTW) (2/5/06). Although losses narrow from a year ago, revenues declined, setting the stock on its ear, somewhat.
MIND C.T.I. (MNDO) (2/5/06). 1st QT profits at $1.1 million; balance sheet still looks pretty good.
8×8 (EGHT) (1/20/06). Reports record annual FY revenue and losses narrow a lot; balance sheet still okay but weakens.
Digital Angel (DOC) (12/20/05). Enters distribution pact with Webster Veterinary Supply for its ID and bio-thermo temperature sensing microchips. Posts highest quarterly revenue in its history and raises full-year guidance; but losses are a drag; balance sheet looks okay.
Fusion (FSN) (12/5/05). Despite what may be some bits of good news recently, we’re placing this on the “Endangered List”, for now.
Westell (WSTL) (10/20/05). Slates earnings call for May 21. Subsidiary picked by Business Marketing Association for conferencing services.
RAE Systems (RAE) (10/5/05). Quarterly report pretty upbeat as company reaffirms yearly guidance; balance sheet still looks good.
Nephros (NEP) (9/20/05). Stock falls more on auditor’s going concern letter. This isn’t looking good. We’re placing this on “Endangered List”.
EntreMed (ENMD) (9/5/05). Reports 1st QT results.
Zi Corp (ZICA) (8/5/05). Quarterly numbers so-so; balance sheet still seems okay. Announces Nintendo deployment of Decuma Korean for use in game system.
Innodata (INOD) (7/5/05). Releases good-looking quarterly numbers; balance sheet still looks pretty fair. Launches new web site.
Vion Pharma (VION) (5/20/05). Recent cash position looks very healthy thanks to a recent $55.3 million private placement.
B.O.S. (BOSC) (1/5/05). Receives over $1.5 million of orders from major Israeli customer. Recent numbers look positive despite a loss; balance sheet still appears viable. Other product news.
Applied Micro Circuits (AMCC) (11/20/04). To present at Oppenheimer confab on May 16 at Craig-Hallum Investor Conference on May 23.
Nova Measuring (NVMI) (11/5/04). Gives upbeat quarterly report; balance sheet still looks okay.
Aviza (AVZA) (10/5/04). Stock gets clocked big time on poor profit outlook for 2007, despite good quarterly numbers; balance sheet still looks decent. Coverage initiated on stock by Needham & Co.
AIXTRON (AIXG) (7/5/04). Posts pretty good-looking QT numbers.
Network Engines (NENG) (6/5/04). Quarterly revenues above guidance and shows some profit; balance sheet looks pretty good.
Palatin (PTN) (4/5/04). Recent balance sheet looks healthy thanks to a secondary offering in February. To present Phase 2b studies on E-D at AUA annual meeting May 19-24.
OpenTV (OPTV) (3/20/04). Powers HDTV for NTV-Plus, Russia’s leading DTH platform. Recent numbers seem okay and balance sheet looks amazingly strong. No, we haven’t a clue as to why stock does zip.
AVANT (AVAN) (12/5/03). Posts negative equity. This is on “Endangered List”.
Our picks for this Newsletter are an AMEX-listed ancillary benefits company and a biotech service provider that is on NASDAQ.
AMERICAN CARESOURCE HOLDINGS, INC. (AMEX: XSI) – $1.70. Twelve-month hi-low has been $6.10 – $1.45. Located in Dallas, TX, with about 35 employees, this ancillary benefits company has 14.5 million shares outstanding, $6.39 million in total current assets, $12.87 million in total assets, little debt, and $2.29 million in total liabilities. Institutional ownership is around 14%. www.anci-care.com
When we happened across American Caresource Holdings, Inc. all of those aging baby boomers came to mind. The company has an okay balance sheet and it appears to be setting the stage to potentially make a lot of money in the years ahead.
Founded in 1995, and public for less than a year, American Caresource is an ancillary benefits management company that assists health benefits plan sponsors, such as preferred provider organizations (PPOs), third-party administrators, workers compensation benefits administrators, insurance companies, and employers expand the range of provider choices available to their patients. The company’s ancillary healthcare services supplement the care provided by hospitals and physicians. These services include, though not limited to, free-standing diagnostic imaging centers, home health and infusion services, surgical centers, laboratory services, chiropractics, dialysis, durable medical equipment, orthotics and prosthetics, pain management, pharmacy, physical therapy, respiratory services, sleep studies, sub-acute and skilled nursing facilities, hospice services, and bone growth stimulators.
Through its contracts with over 2400 ancillary service providers representing over 20,000 sites nationwide, American Caresource claims to offer its clients direct cost savings with discounted rates for contracted services and administrative cost savings by acting as a single point for managing a comprehensive array of ancillary benefits. These services include processing claims submitted by covered providers, repricing the claims, submitting claims for payment, and disbursing them to the appropriate recipients.
Earlier this year, the company inked new client agreements with Health eConnex and with a major national PPO/network management company to provide ancillary care services to their client bases. American Caresource indicates that annual revenue from these two contracts could be $18.5 million to $20 million.
For FY2006, ending 12/31/06, revenue was $11.41 million with $1.32 million in net losses compared to 2005 revenue of $4.41 million and $2.41 million in losses.
This is not one of the sexiest or most exciting companies ever to be placed in the Current Portfolio, but it could hold a great deal of potential.
Our 24-month target for the stock is $3.25 to $3.50.
For more information, contact XSI at 972-308-6828; investorrelations@anci-care.com
ENCORIUM GROUP, INC. (NASDAQ: ENCO) – $3.28. Twelve-month hi-low has been $6.38 – $2.26. Based in Wayne, PA, with about 245 employees, this biotech service provider has 17.5 million shares outstanding, $15.41 million in total current assets, $38.29 million in total assets, little debt, and $21 million in total liabilities. Institutional ownership is around 24%. www.encorium.com
We like hearing the oft-told story of how it wasn’t the miners who made money during the Gold Rush, but rather the store owners who the pans and pick axes. The Encorium Group, Inc. finds itself in a similar niche within the biotech industry, showing pretty good revenue growth during 2006 and expecting the trend to continue during the current year.
Founded in 1989 as the Covalent Group, and public for over ten years, the company merged with Remedium Oy last year to form Encorium, which is a clinical research organization that designs and manages clinical trials for the pharmaceutical, biotech, and medical device industries. It offers various clinical R&D services supporting Phase I through Phase IV trials. ENCO’s services include study protocol design; clinical trials management, such as case report from design, investigator recruitment, patient enrollment, and study monitoring and data collection; data management services; biostatistics; medical and regulatory affairs; quality assurance and compliance; report writing; and patient registries.
Encorium offers clinical trial services across various therapeutic areas, such as cardiovascular, nephrology, endocrinology/metabolism, hematology, diabetes, neurology, oncology, immunology, vaccines, infectious diseases, gastroenterology, dermatology, hepatology, rheumatology, urology, ophthalmology, women’s health, and respiratory medicine. Besides the U.S., the company operates in Finland and in other parts of Europe. At the end of 2006, ENCO’s pipeline of new business opportunities was in excess of $30 million.
In the beginning of April, Encorium announced $4 million of new business contracts with more than 20 clients had been signed through its European division. Also, at that time, the company reiterated its 1stQT FY guidance of $7.9 million to $8.3 million. At the end of March, ENCO and AtCor Medical Holdings entered into a joint agreement so as to broaden market reach with an alliance for clinical research trials.
For FY2007, ending 12/31/06, revenues were $17.68 million with $494,000 in losses versus 2005 revenues of $12.27 million and $1.49 million in losses. The company expects to see profitability during the 1stQT of this FY.
Encorium seems to be making all of the right moves, lately. If it can live up to its own guidance and expectations, then better days could be ahead.
Our 24-month target for the stock is $6.00 to $6.50.
For more information, contact ENCO’s Lawrence Hoffman at 610-975-9533; lhoffman@encorium.com
Look for the June 5, 2007 Newsletter to be posted on 6/1 or 6/4.
Have a safe holiday,
George