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Hello Readers,
The day this Newsletter is posted, June 1, is the same day that the May jobs report is released, so, for one day, the markets will probably divert their attention from Europe. Regardless of what the jobs number is, the market focus for the foreseeable future will be on Europe. The governments over there are doing the same thing that the Fed and the Treasury did in the U.S. and that is to screw Main Street and save the banks. That strategy really isn’t working too well here, and, given the high unemployment in Greece and Spain, it is not working too well in Europe. Oh sure, our markets will have days when the blinders are kept on and the markets may go on periodic feel-good mini-runs, but global realties will be serving up cold showers for quite some time. Unless the Fed announces the start of QE3, and that changes the landscape, and, BTW, this is becoming more and more of a possibility.
Our Current Portfolio is still feeling pressure due to the recent markets blahs and we fear that we could be in for a long hot summer. And yes, we are tired of thinking this way. And we are also tired of telling you, once again, that we did not close any positions since the last Newsletter.
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 very significant.
Capstone Turbine(CPST)(5/20/12). To release quarterly and FY numbers on June 14.
Five Star Quality Care(FVE)(5/5/12). Will present at the Jefferies Global Healthcare Conference on June 6. Settles litigation against Sunrise.
Zogenix(ZGNX)(4/20/12). Submits IND for second DosePro candidate Relday.
Axcelis Technologies(ACLS)(4/5/12). Reiterates 2ndQT guidance.
Mattson Technology(MTSN)(4/5/12). Awarded ISO 14001 certification for high standards in environmental management and practices.
Ballard Power Systems(BLDP)(3/20/12). To present at the annual Ardour Capital Energy Technology Conference on June 7.
Celsion Corporation(CLSN)(3/5/12). Completes enrollment in its pivotal Phase III HEAT study of ThermoDox in primary liver cancer. Roth Capital gives the stock a “buy”.
Majesco Entertainment(COOL)(3/5/12). Announces several new game offerings that will be appearing on Nintendo and Xbox 360, soon.
Navidea Biopharmaceuticals(NAVB)(1/5/12). Will present at the Jefferies Global Healthcare confab on June 6. Presentation highlights clinical potential of its Amloid imaging biomarker AZD4694.
Anadigics(ANAD)(11/20/11). Powers several new ZTE smartphones.
ECOtality(ECTY)(11/5/11). Files lawsuit to halt “illegal” PUC agreement. Revenue and earnings numbers show nice jump year-over-year; balance sheet could use more cash. Receives delisting threat from NASDAQ, which it has some time to correct.
Synthesis Energy Systems(SYMX)(8/20/11). Initiates pre-commissioning activities for startup of Syngas production at its Yima joint venture project.
Antares Pharma(AIS)(8/5/11). To present at the Jefferies healthcare confab on June 7.
On Track Innovations(OTIV)(6/20/11). Recent numbers not that great nor not that bad; balance sheet still looks pretty good.
Neostem(NBS)(5/20/11). To present at six conferences during June. Let’s hope these help; the stock could use a huge lift.
GSE Systems(GVP)(4/20/11). To present at the East Coast IDEAS Investor Conference on June 5.
ThermoGenesis(KOOL)(4/5/11). Announces Axp approval in Thailand.
Oculus Innovative Sciences(OCLS)(3/5/11). Will hold earnings call on June 7.
Network Engines(NEI)(2/5/11). Receives NASDAQ notification on minimum bid rule; company has some time to rectify the problem.
Sprint Nextel(S)(1/5/11). The usual several dozen releases and stories about the company. Of note is that Sprint will shut down the Nextel network as of June 30, 2013; and that it has received a $1 billion loan to finance equipment purchases.
Astex Pharmaceuticals(ASTX)(12/5/10). To present at the ASCO annual meeting on June 2, 3rd and 4th.
RELM Wireless(RWC)(11/5/10). Receives $1 million international military order for KNG UHF portable radios.
Inovio Pharmaceuticals(INO)(10/20/10). Claims that its universal avian flu vaccine generates protective antibody responses against six H5N1 viruses in Phase I trial.
Rexahn Pharmaceuticals(RNN)(7/20/10). Publishes new preclinical research data for novel anti-cancer compound RX-3117.
Novabay Pharmaceuticals(NBY)(4/20/10). Enrolls first patients in Global BAYnovation Phase 2b study for Adenoviral Conjunctivitis.
Novavax(NVAX)(4/5/10). Files for $12 million secondary offering.
Cytokinetics(CYTK)(2/5/10). Opens second cohort in Phase 2b clinical trial of intravenous Omecamtiv Mecarbil in patients with acute heart failure.
Qualstar(QBAK)(10/20/09). Sets special shareholder meeting for June 20 and seeks support to stop BKF Capital Group from taking control of company.
USA Technologies(USAT)(6/5/09). Company provides additional insight into dissident shareholder.
Our picks for this Newsletter are two more biotechs, both NASDAQ-listed.
ANTHERA PHARMACEUTICALS (NASDAQ: ANTH) – $1.97. Twelve-month hi-low has been $8.89 – $1.44. Based in Hayward, CA, with about 35 employees, this drug developer has 41.08 million shares outstanding, $44.54 million in total current assets, $46.15 million in total assets, and $47.51 million in total liabilities, of which $17.34 is long-term debt. Institutional ownership is around 52%. Three analysts rate the stock a “strong buy”, two as a “buy”, and two as a “hold”. www.anthera.com
Normally when we see more liabilities than assets, such as the case with Anthera Pharmaceuticals, Inc., we have a tendency to look the other way. But, there are over a half dozen analysts who seem positive about the company along with hefty institutional ownership. The company also has some nice alliances with a few big name pharmas.
Founded in 2004, and trading on NASDAQ for just over two years, Anthera is developing products to treat diseases associated with inflammation. The company’s research programs focus on anti-inflammatory therapeutics for cardiovascular diseases, lupus, and other serious diseases. Its primary product candidates include blisibimod, which is in Phase II clinical trial for treating systemic lupus erythematosus. Its product candidates also comprise varespladib and varespladib sodium that are designed to inhibit a novel enzyme known as secretory phospholipase A2 or sPLA2, which are implicated in various acute inflammatory conditions, including acute coronary syndrome and acute chest syndrome associated with sickle cell disease, as well as in chronic diseases, such as stable coronary artery disease.
Anthera has license agreements with Eli Lilly and Shionogi & Co. to develop and commercialize sPLA2 inhibitors for treating cardiovascular disease and other diseases; and Amgen to develop and commercialize blisibimod for treating systemic lupus erythematosus (SLE).
At the end of April, the company announced the completion of patient dosing in its Phase 2b PEARL-SC study, which is a randomized double-blind study to evaluate the efficacy, safety, and tolerability of blisibimod administration in subjects with SLE.
Like many small biotechs, Anthera makes squat and rings up some mega-losses. For example, during the 1stQT of FY2012, ending 3/31/12, revenue was zilch and losses totaled $21 million.
Anthera has analysts’ and institutional backing, but, more importantly, we like the alliances it has with some major pharmaceuticals, which may say something about the company drug candidates.
Our 24-month target for the stock is $3.50 to $4.00.
For more information, contact ANTH’s Bianca Nery at 510-856-5586; bnery@anthera.com
AVANIR PHARMACEUTICALS, INC. (NASDAQ: AVNR) – $2.90. Twelve-month hi-low has been $4.80 – $1.77. Based in Aliso Viejo, CA, with about 185 employees, this drug developer has 135.68 million shares outstanding, $80.1 million in total current assets, $85.35 million in total assets, little debt, and $13.72 million in total liabilities. Institutional ownership is around 58%. Three analysts give the stock a “strong buy”, three have it as a “buy”, and one is on “hold”. www.avanir.com
Sometimes we do walk down the same road twice, as is the case with Avanir Pharmaceuticals, Inc. We picked the stock a few years back and closed it in 2010 for a 65% gain. Back then, it was still mostly R&D and had little revenue. Now, it seems that is changing. Also, it is hard to ignore the six analysts who have some sort of buy recommendation on the stock.
Founded in 1988, and public for over twenty years, Avanir is developing and commercializing novel therapeutic products for treating central nervous system disorders. The company primarily offers NUEDEXTA, a unique proprietary combination of dextromethorphan and low-dose quinidine for treating pseudobulbar affect, or PBA, which is a condition characterized by episodes of uncontrollable laughing and/or crying that may be inappropriate and unrelated to the situation at hand.
Avanir’s product line also includes AVP-923, which is in a Phase II clinical trial for treating central neuropathic pain in patients with multiple sclerosis; and in Phase III clinical trial for treating patients with diabetic peripheral neuropathic pain. In addition, the company’s first commercialized product, docosanol 10% cream, is the only over-the-counter treatment for cold sores that has been approved by the FDA. It is sold in the U.S. and Canada as Abreva by its marketing partner GlaxoSmith Kline.
The company still racks up some hefty losses, but is showing some revenues. For the FY ending 9/30/2011, revenue was $10.49 million with $60.63 million in losses. During the first six months of the current FY, ending3/31/12, revenue was $17.47 million with $33.01 million in losses; a big chunk of the revenue has started coming from NUEDEXTA.
We liked Avanir once before for many of the same reasons as we do now, except that now the company is showing some revenue.
Our 24-month target for the stock is $5.00 to $5.50.
For more information, contact AVNR’s Ian Clements at 949-389-6700; ir@avanir.com
Look for the June 20, 2012 Newsletter to be posted on 6/18 or 6/19.
Thank you,
George