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Hello Readers,
Since the last Newsletter, we have closed three positions for gains and one for a nasty loss.
ENTRUST, INC. (2/20/08). Closed position 6/23/08 at $3.40 for a 51% GAIN.
BARRIER THERAPEUTICS (3/20/08). Closed position 6/23/08 at $4.10 for a 34% GAIN. (being acquired by Stiefel Labs)
KODIAK OIL & GAS. (9/5/07). Closed position 6/18/08 at $5.42 for a 53% GAIN.
02DIESEL (5/20/06). Closed position 6/18/08 at 15 cents for a 88% LOSS.
Ever since selecting Entrust five months ago, the stock moved steadily upward on steady doses of good news. With Barrier Therapeutics, we were surprised, once again, as another of our picks marched down the takeover aisle; in this case an offer of $4.15 a share by Stiefel Labs. When we recommended Kodiak Oil & Gas, we said this is one to buy if you thought crude would go to $150, and, surprise surprise, we’re almost there. 02Diesel was closed for an ugly loss.
Well, should we hit the replay button, again?!!! Why not. As we have been saying for the last several months, until the Fed and Treasury stop supporting the markets with funny money, or welfare for Wall Street, we will continue trading in this rut. We need a SELL-OFF, a blowout – the sort of event that has traders crying on the exchange floors, and we finally may be near that point. Then, we will know almost for certain when to jump back in. This is not a fun way to start the summer. And, it’s now official, this is the worst shape our Current Portfolio has been in since our inception twelve years ago in 1996.
Here are the headlines since the last Newsletter about companies in our Current Portfolio. Dates in parentheses are when we first recommended them. And once again, PLEASE NOTE that because of the time of year there is not much news issued.
Avigen (AVGN) (6/20/08). Sets earnings call for July 30.
Microvision (MVIS) (5/20/08). Gets an upbeat mention in a Forbes.com story.
Ziopharm Oncology (ZIOP) 5/5/08). Announces organizational changes and new appointments in clinical and regulatory groups.
Micromet (MITI) (4/20/08). Company and Nycomed begin formal preclinical safety studies for antibody MT203 for inflammatory and autoimmune diseases.
Kopin (KOPN) (4/20/08). Returns to NASDAQ compliance with filing of quarterly report.
Replidyne (RDYN) (4/5/08). Ends deal with Asubio Pharma over lead drug candidate and expects $4.1 million charge.
Catalyst Pharmaceutical (CPRX) (12/20/07). To join the Russell Microcap Index.
Sunesis Pharmaceuticals (SNSS) (11/5/07). Presents data from clinical trials of Voreloxin, formerly SNS-595), in patients with acute myeloid leukemia at European hematology congress.
Wave Systems (WAVX) (9/5/07). To provide Internet video download service for NBC’s coverage of the Beijing Olympic Games. Wells Fargo Funding authorizes company’s eDisclosure solution for its mortgage correspondents. Regains compliance with NASDAQ marketplace rules.
SIGA Technologies (SIGA) (8/20/07). Receives $8 million in financing support from MacAndrews & Forbes.
A.P. Pharma (APPA) (8/5/07). Completes enrollment in Phase 3 trial of its nausea drug candidate APF530.
American Fiber Optic Products (AFOP) (7/20/07). Raises 2nd quarter revenue guidance and sets earnings call for July 23.
Oncolytics (ONCY) (6/5/07). Initiates Phase 2 clinical trial investigating REOLYSIN in combination with Paclitaxel and Carboplatin in patients with advanced head and neck cancers.
Hana Biosciences (HNAB) (5/5/07). To present Menadione and Alocrest data at the European Society for Medical Oncology confab between July 3-6.
Ore Pharmaceuticals (ORXED) (4/20/07). Streamlines operations and reduces workforce. This is on the “Endangered List”.
TTI Team Telecom (TTIL) (3/5/07). Announces special general meeting for July 29.
Urologix (ULGX) (2/20/07). Names new CEO.
Eon Communications (EONC) (2/5/07). Quarterly numbers look poor; so does the balance sheet. Receives minimum bid notice from NASDAQ. This is on the “Endangered List”.
Neose Technologies (NTEC) (12/20/06). NTEC and BioGeneriX begin Phase 2 trial for GlycoPEG-GCSF. This is on the “Endangered List”.
CardioTech (CTE) (12/20/06). Recent numbers show improvement; balance sheet still looks good.
Lantronix (LTRX) (12/5/06). Launches improved web site. Receives NASDAQ extension to regain minimum bid price rule compliance.
YM Biosciences (YMI) (11/5/06). Says FDA lifts clinical hold on Aerolef and clearance of a Phase II clinical trial.
Proxim Wireless (PRXM) (11/5/06). Introduces what it claims is the industry’s most advanced point-to-point product with T1/E1, Ethernet, AES Security, QOS and multiple frequency support in a single box. Expands commitment to customers in APAC and EMEA. This one is making us nervous since the stock keeps dropping like a rock.
Hydrogenics (HYGS) (9/20/06). Stock was at around 80 cents but made a nice comeback on news that company is providing a clean energy hydrogen generation system to Shell Hydrogen for the California Hydrogen Highway initiative.
TVI Corp (TVIN) (9/5/06). Dissident shareholders win partial victory. This is on the “Endangered List”.
Advanced Life Sciences (ADLS) (7/20/06). Journal of Antimicrobial Chemotherapy paper supports role for Cethromycin as a potential treatment for infections caused by community-associated Methicillin resistant Staphylococcus aureus (CA-MRSA).
NTN Buzztime (NTN) (7/5/06). Partners with VH1 to launch “I Love The New Millennium” trivia game in bars and restaurants across the U.S.
Tri-S Security (TRIS) (5/5/06). Security Letter names TRIS to Top 40 list of security companies in the U.S. Also selected as one of Georgia’s top 100 public companies.
ThermoGenesis (KOOL) (4/5/06). Announces receipt of CE Mark for MarrowXpress.
Digital Angel (DIGA) (12/20/05). Destron Fearing unit receives USDA’s first visual tag approval. Awarded $885,000 in contracts from various Federal agencies. This is on the “Endangered List”.
Westell Technologies (WSTL) (10/20/05). Provides update on strategic alternatives for ConferencePlus; updates reported 4th quarter and FY2008 results.
North American Scientific (NASM) (8/5/05). Reports earnings. This is on the “Endangered List”.
Vion Pharmaceuticals (VION) (5/20/05). Presents data on Cloretazine. This is on “Endangered List”.
Our picks for this Newsletter are a maker of energy systems and another small biotech, both trading on the NASDAQ.
APPLIED ENERGETICS, INC. (NASDAQ: AERG) – $1.80. Twelve-month hi-low has been $4.36 – $1.58. Based in Tucson, AZ, with about 75 employees, this maker of technical equipment has 80.6 million shares outstanding, $15.53 million in total current assets, $26.36 million in total assets, little debt, and $3.02 million in total liabilities. Institutional ownership is around 42%. One analyst gives the stock a “strong buy”. www.appliedenergetics.com
One would think with the Pentagon spending more money than the GDP of most countries that Applied Energetics, Inc. should do well. A decent balance sheet and a sizeable recent military contract make it easier to add this one to the Current Portfolio.
Formed in 2002, and public for nearly four years, Applied Energetics develops and manufactures applied energy systems primarily for military applications. The company provides solutions for urgent military missions, including neutralizing improvised explosive devices (IEDs), neutralizing vehicle-borne IEDs, and non-lethal methods for vehicle stopping. It is also the exclusive developer of Laser Guided Energy (LGE) and Laser Induced Plasma Channel (LIPC) technologies, which can precisely transmit high voltage electrical charges by using a laser to create a conductive path in the atmosphere. AERG claims this technique can deliver tailored weapon and countermeasure effects to targets with laser accuracy and manageable lethality, reducing the potential for injuries and collateral damage.
In addition, Applied Energetics provides high-voltage solutions for semiconductor, aerospace, environmental, and other commercial ventures under the North Star Power Engineering trade name; and high performance laser solutions for military and commercial customers. The company markets its products and services directly to the U.S. military and to other Allied customers.
In early June, AERG received a cost-plus contract for a classified system for the U.S. Marines with a ceiling value of about $9.3 million.
For FY2007, ending 12/31/07, revenue was $12.4 million with $13.66 million in losses. During the 1stQT of the current FY, ending 3/31/08, revenue was $1.96 million with $3.2 million in losses.
Yes, we hope the losses abate and that the company keeps getting more contracts like the recent one.
Our 24-month target for the stock is $3.50 to $3.75.
For more information, contact AERG at 520-628-7415.
NEUROBIOLOGICAL TECHNOLOGIES, INC. (NASDAQ: NTII) – $1.40. Twelve-month hi-low has been $14.98 – $1.15. Based in Emeryville, CA with about 30 employees, this biotech has 26.9 million shares outstanding, $35.39 million in total current assets, $47.83 million in total assets, and $24.88 million in total liabilities, of which $14.68 million is deferred long-term liability charges. Institutional ownership is around 68%. One analyst rates the stock a “strong buy”. www.ntii.com
Here’s another one of those beaten-down small biotechs , which will either elate or disappoint us. However, Neurobiological Technologies, Inc. strengthened its balance sheet at the end of last year and the company is showing nice revenues, although the losses are still tough to take. It also has several promising drug candidates in the pipeline.
Founded in 1987, and public for nearly seven years, NTII engages in identifying and acquiring drug candidates and in designing and managing late-stage clinical trials for central nervous system (CNS) conditions. It focuses on therapies for neurological conditions that occur in connection with dementia, Alzheimer’s, ischemic stroke, neuropathic pain, and brain cancer. The company uses a strategy of in-licensing late-stage CNS agents and pursues regulatory approval and commercialization either independently or with a strategic partner.
NTTI’s lead product is Namenda (memantine hydrochloride), which received approval for treating Alzheimer’s in Europe in 2002 and in the U.S. in 2003. Namenda is currently being sold by Forest Labs for moderate-to-severe Alzheimer’s disease. In Europe, memantine has been marketed by Merz & Co. for a number of indications for several years. The company is also developing Viprinex, which is in Phase III clinical trial for treating ischemic stroke. Further, NTII has a collaboration and services agreement with Celtic Pharma for developing XERECEPT by providing clinical trial and management services. It has a strategic research and marketing cooperation agreement with Merz and Children’s Medical Center to further the clinical development of Namenda/Ebixa; and a collaboration and license pact with the Buck Institute For Age Research for developing a novel therapy for Alzheimer’s.
For the FY ending 6/30/07, revenue was $17.67 million with $14.13 million in losses. During the first nine months of the current FY, ending 3/31/08, revenue was $11.24 million with a net loss of $12.87 million.
NTII is tied-in with some pretty good names in the biotech industry, so, it may be safe to think that its drug candidates have some promise.
Our 24-month target for the stock is $2.75 to $3.00.
For more information, contact NTII at 510-595-6000.
Look for the July 20, 2008 Newsletter to be posted on 7/16 or 7/17.
Have a safe holiday,
George