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Hello Readers,
About a week ago, CNBC’s Jim Cramer said it best, “This is an awful market”. That pretty much sums it up. As we have been harping, periodically, until the cataclysmic sell-off occurs, this death by a thousand knives will continue. The Fed and the Treasury have been preventing this with their socialism for Wall Street. Why do we want the blowout? It makes it easier to determine entry points. Currently, we are walking around in a very dimly-lit room. Take for example Dow component General Electric that was $35 a few months ago, and then $33 a few weeks ago. Both times, it seemed cheap. Presently, the stock is hovering around $30. Is this a good time to buy GE? One would think, but …?
And the same scenario spills over to our Current Portfolio. In almost every Newsletter for the last few months, we have said that this may be a good time to “bottom fish”, and we still think so. However, the fishing would be much easier if there was less water in the pond.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them. NOTE: At this time of year, there is not much news since most companies have just had their earnings reports.
Micromet (MITI) (4/20/08). MITI and MedImmune commence treatment in Phase 2 trial of BiTE antibody Blinatumomab (MT103/MEDI-538) in patients with acute lymphoblastic leukemia. Also, MT103/MEDI-538 demonstrates durable responses in patients with relapsed non-Hodgkin’s lymphoma.
Replidyne (RDYN) (4/5/08). Completes restructuring.
Rodman & Renshaw (RODM) (3/20/08). Retained by NetSol as exclusive investment advisor. Places offering for Genta, Inc. Expands its global capital markets. Completes acquisition of COSCO Capital Management.
Entrust (ENTU) (2/20/08). Announces agreement with Acxiom to provide cost-effective identity theft and fraud prevention solutions. Leading Indian credit rating firm switches to Entrust IdentityGuard. SC Magazine gives ENTU’s Entelligence Messaging Service a five-start and recommended rating.
IncrediMail (MAIL) (2/20/08). Quarterly revenue numbers not bad but losses need paring; balance sheet still looks good.
Catalyst Pharmaceutical (CPRX) (12/20/07). Files shelf registration for offering of up to $30 million.
Hollis-Eden Pharmaceuticals (HEPH) (12/20/07). Stock gets a boost as company reports additional positive data from Phase I/II clinical trial with TRIOLEX supporting anti-inflammatory approach to treating Type 2 diabetes.
DigitalFX (DXN) (12/5/07). Several news releases on products. This one is on the “Endangered List”.
Sunesis Pharmaceuticals (SNSS) (11/5/07). Stock downgraded by Cantor Fitzgerald as company cuts 60 jobs and refocuses resources on developing Voreloxin.
Wave Systems (WAVX) (9/5/07). Xerox simplifies loan process with Wave’s electronic signature solution. Named permanent member of Trusted Computing Group board of directors.
Radcom (RDCM) (7/20/07). One-for-four reverse stock split to become effective June 16, the day we post this Newsletter. We have never been a big fan of these since they rarely help current shareholders. Wait and see.
Pharmacyclics (PCYC) (6/20/07). A few months ago, this one was at death’s door as the stock sunk to around 60 cents, but some positive news has resuscitated it. Company regains NASDAQ compliance. Its Novel Btk Inhibitor shows efficacy in preclinical models of rheumatoid arthritis and lymphoma. Phase 1/2 trial of Motexafin Gadolinium plus antibody targeted radiation therapy demonstrates high complete response rate in patients with non-Hodgkin’s lymphoma. RWD Acquisitions announced expiration of tender offer.
Xenonics (XNN) (6/5/07). Former director of business development for ITT joins company.
Oncolytics (ONCY) (6/5/07). To present at BIO 2008 confab on June 17 and 18. Starts enrollment in Phase 1/2 ovarian cancer clinical trial with REOLYSIN. Begins patient enrollment in UK Phase II clinical trial investigating REOLYSIN in combination with Paclitaxel and Carboplatin. ONCY collaborators present positive Phase II sarcoma trial results at ASCO meeting.
Encorium Group (ENCO) (5/20/07). To merge Fine Success Investments into company for 12.5 million shares of stock. Combined company expected to have annual revenues of about $50 million to $55 million. Also plans to buy oncology-focused clinical research organization Prologue Research International, Inc.
Hana Biosciences (HNAB) (5/5/07). Stock transferred from NASDAQ Global Market to NASDAQ Capital Market, but receives minimum bid rule notice from NASDAQ. Phase 2 clinical trial of Marqibo for metastatic uveal melanoma meets clinical response criteria to advance full enrollment.
ECtel (ECTX) (5/5/07). Joins forces with Amdocs to provide best-in-class fraud detection and prevention solution.
Ore Pharmaceuticals (OREX) (4/20/07). Regains NASDAQ compliance, thanks to reverse stock split. Its DioGenix subsidiary discovers gene sets which correlate to multiple sclerosis. This is on the “Endangered List”.
Immunicon (IMMC.OB) (3/20/07). We have CLOSED THIS POSITION since the company just filed for bankruptcy.
UQM Technologies (UQM) (2/5/07). To present at Capstone Investments small-cap confab on June 18.
Neose Technologies (NTEC) (12/20/06). NTEC and Novo Nordisk complete initial Phase 1 clinical trial of NN7128 (long-acting Vlla). This is on the “Endangered List”.
Proxim Wireless (PRXM) (11/5/06). Says it redefines price/performance ratio of high-performance enterprise wireless networks. Receives Network Products Guide 2008 product innovation award. Chosen by TW-Airnet of Taiwan for municipal wireless network in Kinmen Islands.
TVI Corp (TVIN) (9/5/06). News of a proxy battle shaping up as company receives NASDAQ delisting notice, which it will appeal. This is on the “Endangered List”.
NTN Buzztime (NTN) (7/5/06). Names new Chairman/CEO.
ThermoGenesis (KOOL) (4/5/06). Announces filing of 510(k) application for MarrowXpress.
Lipid Sciences (LIPD) (2/20/06). Company’s autologous therapeutic HIV vaccine study published in “Experimental Biology and Medicine”.
8×8 (EGHT) (1/20/06). Expands Packet8 business voice solutions with launch of virtual trunking services.
Digital Angel (DIGA) (12/20/05). SARBE unit receives $2.7 million of orders from Malaysian Air Force and Navy to supply personal locator beacons. This is on the “Endangered List”.
Westell (WSTL) (10/20/05). Subsidiary ConferencePlus expands Event Manager.
RAE Systemsu(RAE) (10/5/05). Introduces new wireless modem for AreaRAE gas detection networks. Introduces next generation Photoionization Detector for compound-specific applications.
EntreMed (ENMD) (9/5/05). To present at BIO 2008 confab on June 18. Receives new patent for 2-Methoxyestradiol analogs.
Vion Pharmaceuticals (VION) (5/20/05). Several releases about various clinical trials. This is on the “Endangered List”.
Network Engines (NENG) (6/5/04). Announces stock repurchase program. Teams with Astute Network to produce industry’s first stateless ATCA solution.
TMNG Global (TMNG) (4/20/04). Announces stock repurchase and execution of standstill agreements. TMNG and Cartesian launch new ascertain subscription assurance solution for cable, fixed-line and mobile operators.
Our selections for this Newsletter are another biotech and a electric utility, both NASDAQ-listed.
AVIGEN, INC. (NASDAQ: AVGN) – $2.95. Twelve-month hi-low has been $7.10 – $2.37. Located in Alameda, CA, with about 35 employees, this biopharmaceutical has 29.8 million shares outstanding, $64.29 million in total current assets, $74.38 million in total assets, and $10.71 million in total liabilities, of which $7 million is long-term debt. Institutional ownership is around 72%. One analyst rates the stock a “strong buy”, one as a “moderate buy”, and another as a “hold”. www.avigen.com
Yes, Avigen, Inc. is another one of those biotechs with a good-looking balance sheet and some promising technologies in the pipeline.
Founded in 1992, and public for over seven years, Avigen focuses on developing and commercializing small molecule therapeutics to treat neurological and neuromuscular disorders. The company’s lead product candidates primarily address spasticity, and neuromuscular spasm and neuropathic pain. Each of its two programs, AV650 and AV411, are commercially approved pharmaceuticals outside the U.S. AV650 is an orally administered, centrally-acting small molecule known as tolperisone, and is being developed for the North American market under a license and supply agreement with a subsidiary of Sanochemia Pharmazeutika AG. AV411 is being developed as a first-in-class, non-opiate oral therapy for treating neuropathic pain.
Several other candidates are AV513, which is being developed as an oral therapy for treating blood disorders, including hemophilia; and AV333, another candidate that also acts upon neuropathic pain through a glial cell attenuation mechanism.
At the end of April, Avigen said that it was on track to report AV650 Phase II data by year end from its ongoing trial with spasticity associated with multiple sclerosis; and that it was enrolling subjects in an ongoing Phase II trial in patients with spasticity associated with spinal cord injury. The company also disclosed a composition-of-matter patent for a pure form of AV650 that is required by the FDA. Avigen also reported that it was enrolling subjects in an ongoing AV411 Phase I maximum tolerated dose study which will also assess the effect of food on drug metabolism.
Avigen is pretty typical of many small biotechs in that it earns nearly zilch and runs up almost nothing for losses. For example, during the 1stQT of the current FY, ending 3/31/08, losses were $7.41 million.
The company appears to have a balance sheet strong enough to take it to the next clinical trial stages.
Our 24-month target for the stock is $5.00 to $5.50.
For more information, contact AVGN’s Michael Coffee at 510-748-7372; ir@avigen.com
MMC ENERGY, INC. (NASDAQ: MMCE)- $2.10. Twelve-month hi-low has been $7.25 – $2.06. Based in New York City, this electric utility has 14.1 million shares outstanding, $34.1 million in total current assets, $53.53 million in total assets, and $3.8 million in total liabilities, of which $1.85 million is long-term debt. Institutional ownership is around 56%. www.mmcenergy.com
This has very little sex appeal, but MMC Energy, Inc. may be in the right place at the right time, and with its balance sheet just may get where it needs to go.
Founded in 2003 and public for about a year, MMC Energy is a private equity firm specializing in acquiring, directly or through joint venture, small to mid size electricity generating assets, generally below 250 megawatts (MW) and that require additional development capital and recommissioning expenditures and associated energy infrastructure assets. The company may also develop renewable energy projects such as wind and companies that provide non-carbon emitting ancillary services and transmission grid optimization technologies.
To date, MMC Energy has three electricity generating assets in California – Chula Vista, Escondido, and Mid-Sun – with a combined capacity of 110 megawatts. The company is in the process of upgrading two of these assets. It is also pursuing additional acquisitions primarily in California, Texas, and the Mid-Atlantic and Northeastern states.
In mid-May, the company agreed to purchase one LM-6000 PC Sprint natural gas-fired turbine from GE Energy for about $15.3 million. This is to be used in its Escondido project and will increase usage from 44MW to 50MW.
For FY2007, ending 12/31/07, revenue was $6.7 million with $3.77 million in losses. During the 1stQT of the current FY, ending 3/31/08, revenue was $730,000 with $1.63 million in losses.
As we said, nothing exciting, but MMC seems to be on the right side of the energy equation.
Our 24-month target for the stock is $3.50 to $3.75.
For more information, contact MMCE at 212-977-0900.
Look for the July 5, 2008 Newsletter to be posted on 6/30 or 7/1.
Thank you,
George