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Hello Readers,
Since the last Newsletter, we closed one position.
MEDICINOVA (5/20/11). Closed position 5/11/12 at $3.90 for a 58% GAIN.
MediciNova’s stock got a pretty nice pop on an upbeat earnings report about its various product candidates. Since this is our first gain in nearly seven weeks, due to the market slide, we see it as a small victory rather than a reason to do cartwheels.
And so, things have become even uglier. A socialist becomes president of France; Greece is in flux, again, as socialists make gains in new elections; Spanish bond yields push higher; and, in the U.S., JP Morgan Chase has a $2 billion hiccup, all, of which, caused more consternation for the markets. Since small stocks get whacked the most during market sell offs, our Current Portfolio has taken even more of a thumping.
When will the bleeding stop? As soon as the Fed massages the markets with added liquidity or strongly hints at such action. If JP Morgan had not pricked a finger, the Fed may have taken action by now, but Chairman Ben probably doesn’t want to be seen as favoring Wall Street over Main Street, just yet. Give him time. He will.
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 highly significant.
Bacterin(BONE)(5/5/12). Records pretty decent looking revenue numbers but shows a bad loss; balance sheet still looks okay. Signs its third national GPO contract with Novation.
Zogenix(ZGNX)(4/20/12). Latest numbers show nice year-over-year improvement as company reaffirms 2012 guidance; balance sheet still looks good. Submits New Drug Application to FDA for Zohydro for treating chronic pain.
Air Media Group(AMCN)(4/20/12). Although company post weak 1stQT numbers, it is still forecasting a strong second half of the year; balance sheet still looks strong.
Axcelis Technologies(ACLS)(4/5/12). Quarterly results were pretty dismal; balance sheet still looks strong. Company’s HDx high current implanter selected as process tool of record by a major chipmaker.
Echo Therapeutics(ECTE)(3/20/12). Feltl downgrades stock from a Strong Buy to a Buy, which begs the question “is she pregnant or isn’t she?” Quarterly numbers look okay, as does balance sheet. Symphony tCGM to be profiled on The Doctors TV show. Announces positive clinical results of Symphony tCGM system.
Ballard Power Systems(BLDP)(3/20/12). Partners with American Platinum on a range of clean energy fuel cell applications in South Africa. To present at the JMP Securities Research confab on May 16, the day we post this Newsletter. Ardour Capital upgrades stock. Recent revenue numbers not bad.
Celsion Corporation(CLSN)(3/5/12). Balance sheet still looks pretty healthy. Announces resubmission with Philips Healthcare of combined IND/IDE application for a Phase 2 study of ThermoDox and MR-guided HIFU in bone cancer. Announces ThermoDox commercial supply agreement with Hisun.
Majesco Entertainment(COOL)(3/5/12). Releases Zumba Fitness Rush Bollywood style pack and Zumba Wear Avatar Collection.
Geron Corporation(GERN)(2/5/12). Completes enrollment in Phase 2 clinical trial of Imetelstat in non-small cell lung cancer. Recent balance sheet still looks pretty strong.
Nanosphere(NSPH)(1/20/12). Will host Investor Day on June 13. Latest balance sheet still looks strong. Company and Thermo Fisher enter into a marketing/distribution pact in Europe.
Navidea Biopharmaceuticals(NAVB)(1/5/12). Will present at several upcoming scientific meetings. Balance sheet still looks pretty good.
Nexxus Lighting(NEXS)(12/5/11). Recent numbers not glowing; balance sheet is so-so.
Anadigics(ANAD)(11/20/11). Craig-Hallum downgrades the stock to a “hold”.
ECOtality(ECTY)(11/5/11). Company and Lloyd Center unveil electric vehicle charging stations in Portland.
BioMimetic Therapeutics(BMTI)(9/20/11). Balance sheet still looks pretty good.
Synthesis Energy Systems(SYMX)(8/20/11). Announces India coal test agreement. Balance sheet still looks good.
Antares Pharma(AIS)(8/5/11). To present at Merrill Lynch healthcare conference on May 17, the day after we post this Newsletter. Company posts modest revenues and profits; balance sheet still looks good.
Cover-All Technologies(COVR)(7/20/11). Company reiterates full-year guidance of $22 million to $25 million in revenue; balance sheet still looks okay.
On Track Innovations(OTIV)(6/20/11). Receives order for 30,000 NFC and contactless payment readers to be deployed across the U.S.
Gleacher & Company(GLCH)(6/5/11). Quarterly numbers pretty disappointing.
Idera Pharmaceuticals(IDRA)(6/5/11). Announces efficacy data for IMO-8400 in preclinical models of lupus and psoriasis. Reports top-line results from a Phase 2 clinical trial of IMO-2055 in treating patients with advanced head and neck cancer.
Neostem(NBS)(5/20/11). Cash equivalents still look healthy, but low stock price is starting to bother us. This has now become a wait-and-see situation.
Energy Recovery(ERII)(5/5/11). Roth Capital initiates coverage on the company. Quarterly numbers not great; balance sheet still looks good.
GSE Systems(GVP)(4/20/11). Quarterly revenue numbers better than a year ago as company still shows profits; balance sheet still seems strong.
Thermogenesis(KOOL)(4/5/11). Recent balance sheet still looks good.
Jamba, Inc.(JMBA)(3/20/11). Sets annual shareholders meeting for May 17, the day after we post this Newsletter. Posts upbeat quarterly report; balance sheet looks okay.
Oculus Innovative Sciences(OCLS)(3/5/11). Prepares to initiate clinical study for use of Microcyn Hydrogel in management of scars based upon FDA-reviewed protocol.
Biodel(BIOD)(2/20/11). Balance sheet still looks pretty healthy. And yes, we know that the stock price has been tanking despite this fact, but this is an example of what happens to small stocks during a market swoon.
Real Goods Solar(RSOL)(1/20/11). Revenue numbers improve year-over-year, but losses uptick; balance sheet still looks okay.
Great Basin Gold(GBG)(1/5/11). Company releases okay earnings report, but stock is mired due to mutual funds and ETFs really are not into gold stocks, but, instead are just buying the metal.
Sprint Nextel(S)(1/5/11). The usual several dozen news stories and releases, of note is that company won a $2 billion contract with Western States contracting alliance.
Relm Wireless(RWC)(11/5/10). Receives $2 million order from Harris County, Texas. Latest numbers not great; balance sheet still looks okay.
Inovio Pharmaceuticals(INO)(10/20/10). Balance sheet still looks pretty healthy.
ProPhase Labs(PRPH)(10/5/10). Revenues jump compared to a year ago; balance sheet still looks good.
CombiMatrix(CBMX)(8/20/10). Quarterly numbers show year-over-year improvement; balance sheet okay.
Rexahn Pharmaceuticals(RNN)(7/20/10). Submits Archexin Phase 2 protocol to FDA for ovarian cancer. Issued Japanese patent for new anti-cancer compounds.
Alpha Pro Tech(APT)(7/20/10). Releases good-looking quarterly revenue numbers; balance sheet still looks okay.
NovaBay(NBY)(4/20/10). Balance sheet still looks good. Company says that Aganocide outperformed antibiotics in study.
CD International(CDII)(4/5/10). Latest numbers okay but not great; balance sheet still looks good.
Novavax(NVAX)(4/5/10). Launches additional Phase 1 clinical trial of A/H5N1 influenza vaccine candidate. Balance sheet still looks good.
CytRx Corporation(CYTR)(1/5/10). We are placing this on the “Endangered List ” as company does a 1 for 7 reverse stock split. Balance sheet still looks strong. Presents complete clinical data from INNO-206 Phase 1b/2 trial at ASCO.
Qualstar(QBAK)(10/20/09). Quarterly numbers okay; balance sheet still looks good.
USA Technologies(USAT)(6/5/09). Releases pretty good quarterly numbers; balance sheet still looks good. However, here is another stock that tanked despite some upbeat news, and, once again, this is indicative of a lousy market.
Performance Technologies(PTIX)(7/20/09). Quarterly revenue numbers down from a year ago but company turns a small profit; balance sheet still looks good.
GlobalSCAPE(GSB)(5/20/08). Latest numbers show year over year revenue boost; balance sheet still looks god.
YM Biosciences(YMI)(11/5/06). Balance sheet still is real strong, which is the main reason we have kept it in the Current Portfolio for what seems like centuries.
Our picks for this Newsletter are an industrial good maker and a developer of flavor ingredients, both trading on NASDAQ.
CAPSTONE TURBINE CORPORATION (NASDAQ: CPST) – $1.01. Twelve-month hi-low has been $1.89 – 85 cents. Based in Chatsworth, CA, with about 190 employees, this industrial goods maker has 298.52 million shares outstanding, $74.42 million in total current assets, $87 million in total assets, little debt, and $52.15 million in total liabilities. Institutional ownership is around 25%. Four analysts rate the stock a “strong buy”. www.capstoneturbine.com
At first glance, Capstone Turbine Corporation seems like the ideal candidate for the Current Portfolio. It has a decent balance sheet, is showing steady revenue growth, and has some good analysts’ backing. The main worry here is the number of shares outstanding, which do not seem to be a problem, for now, but need watching.
Founded in 1988, and public for over a dozen years, Capstone Turbine makes and services turbine generator sets and related parts for use in stationary distributed power generation applications. These applications include cogeneration combined heat and power (CHP), integrated CHP, resource recovery, and secure power, as well as combined cooling, heat, and power; and its products are used as battery charging generators for hybrid electric vehicle applications. Capstone mainly offers microturbine units, sub-assemblies, and components. It also provides various accessories, including rotary gas compressors with digital controls, heat recovery modules for CHP applications, dual mode controllers that allow automatic transition between grid connect and stand-alone modes, batteries with digital controls for stand-alone/dual-mode operations, power servers for multi-packed installations, and protocol converters for Internet access, as well as frames, exhaust ducting, and installation hardware.
Capstone also remanufactures microturbine engines and provides after-market parts and services, scheduled and unscheduled maintenance, and factory and on-site training services. The company’s microturbines can be fueled by various resources, including natural gas, propane, sour gas, landfill or digester gas, kerosene, diesel and biofuel.
In mid-April, Capstone received an order for 30 more microturbines from multiple oil and gas producers operating in the Eagle Ford Shale play. Also, at that time, the company expanded its presence in the hospital market with an order for a dual-mode C1000 Power Package to an unnamed Michigan hospital.
For the FY ending 3/31/11, revenue came to $81.89 million with $38.47 million in losses. During the first nine months of the current FY ending 12/31/11, revenue was $79.23 million with a net loss of $10.45 million.
The company is showing some good revenue growth and appears to be getting a grip on the losses. There is nothing sexy about this company except that seems to be growing pretty nicely. Our only fear is a major reverse split on the stock.
Our 24-month target for the stock is $1.75 to $2.00.
For more information, contact CPST at 818-407-3628; ir@capstoneturbine.com
SENOMYX, INC. (NASDAQ: SNMX) – $2.34. Twelve-month hi-low has been $6.44 – $2.16. Based in San Diego, CA, with about 110 employees, this developer of flavor ingredients has 39.92 million shares outstanding, $51.26 million in total current assets, $63.75 million in total assets, little debt, and $34.36 million in total liabilities. Institutional ownership is around 57%. Three analysts rate the stock a “strong buy” and one as a “moderate buy”. www.senomyx.com
Sometimes we stumble upon a company like Senomyx, Inc. that makes products that seem off the beaten path, but show good revenue growth and have a decent balance sheet.
Founded in 1998, and public for nearly eight years, Senomyx, simply put, uses taste receptor technologies to discover and develop flavor ingredients for the packaged food, beverage and ingredient supply industries. These flavors ingredients include flavors such as savory flavors and cooling flavors; and flavor modulators, such as sweet and salt enhancers, and bitter blockers. The company has collaborative agreements with several packaged food and beverage and ingredient companies, including Ajinomoto Co., Firmenich SA, Nestle SA, and PepsiCo.
Senomyx has developed taste receptor-based assays for use in its screening systems and to screen its compound libraries and identify potential flavor ingredients. The company is developing flavor ingredients to allow its collaborators to reduce sugar levels, artificial sweeteners, salt and MSG in packaged food and beverage products.
For FY2011, ending 12/31/11, revenue was $31.33 million with $8.72 million in losses compared to FY2010 revenues of $28.7 million and $10.67 million in losses. During the first quarter of the current FY, revenues were $8.2 million with a net loss of $1.85 million; these were in line with estimates and the company reaffirmed FY2012 EPS guidance.
This is another one that isn’t real sexy, but the company appears to be carving a nice niche for itself.
Our 24-month target for the stock is $4.25 to $4.75.
For more information, contact SNMX’ Gwen Rosenberg at 858-646-8369; gwen.rosenberg@senomyx.com
Look for the June 5, 2012 Newsletter to be posted on 6/1 or 6/4.
Have a good holiday!
George