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Hello Readers,
Since the last Newsletter, we closed seven positions; five for gains and two for losses.
BioCryst Biopharmaceuticals (10/20/11). Closed position 2/15/12 at $4.26 for a 55% GAIN.
DRY SHIPS (12/20/11). Closed position 2/14/12 at $3.78 for a 77% GAIN.
NUPATHE (12/20/11). Closed position 2/9/12 at $3.42 for a 74% GAIN.
SMITH MICRO SOFTWARE (2/5/12). Closed position 2/8/12 at $2.83 for a 56% GAIN.
GLU MOBILE (9/5/11). Closed position 2/9/12 at $4.65 for a 52% GAIN
BLUE PHOENIX (10/20/10). Closed position 2/6/12 at $2.67 for a 70% LOSS.
(price reflects reverse split)
Hollywood Media (1/5/08). Closed position 2/15/12 at $1.26 for a 53% LOSS.
BioCryst Pharmaceuticals popped on news of ‘promising’ results from preclinical studies of its drug candidate for hepatitis C. A rising tide lifts all ships and that is what happened with Dry Ships when shipping stocks went on a tear. Nothing really seemed to juice Smith Micro Software, although the stock did go on a tear the day after an investor conference, which, if possible, is why we mention them in the below updates. The same goes for NuPathe, except there was not any investor confab preceding its nice run. Glu Mobile’s stock popped thanks to some strong quarterly numbers. And, we closed Hollywood Media and Blue Phoenix for losses.
Why this rally continues is not hard to figure out. Europe’s woes seem to be somewhat ignored, although it is a disaster waiting to explode. Does anyone seriously believe that Greece, with 20% unemployment, will ever repay all of that money? For that matter, how about the United States paying back $15 trillion? But, since all is calm, for now, this is all traders need. And, they also have Chairman Ben and the Fed keeping rates at near zero for the next three years, so, where else but equities are people going to put most of their money? The one thing that worries us is that since the start of the year, the markets have gone straight up on little volume.
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 think the news to be significant.
Geron (GERN)(2/5/12). Completes enrollment in Phase 2 clinical trial of Imetelstat in breast cancer.
Nanosphere (NSPH)(1/20/12). To release earnings on February 16, the day we post this Newsletter.
A123 Systems (AONE)(1/20/12). To supply six battery energy storage solutions to the Northern Powergrid for the UK’s largest smart grid project. Stock dropped a little over concerns that battery sales to Fisker may stall.
Navidea Biopharmaceuticals (NAVB)(1/5/12). Obtains EMA guidance for Lymphoseek; will submit marketing authorization application in Europe.
Vermillion (VRML)(12/5/11). Sets earnings news for February 23.
Nexus Lighting (NEXS)(12/5/11). Introduces first high performance 650 Lumen BR30 LED light bulb. Company’s Array LED lamps light major Miami Beach hotel.
Anadigics (ANAD)(11/20/11). Sets earnings call for February 22.
BioCryst Pharmaceuticals (BCRX)(10/20/11). Plans earnings news for February 16, the day we post this Newsletter.
BioMimetic Therapeutics (BMTI)(9/20/11). Introduces Augmatrix biocomposite bone graft product line at AAOS.
Synthesis Energy Systems (SYMX)(8/20/11). Enters into feasibility study with Ncondezi Coal Company. Current balance sheet still looks strong.
Galena Biopharma (GALE)(7/5/11). Initiates enrollment in Phase 1/2 trial for folate binding protein (E39) targeted peptide vaccine in ovarian and endometrial cancer patients. Launches new patient web site NeuVax.com
Opnext (OPXT)(6/20/11). Thailand flooding impacts revenues and earnings; balance sheet still looks good.
On Track Innovations (OTIV)(6/20/11). Introduces EasyPark electronic parking management system to the U.S. market starting at UC-Davis campus.
Gleacher & Co. (GLCH)(6/5/11). Quarterly revenue could have looked better, but company posts earnings; balance sheet still looks good.
Neostem (NBS)(5/20/11). To present at New York Stem Cell Summit on February 21.
MediciNova (MNOV)(5/20/11). Receives a notice of patent allowance for a method of treating progressive MS.
ThermoGenesis (KOOL)(4/5/11). Although recent numbers are not so great, company is upbeat; cash reserves still look good. Res-Q shows positive results in two clinical trials.
Oculus Innovative Sciences (OCLS)(3/5/11). Revenue growth continues at nice pace; balance sheet looks good.
Biodel (BIOD)(2/20/11). Balance sheet still looks strong.
Network Engines (NEI)(2/5/11). To showcase new high-performance security appliance technologies at RSA Conference February 27 to March 2.
Great Basin Gold (GBG)(1/5/11). Posts preliminary 2011 operating results.
Sprint Nextel (S)(1/5/11). The usual several dozen news releases and stories, most notable is that the company increased sales but missed estimates on earnings.
Astex Pharmaceuticals (ASTX)(12/5/10). Will present at the Citi Global Health Care Conference on February 29. Stock takes a hit as FDA raises questions about Dacogen.
NovaBay Pharmaceuticals (NBY)(4/20/10). Provides business update and 2012 outlook.
China Direct Industries (CDII)(4/5/10). Quarterly numbers not near as good as a year earlier; balance sheet still looks pretty good.
Cytokinetics (CYTK)(2/5/10). Balance sheet still looks strong.
USA Technologies (USAT)(6/5/09). Revenue numbers look a lot better but losses need more paring; balance sheet still looks good.
GlobalSCAPE (GSB)(5/20/08). Provides preliminary 4thQT results.
LRAD Corporation (LRAD)(10/5/07). Quarterly numbers not bad; balance sheet still looks good. However, we are placing this on the “Endangered List” since the stock has been in the Current Portfolio way too long and has done nothing during much of that time.
XATA Corporation (XATA)(9/20/07). This, too, is being placed on the “Endangered List” for pretty much the same reason as LRAD.
YM Biosciences (YMI)(11/5/06). Balance sheet still looks strong.
Our picks for this Newsletter are a gene sequencing company and a drug developer, both trading on the NASDAQ.
COMPLETE GENOMICS, INC. (NASDAQ: GNOM) – $4.05. Twelve-month hi-low has been $18.55 – $2.21. Located in Mountain View, CA, with about 240 employees, this biotech has 33.18 million shares outstanding, $114.49 million in total current assets, $147.19 million in total assets, and $44.57 million in total liabilities, of which $18.41 million is long-term debt. Institutional ownership is around 43%. Three analysts rate the stock a “strong buy” and three have it as a “hold”. www.completegenomics.com
Put aside any past problems Complete Genomics, Inc. may have had. It has a decent balance sheet, orders for its genome sequencing are on the rise, and biotechs are hot, right now. And, it recently inked a nifty deal with the Mayo clinic.
Founded in 2005, and public for just over a year, Complete Genomics is a life science company that has developed and commercialized a DNA sequencing platform, which began commercial operations in May, 2010 and the company claims to have 99.99% accuracy levels. Its complete genomics analysis (CGA) platform combines it human genome sequencing technology with advanced informatics and data management software and its end-to-end outsourced service model to provide customers with data for genome-based research.
During 2010, the company sequenced over 800 complete human genomes. Its customers include global academic and government research centers and biopharmaceutical companies. During the first three quarters of 2011 Complete Genomics shipped approximately 2400 genomes to customers, and during the last, or fourth quarter, expected to ship between 900 and 1200 genomes. As of the end of September, 2011, GNOM claimed to have a backlog of $24 million and 4800 genomes.
In mid-February, of this year, the company signed an agreement with the Mayo Clinic to help them sequence and analyze genetic material.
For FY2010, ending 12/31/10, revenue was $9.38 million with $58.1 million in losses. During the first nine month of FY2011, ending 9/30/11, revenue was $16.87 million with $50.03 million in losses. It seems like good progress is being made on the top line and the bottom line (in terms of paring losses).
This one is pretty easy to understand. Genomics is getting hot again. The company looks to be at the breakout stage in terms of sales. And, the stock is near its all-time low.
Our 24-month target for the stock is $6.50 to $7.00.
For more information, contact GNOM’s Scott Sandler at 650-943-2788; ssandler@completegenomics.com
OREXIGEN THERAPEUTICS, INC. (NASDAQ: OREX) – $3.05. Twelve-month hi-low has been $4.15 – $1.22. Based in La Jolla, CA, with about 30 employees, this drug maker has 53.73 million shares outstanding, $64.73 million in total current assets, $65.89 million in total assets, and $50.13 in total liabilities, of which $42.86 million is deferred long term liability charges. Institutional ownership is around 24%. Two analysts rate the stock a “strong buy” and two have it as a “hold”. www.orexigen.com
It is not too often when we see a small biotech/drug maker boasts that it has enough money to make it through the next three years, but that is what Orexigen Therapeutics crowed in mid-January. If true, then this seems like a good bet, considering the products the company has in its pipeline. Oh, and not included in the above numbers is the $86 million the company raised in a secondary offering at the end of December 2011.
Founded in 2002, and public for nearly five years, Orexigen is developing pharmaceutical products aimed at obesity. Its lead combination product candidates are Contrave, which has completed Phase III clinical trials; and Emphatic that has completed Phase II clinical trials. Contrave is a combination of two drugs, bupropion and naltrexone, in a sustained release formulation (SR). Bupropion is an antidepressant and smoking cessation medication while Naltrexone is a treatment for alcohol and opioid addiction. The company’s Empatic product candidate is a combination of bupropion SR and zonisamide SR. Zonisamide is for the adjunctive treatment of partial seizures, a form of epilepsy. Orexigen has collaboration with Takeda Pharmaceutical to develop and sell Contrave.
Like many small R&D biotechs Orexigen has little revenue and mega losses. For example, during the quarter ending 9/30/11, revenue was $857,00 with $4.58 million in losses.
One reason Orexigen will need some of the money it has amassed is that the FDA is making the company run a trial with nearly 10,000 patients to prove that its obesity drug, Contrave, doesn’t cause heart problems. The bet here is that it will, or hit a few snags, which should be manageable.
Our 24-month target for the stock is $5.00 to $5.50.
For more information, contact OREX at 858-875-8600; IR@orexigen.com
Look for the March 5, 2012 Newsletter to be posted on 3/1 or 3/2.
Thank you,
George