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Hello Readers,
Not only did the markets throw out the baby with the bath water during most of September, they also threw out brothers, sisters, Mom, Dad, and the grandparents, along with gold and silver. However, toward the end of the month, the hint that the Fed, along with European banks, may launch some sort of QE3 gave the markets new hope. It is still our belief that this will come to pass. No, we are not proponents of more Fed intervention, but the central bankers have, in their minds, crossed the Rubicon.
As a result of all of this, much of our Current Portfolio has been beaten to a pulp. Many of our picks released relatively good over the last few months only to see their stock prices get hammered under the weight of the Bear onslaught, which leads to another problem. Once the next Bull run begins, and there will be one, small stocks have historically taken much longer to regain momentum, because speculative investors are a nervous bunch and need to see more solid footing from the Big Cap stocks.
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.
Celldex Therapeutics (CLDX)(9/20/11). To present at cancer conference on October 6.
Glu Mobile (GLUU)(9/5/11). To present at Craig-Hallum confab on October 6.
Net List (NLST)(9/5/11). To also present at the Craig-Hallum conference on October 6.
Synthesis Energy Systems (SYMX)(8/20/11). End of FY shows slight revenue gain and nice paring of the losses; balance sheet still looks good.
Satcon Technology (SATC)(8/5/11). Chosen for Landmark 5 megawatt project by Arizona Western College.
Cover-All Technologies (COVR)(7/20/11). Claims My Insurance Center NexGen achieves high marks among commercial lines policy administration vendors.
RXi Pharmaceuticals (RXII)(7/5/11). Separates into two public companies. Stock symbol remains unchanged but new name is Galena BioPharma.
Opnext (OPXT)(6/20/11). Highlights 10G and 40G technologies during ECOC 2011. Introduces next-generation 100G DP-QPSK coherent transponder module.
Neostem (NBS)(5/20/11). Coverage initiated by JMP Securities.
MeciniNova (MNOV)(5/20/11). Announces private stock sale to Kissei Pharmaceutical.
Innodata (INOD)(5/5/11). Authorizes $2 million stock repurchase program.
GSE Systems (GVP)(4/20/11). To provide engineering simulation for B&W mPower reactor.
Oculus Innovative Sciences (OCLS)3/5/11). Licenses global rights for endotracheal tube from NIH to reduce ventilator-associated pneumonia.
Biodel (BIOD)(2/20/11). Reports top-line results from pump study of experimental insulins.
Sprint Nextel (S)(1/5/11). The usual three or four dozen stories and articles. Of some note is that the company is launching Sprint Direct Connect.
Trident Microsystems (TRID)(12/20/10). TRID and LG CNS announce commercial android STB deployment. To cut 275 jobs in order to lower breakeven point. This is making us a little nervous.
Astex Pharmaceuticals (ASTX)(12/5/10). Shows evidence of AT13387 activity in gastrointestinal stomal tumor models.
Inovio Pharmaceuticals (INO)(10/20/10). To present at five conferences during October. Enters collaboration with Department of Homeland Security to assess foot and mouth disease synthetic vaccines’ potential to help insure nation’s food supply safety.
Blue Phoenix Solutions (BPHX)(10/20/10). Receives NASDAQ delisting notice. Stock has really tanked over the last few months and we have placed it on the “Endangered List”.
Rexahn Pharmaceuticals (RNN)(7/20/10). Advances pancreatic cancer drug as it completes patient enrollment for Archexin Phase II trial.
China Direct Industries (CDII)(4/5/10). Completes the sale of its 51% stake in Shanxi Pan Asia Magnesium for $3 million.
Novavax (NVAX)(4/5/10). To report top-line results from Phase I respiratory syncytial virus vaccine clinical trial on October 3, the day we post this Newsletter.
Cytokinetics (CYTK)(2/5/10). Announces first publication on Smooth Muscle Myosin Inhibitors in The Journal of Pharmacology and Experimental Therapeutics.
CytRx (CYTR)(1/5/10). To substantially increase patient enrollment in INNO-206 Phase 1b/2 clinical trial principally in patients with soft tissue sarcomas.
Qualstar (QBAK)(10/20/09). Announces new rack mount tape library.
USA Technologies (USAT)(6/5/09). Releases pretty upbeat FY report; balance sheet still looks good, and stock fell like a rock during last several weeks.
GlobalScape (GSB)(5/20/08). Named to Software Magazine’s list of 500 largest software companies.
LRAD Corporation (LRAD)(10/5/07). Announces initial LRAD systems order from U.S. Air Force and receives $1.1 million in follow-on LRAD orders from the U.S. Navy. Awarded $500,000+ LRAD 300X order for foreign armored vehicles.
XATA Corporation (XATA)(9/20/07). XATA and McLeod announce joint development projects to improve compliance and integrate product functionality.
YM BioSciences (YMI)(11/5/06). Initiates Phase II BID trial with CYT387 in myelofibrosis. Reports on Nimotuzumab data at ECCO-ESMO confab. End of FY balance sheet looks healthy.
Our picks for this Newsletter are two more biotechs, both trade on NASDAQ.
CORCEPT THERAPEUTICS, INC. (NASDAQ: CORT) – $2.95. Twelve-month hi-low has been $5.07 – $2.53. Based in Menlo Park, CA, with about 20 employees, this biotech has 84.2 million shares outstanding, $52.68 million in total current assets, $52.72 million in total assets, little debt, and $3.86 million in total liabilities. Institutional ownership is 34%. Seven analysts rate the stock a “strong buy” and one has it on “hold”. www.corcept.com
When over a half-dozen analysts give a company like Corcept Therapeutics, Inc. a “strong buy”, one takes notice. It also helps that the company has a pile of money on the balance sheet.
Founded in 1998, and public for over seven years, Corcept is developing drugs for treating severe metabolic and psychiatric disorders, which are associated with the steroid hormone cortisol. The company has completed a Phase III study of its most advanced pipeline product CORLUX for treating Cushing’s Syndrome, as well as an ongoing Phase III study of CORLUX for treating the psychotic features of psychotic depression; and a Phase II program for CORT 108297 and an IND-enabling program for CORT 113083. Corcept has a patent license from Stanford University for the use of GR-II antagonists, as well as arrangements with ICON Clinical Research and MedAvante.
At the end of August, the FDA advised the company that no advisory committee will be scheduled in connection with its review of the New Drug Application (NDA) for CORLUX for treating the manifestations of Cushing’s Syndrome; however, this decision does not alter the Prescription Drug User Fee Act (PDUFA) goal date for completion of review which remains February 17, 2012. So, things could get even more interesting the nearer that date approaches.
Like many other small biotechs Corcept has little, if any, revenue and some pretty hefty losses. For example, during the quarter ending 6/30/11, revenue was zero with $8.9 million in losses.
This is worth repeating. This is a play based upon seven “strong buys”, and what appears to be financial fortitude on the company’s balance sheet.
Our 24-month target for the stock is $5.00 to $5.50.
For more information, contact CORT at 650-327-3270; IR@Corcept.com
KERYX BIOPHARMACEUTICALS, INC. (NASDAQ: KERX) – $3.00. Twelve-month hi-low has been $5.91 – $2.98. Based in New York City, with about 25 employees, this drug developer has 69.7 million shares outstanding, $52.9 million in total current assets, $56.39 million in total assets, little debt, and $9.4 million in total liabilities. Institutional ownership is around 36%. Seven analysts rate the stock a “strong buy”. www.keryx.com
Like Corcept up above, we are adding Keryx BioPharmaceuticals, Inc. to the Current Portfolio for pretty much the same reasons. The company has a pot of money and seven analysts give the stock a “strong buy”, which usually says something for a company’s product line.
Founded in 1998, and public for over ten years, Keryx is developing pharmaceuticals products for treating life-threatening diseases, including cancer and renal disease. The company is developing KRX-0401 (perifosine), a novel potentially first-in-class, oral anti-cancer agent that inhibits Akt activation in the phosphoinositude 3-kinase (P13K) pathway, and also affects a number of other key signal transduction pathways, including the JNK pathway, all of which are pathways associated with programmed cell death, cell growth, and cell differentiation and cell survival. KRX-0401 is currently in Phase 3 clinical development for both refractory advanced colorectal cancer and multiple myeloma, and in Phase 1 and 2 clinical development for several other tumor types. Each of the KRX-0401 Phase 3 programs is being conducted under Special Protocol Assessment (SPA) agreements with the FDA.
Keryx is also developing Zerenex (ferric citrate), an oral, iron-based compound that has the capacity to bind to phosphate and form non-absorbable complexes. The Phase 3 clinical program of Zenenex in the treatment of hyperphosphatemia (elevated phosphate levels) in patients with end-stage renal disease is being conducted pursuant to an SPA agreement with the FDA. The company has strategic alliances with AEterna Zentaris, Panion & BF Biotech, Japan Tobacco, and Torii Pharmaceutical Co.
And again, we have another small biotech with little revenue and mega-losses. During the first six months of the current FY, ending 6/30/11, revenue was $5 million with $9.5 million in losses.
Besides the seven “strong buys”, the pile of money, this company also seems to have a lot of irons in the fire.
Our 24-month target for the stock is $5.00 to $5.50.
For more information, contact KERX’s Lauren Fischer at 212-531-5965; lfischer@keryx.com
Look for the October 20, 2011 Newsletter to be posted on 10/17 or 10/18.
Thank you,
George