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HAPPY NEW YEAR READERS! (we hope)
Since the last Newsletter, we did not close any positions, which is usually the case over the holidays. However, what was HIGHLY UNUSUAL was the number of positions we closed in 2009. The total number of Closed Positions was 70. To put it in better perspective, since our first Newsletter appeared on March 20, 1997, we have had 598 total Closed Positions, and nearly 12% of those came in one year. Of course, 2009 was a very unusual year, and we all know why. So, what happens this year? Look for the government to begin weaning itself from the market in the face of more joblessness, ever-declining housing values, and an increasing debt overload. It’s a dance that the Fed and Treasury may not be able to do, since we are in uncharted waters. Their actions will probably cause some choas leading to wild swings in the markets, both on the upside and downside. As Axl Rose once said, “Welcome to the jungle”.
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. BTW, there are not a lot of updates in this Newsletter because of the holidays.
PLX Technology(PLXT)(12/20/09). Claims to deliver reliable, power-saving performance in Fujitsu and SUN SPARC enterprise M3000 servers.
Helicos Biosciences(HLCS)(10/20/09). Stock falls even more as company announces $6.4 million offering.
Anadys Pharmacueticals(ANDS)(8/20/09). Says hepatitis C drug meets key study goals.
Performance Technologies(PTIX)(7/20/09). Enters agreement with Mack Technologies to outsource manufacturing of its printed circuit board assembly.
Salary.com(SLRY)(7/5/09). Launches new website for individuals $10 personal salary report offer.
USA Technologies(USAT)(6/5/09). Brokerage firm Janney Montgomery Scott initiates coverage. More updates about the dissident shareholder group.
Durect Corp(DRRX)(4/20/09). Reports positive Phase 2b data on its anesthetic.
Ligand Pharmaceuticals(LGND)(2/20/09). Completes Neurogen acquisition.
Oilsands Quest(BQI)(10/20/08). Announces upsizing and closing of previously-announced private placement.
SCM Microsystems(SCMM)(10/5/08). Shareholders approve proposed business combination with Bluehill ID, expected early this year.
Bridgeline Software(BLSW)(6/5/08). Reports record sales and profits for FY2009; balance sheet still looks good.
Nanophase Technologies(NANX)(1/20/08). NASDAQ alerts company about $1 minimum bid rule.
Hollywood Media(HOLL)(1/5/08). Announces sale of Broadway Ticketing division for an estimated total consideration of $45 million.
MOVE, Inc(MOVE)(1/5/08). To present at the Citigroup annual entertainment confab on January 5 and at the annual Needham Growth Conference on January 12.
Sunesis Pharmaceuticals(SNSS)(11/5/07. Just as the company regains NASDAQ compliance it registers for a secondary offering of up to $50 million which appears to put pressure on the stock price.
Xenonics(XNN)(6/5/07). Recent 4thQT numbers not bad but balance sheet not that great. We are placing this on the “Endangered List”.
Lantronix(LTRX)(12/5/06). We are also placing this one on the “Endangered List” because the company recently did a 1 for 6 reverse split and these seldomly work out for existing shareholders.
We thought it would be fun to begin the new year with two very low-priced biotechs, both trading on NASDAQ.
CYCLACEL PHARMACEUTICALS, INC. (NASDAQ: CYCC) – $1.02. Twelve-month hi-low has been $1.69 – 26 cents. Based in Berkeley Heights, NJ, with about 50 employees, this biotech has 24.4 million shares outstanding, $14.43 million in total current assets, $17.54 million in total assets, little debt, and $9.56 million in total liabilities. Institutional ownership is around 38%. Three analysts give the stock a “strong buy”. www.cyclacel.com
Three analysts give the stock a big thumbs up and the company just reported some positive results from a trial on one of its lead drug candidates. Also, the balance sheet isn’t half-bad, so, with the stock at nearly a dollar, we add Cyclacel Pharmaceuticals to the Current Portfolio.
Founded in 1992 and trading on NASDAQ for over five years, Cyclacel’s core strength is in cell cycle biology and is advancing a pipeline of small molecule drugs designed to stop uncontrolled cell division. The company has three clinical-stage compounds and what it feels is a deep pipeline aimed at treating human cancers and other serious disorders. The company’s subsidiary, ALIGN Pharmaceuticals, markets directly in the U.S. Xclair Cream for radiation dermatitis, Numoisyn Liquid and Numoisyn Lozenges for xerostomia.
Three orally-available Cyclacel drugs are in clinical development. Sapacitabine (CYC682), an oral nucleoside analogue, which is in Phase II studies for treating hemotological malignancies, such as acute myeloid leukemia (AML) in the elderly, myelodysplastic syndromes, cutaneous T-cell lymphoma, and lung cancer; Seliciclib (CYC202), a CDK (cyclin dependent kinase) inhibitor, which is in Phase II studies for treating lung cancer and nasopharyngeal cancer; and CYC116, an Aurora kinase and VEGFR2 inhibitor that is in Phase I studies for patients with solid tumors. The company is focusing on building a diversified biopharmaceutical business targeting hemotology, oncology, and other therapeutic areas.
Early in December, 2009, Cyclacel held a Type A meeting with the FDA to discuss a randomized Phase 3 study design for its oral Sapacitabine capsules in AML and separately in myelodysplastic syndromes (MDS). Based on the FDA’s confirmation that the proposed study design would be acceptable for a Special Protocol Assessment (SPA), Cyclacel plans to submit a SPA request during the 1stQT of this year. Prompting this action was the fact that the company reported data from its randomized Phase II study including one-year survival in a difficult to treat population of elderly patients with AML aged 70 years and activity in older patients with MDS refractory to hypomethylating agents.
Cyclacel is pretty typical of many small biotech in that it has scant revenues and mega losses. For example, during the quarter ending 9/30/09, income was $230,000 and losses were $3.13 million.
The company has a good story line, pretty cheap stock price, and don’t forget about those three analysts.
Our 24-month target for the stock is $1.75 – $2.00.
For more information, contact, CYCC’s Corey Sohmer at 908-517-7330; csohmer@cyclacel.com
CYTRX CORPORATION (NASDAQ: CYTR) – $1.10. Twelve-month hi-low has been $1.72 – 24 cents. Located in Los Angeles, CA, with about 30 employees, this biotech has 109.5 million shares outstanding, $36.48 million in total assets, $37.17 million in total assets, little debt, and $7.06 million in total liabilities. Institutional ownership is around 4%. Five analysts rate the stock a “strong buy”. www.cytrx.com
When we first saw the number of shares outstanding, we had second thoughts about CytRx Corporation, but then we saw the five “strong buys” on the stock and that got our attention, plus the balance sheet looks pretty good.
Founded in 1985 and public for over twenty years, CytRx is developing human therapeutics. The company’s drug development pipeline includes five programs in clinical development. These include Tamibarotene, a synthetic retinoid in Phase II clincial development to treat acute promyelocytic leukemia (APL); INNO-2006, a pro-drug for doxorubicin in Phase II clinical development for treating cancer; Bafetinib, a drug in Phase I to treat chronic myeloid leukemia; Arimoclomol, an orally administered small-molecule product candidate in Phase IIb clinical development for treating amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease); and Iroxanadine, and orally-administered small-product candidate in Phase I clinical development to treat diabetic ulcers. CytRx is also developing treatments for neurodegenerative and other disorders based on its small-molecule molecular chaperone amplification technology; and new drug discovery research using its master chaperone regulator assay technology.
Apart from its drug development programs, CytRx maintains a 36% interest in RXi Pharmaceuticals (NASDAQ: RXII), which is dedicated to developing proprietary RNA interference (RNAi) therapeutics.
In early December, 2009, CytRx announced positive results Phase 2 results for Tamibarotene in treating APL. Also, at around that time, the FDA permitted the company to re-enter the clinic with its orally administered drug candidate Arimoclomol as a therapeutic treatment for ALS. At the end of November, 2009, the company announced plans to initiate a Phase 2 clinical trial with INNO-206 in patients with advanced soft tissue sarcomas.
As with most small biotechs, CytRx has little revenue and big losses. Its quarter ending 6/30/09 seems pretty typical of the company’s P&E that showed $964,000 in revenue and $2.23 million in losses.
Besides the balance sheet and the five “strong buys” on the stock, the company seems to have a promising pipeline of drug candidates.
Our 24-month target for the stock is $1.80 to $2.00.
For more information, contact CYTR at 310-826-5648.
Look for the January 20, 2010 Newsletter to be posted on 1/18 or 1/19.
HAPPY 2010!
George