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Hello Readers,
Since the last Newsletter, we have closed two more positions, for some fair gains.
TUMBLEWEED (3/5/05). Closed position 9/14/05 at $3.95 for a 52% GAIN.
CENTILLIUM (7/20/05). Closed position 9/9/05 at $3.72 for a 57% GAIN.
For the last several months, Tumbleweed had mostly been hovering at a 25% to 45% gain, so, when it pierced our 50%-plus threshold, we closed it, and, yes, it could go higher. Ever since we picked Centillium the stock has acted well, making steady gains on some good product news, and even though this one, too, could go higher, we’re happy with the 57% gain.
To be blunt, we thought the markets would have been totally decimated over the last several weeks, but, all too often, the market does the opposite of what is expected. Where does it go from here, given all of the turmoil? We don’t know, but keep an eye on what the Fed does over the next few weeks.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
EntreMed (ENMD) (9/5/05). Starts research collaboration with the National Cancer Institute.
@ROAD (ARDI) (8/20/05). Announces customer wins through alliance program with chemical distribution network. Teams with Cingular Wireless to co-market mobile resource management solutions. Stock upgraded by Dougherty & Co.
Zi Corp (ZICA) (8/5/05). Zi’s Decuma Japanese handwriting technology selected for new Motorola 3G Smartphone.
N.A. Scientific (NASI) (8/5/05). Slow sales growth in the 3rd QT somewhat disappointing, but company appears to be trimming its losses; balance sheet still looks okay.
Electric City (ELC) (7/5/05). Nissan NA to participate in ELC’s VNPP development for ComEd.
Telecommunication Systems (TSYS) (6/20/05). Provides communications infrastructure for Joint Task Force Katrina. Issued patent for Enhanced E9-1-1 location information using VoIP. Provides Corr Wireless with E9-1-1 solution.
Sirenza (SMDI) (6/5/05). To present at Banc of America (BOA) Securities Conference on September 21.
Verticalnet (VERT) (4/5/04). Several product releases.
AEHR Test Systems (AEHR) (3/20/05). Receives follow-on MAX orders from major IC manufacturer.
Mindspeed (MSPD) (2/20/05). About a month ago, Mindspeed was on the verge of doom and gloom, but has pulled a Lazarus thanks to some good news such as raising its fourth quarter outlook, which usually juices a stock.
Brillian (BRLC) (1/5/05). Launches 6580iFB 65-inch 1080p HDTV/media server video platform.
Advancis Pharma (AVNC) (12/20/04). Agrees to sell Keflex brand rights to a private company. Will start a new PULSYS study.
Net2Phone (NTOP) (11/5/04). Responds to IDT’s stock instead of cash offer.
Trikon (TRKN) (10/5/04). Says metal deposition system has been ordered by a new power semiconductor fabrication facility in Asia.
Chordiant Software (CHRD) (9/20/04). Partners with Infograin to deliver integration services to its global client base. Selected by HSBC to provide card dispute resolution.
Tripath (TRPH) (8/5/04). Announces new architecture platform for digital amplifiers. This one is on the “Endangered List”.
Avanex(AVNX) (7/20/04). CFO quits. Company gets delisting notice from NASD. Remember, this one is also on the “Endangered List”.
AIXTRON (AIXG) (7/5/04). Another Taiwanese IC manufacturer chooses Genus Strata-Gem 300mm ALD process tools for advanced DRAM production.
Bindview (BVEW) (6/5/04). Several releases on security compliance.
GoRemote (GRIC) (5/5/04). Announces distribution pact with T-Mobile HotSpot. Quarterly results show progress in managed broadband services revenue; balance sheet still looks good.
Palatin (PTN) (4/5/04). End of year numbers reflect less losses.
NexMed (NEXM) (4/5/04). Licenses nail fungus drug to Novartis. Will present at an investor confab on September 20.
Socket Communications (SCKT) (3/20/04). Partners with Liquidmetal Technologies to provide rugged line of portable data collection products. Delivers industry first CF RFID reader-scan card with combined bar code and RFID technology.
OpenTV (OPTV) (3/20/04). Collaborates with Nagravision and ADB to provide advanced, end-to-end solutions for high definition push DVR services. Chosen by Cabovisao to provide latest generation middleware. Several other upbeat releases including its purchase for $19.5 million of a cable ad and sales management firm.
Oplink (OPLK) (2/20/04). To present at investor confab on September 19.
Somera Communications (SMRA) (2/20/04). To serve as primary vendor for refurbished network equipment for major European wireless carrier. Spotwave Wireless picks company as new authorized distribution partner.
Actuate (ACTU) (1/5/04). Upgraded by KeyBanc et al. Releases info on Object Designer.
Active Power (ACPW) (11/20/03). Ships continuous power system for use at Chinese National Olympics.
Insmed (INSM) (11/5/03). Forbes.com says company’s growth hormone drug should be up for FDA review in early October.
Targeted Genetics (TGEN) (10/5/03). Restructures Biogen debt. This one is on the “Endangered List”.
ViroLogic (MGRM) (7/20/01). Company changes its name to Monogram Biosciences and notice the new symbol, MGRM. This has been in the Current Portfolio for over four years and, if something doesn’t move the stock in the next few months, we may close it.
Our picks for this issue are a biotech and a medical equipment supplier, both trading on the AMEX.
DYADIC INTERNATIONAL,INC. (AMEX: DIL) – $2.40. Twelve-month hi-low has been $7.35 – $1.87. Based in Jupiter, FL, with about 90 employees, this biotech has 22.6 million shares outstanding, $24.5 million in total current assets, $26.9 million in total assets, and $6.92 million in total liabilities, of which $3.45 million is long-term debt. Institutional ownership is around 4%. http://www.dyadic-group.com
And so we continue our love affair with small biotechs by adding Dyadic International, Inc. to the Current Portfolio, which seems to have a healthy balance sheet and some interesting products in development.
Founded in 1979 and trading on the AMEX since May, Dyadic develops and distributes specialty enzymes and related products to the textile, food and feed, starch, pulp and paper and other industries in the U.S., Hong Kong, Poland, and The Netherlands. Billing itself as a leading genomics company, DIL believes it is poised to become a leader in proteomics through developing novel products derived from the DNA of complex living organisms found in what it call’s the Earth’s biodiversity. Using its proprietary C1 Host Technology and C1 Expression and Screening Systems technology platforms, Dyadic develops biological products such as proteins, enzymes, polypeptides, and small molecules. By utilizing these host organisms, the company’s “one-stop shop” technology discovers and expresses eukaryotic genes, which are the genes of complex living organisms. It then manufactures these biological products for commercial application. DIL feels that its technology virtually ensures that each time a useful gene is discovered, it can be expressed and then mass-produced.
Dyadic has made and sold enzyme products since 1994. The company’s capacity has made it possible for it to sell over 50 products to industrial customers in more than 35 countries. In June, Dyadic announced successful completion of sequencing of its C1 fungal genome by Agencourt Bioscience; the parties completed the sequencing of the 38 million bases in the C1 genome ahead of schedule. Also in June, the company was listed as part of the new Russell Microcap Index.
For FY2004, ending 12/31/04, revenue was $16.7 million with $6.08 million in net losses. During the first six months of FY2005, ending 6/30/05, revenue was $7.7 million with $5.4 million in losses.
Dyadic is presently transitioning its revenue base from the lower margin textile enzymes to higher margin areas in areas such as enzymes for the pulp and paper, food and feed industries. So far, the company seems to be making headway with this new focus.
Our 24-month target for the stock is $4.25 to $4.50.
For more information, contact DIL’s Sasha Bondar at 561-743-8333; sbondar@dyadic-group.com
NEPHROS, INC. (AMEX: NEP) – $2.95. Twelve-month hi-low has been $6.27 – $2.06. Located in New York City with about 20 employees, this medical equipment provider has 12.3 million shares outstanding, $9.9 million in total current assets, $11 million in total assets, little debt and $2.75 million in total liabilities. http://www.nephros.com
For reasons unknown, even to us, we seldom put medical equipment companies into the Current Portfolio. Nephros, Inc. has a decent looking balance sheet and, a few months back, received a boost from the FDA. Bt the way, “nephros” is Greek for kidney.
Founded in 1997, and trading on the AMEX for less than a year, Nephros develops hemodiafiltration (HDF) products and technologies for treating patients with End Stage Renal Disease (ESRD). The company believes it has developed the most effective ESRD therapy available worldwide, offering proprietary technologies that improve clinical efficacy. NEP’s technologies also remove a range of harmful substances not currently removed by existing dialysis methods; addressing substances known collectively as middle molecules, due to their molecular weight, that contribute to such conditions as carpal tunnel syndrome, dialysis related amyloidosis, and degenerative bone disease in the ESRD patient.
Nephros has three products in various stages of development, including OLpur MD190, a dialyzer designed for HDF therapy; the OLpur H2H, an add-on molecule designed to allow the most common types of hemodialysis machines to be used for HDF therapy; and the OLpur NS2000 system, a stand-alone HDF machine and associated filter technology. The company sells the OLpur MD190 dialyzer in some, or all, of Cyprus, France, Germany, Greece, Ireland, Italy, The Netherlands, Spain, Sweden, the UK, and Switzerland.
In July, Nephros received a U.S. patent on its OLpur H2H product. Then, in June, NEP received FDA approval to market its OLpur HD190 high flux filter in the U.S. Back in March, the company granted Asahi Kasei Medical exclusive rights to make and distribute its filter products in Japan for 10 years.
For FY2004, ending 12/31/04, revenue was $138,000 with $7.6 million in losses. During the first six months of FY2005, ending 6/30/05, new product revenues were $378,000 with $2.43 million in losses.
Nephros began selling products in the first quarter of 2004. Since then, it has made a foothold in Europe, recently received FDA approval to sell in the U.S., and, at some point, should start making inroads in Japan.
Our 24-month target for the stock is $5.50 to $6.00.
For more information, contact NEP’s Marc Panoff at 212-781-5113.
Look for the October 5, 2005 Newsletter to be posted on 10/3 or 10/4.
Thank you,
George