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Hello Readers,
Since the last Newsletter, we have closed three more positions; two for some nice gains and one for a loss.
INVESTORS CAPITAL (4/20/06). Closed position 9/18/06 at $5.24 for a 65% GAIN.
ADVANCIS PHARMA (12/20/04). Closed position 9/18/06 at $5.69 for a 52% GAIN.
NEXMED (4/5/04). Closed position 9/18/06 at 76 for a 72% LOSS.
Investors Capital had a nice upward spike, probably due to the fact that many brokerage firms should be reporting good results for the current quarter. Over the last few years, Advancis was a roller coaster ride, and it appears that good FDA news on a drug trial spurred AVNC’s stock.NexMed was, of course, a major disappointment, and with a worsening balance sheet, it is time to take the loss.
So, has everyone been riveted to CNBC as the Dow touches record highs? It’s something to cheer about, even though NASDAQ and Russell 2000 have been mired in a monotonous trading range. At least, things held pretty steady for the month, insomuch as September is usually the cruelest time of year for the markets. As we have been warning for the last several Newsletters, keep an eye on the midterm elections, whose outcome could very well dictate the market’s movements for quite a while.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
Orchid Cellmark (ORCH) (9/20/06). Wins DNA contracts from Kent, Sussex, and City of London police forces.
TVI Corp (TVIN) (9/5/06). Receives $1.2 million contract for decontamination systems from National Guard.
Telular (WRLS) (8/20/06). Announces the next generation of Telguard digital solutions and services.
SCO Group (SCOX) (8/20/06). IBM asks court to dump company’s $5 billion lawsuit over Linux Code, which sent SCOX stock to 52-week low before rebounding to present price.
Microvision (MVIS) (7/20/06). To present at Gilder/Forbes Telecosm conference. Enters agreement to develop automotive head-up display with global tier one partner. Says 2006 revenue will be about 40% lower than last year.
NTN Buzztime (NTN) (7/5/06). Named one of San Diego’s fastest growing tech companies by Deloitte for second consecutive year.
ICAD (ICAD) (5/20/06). Releases version 7.2 of its computer-aided detection technology for mammography.
02Diesel (OTD) (5/20/06). Officially launches its school bus program in South Dakota. OTD’s stock price, like those of several of our alternative energy picks, has suffered a setback with slumping oil and gasoline prices; which is probably a temporary situation.
Kintera (KNTA) (5/5/06). Also, named by Deloitte as one of San Diego’s fastest growing technology companies.
Tris-S Security (TRIS) (5/5/06). Stock takes a dip as company says it will restate 1st QT and 2nd QT results. Awarded a $5.8 million contract extension.
Pharmos (PARS) (4/20/06). Dutton Associates rates the stock a “strong speculative buy” (is there any such thing as a weak “buy”?).
Cytogen (CYTO) (3/20/06). Coverage initiated by Rodman and Renshaw. Study shows that combination of high dose QUADRAMET and chemotherapy shows promise for treatment of high-risk acute myeloid leukemia.
Adherex (ADH) (2/20/06). Initiates Phase I/II trial of Eniluracil in liver cancer.
Gateway (GTW) (2/5/06). The usual dozen or so releases and articles, such as opening its new plant in Nashville and introducing three servers at Intel Developer forum.
8X8 (EGHT) (1/20/06). Stock price, which had slipped to under a dollar, gets a boost as Merriman Curhan Ford upgrades it to a “buy”.
Ceragon (CRNT) (1/5/06). Sets 3rd QT earnings call for October 23.
Castelle (CSTL) (1/5/06). FaxPress Premier fax servers named 2006 Readers’ Choice Award by Windows IT Pro.
Digital Angel (DOC) (12/20/05). Plans to launch national effort at equine market for its bio-thermo chips.
Memory Pharma (MEMY) (11/5/05). Achieves milestone in PDE10 collaboration with Amgen.
Westell (WSTL) (10/20/05). Stock drops as company announces end to development deal with Verizon; WSTL plans to develop multimedia product solo.
RAE Systems (RAE) (10/5/05). Jefferies & Co. initiates coverage and gives the stock a “hold”.
Infinity Pharma (INFI) (10/5/05). Cowen & Co. initiates coverage and gives the stock a “neutral”, whatever that means.
EntreMed (ENMD) (9/5/05). Starts human tests of cancer drug in leukemia patients.
Zi Corp (ZICA) (8/5/05). Signs agreement with one of top ten global wireless service operators for QIX.
Innodata (INOD) (7/5/05). Stock gets a little boost as company announces restructuring and will cut nearly 300 jobs. Sees 3rd QT revenue rising sequentially.
Lime Energy (LMEC.OB) (7/5/05). Until two weeks ago, this was Electric City before name change, and, yes, it’s on the “Endangered List”. Acquires Kapadia Energy Services.
Commerce Energy (EGR) (6/5/05). Acquires customer accounts that it says will triple its natural gas sales volumes; executes supply pact with Pacific Summit Energy.
B.O.S. (BOSC) (1/5/05). Changing CEOs in November.
Applied Micro Circuits (AMCC) (11/20/04). Several product releases. Delays shareholder meeting until October 20.
Aviza (AVZA) (10/5/04). Receives repeat order from Inotera Memories. Will participate in European program to develop next-generation RF filter technology.
Chordiant (CHRD) (9/20/04). Law firm announces derivative lawsuit against company; doesn’t seem to impact stock price.
Socket Communications (SCKT) (3/20/04). Expands sales presence in Latin America.
Avant Immuno (AVAN) (12/5/03). Wins federal grant for typhoid vaccine. Says Glaxo paid royalties at low rate.
Advanced Life Sciences (ADLS) (7/20/06). Announces results underscore dose selection for current Phase III CAP studies.
Our picks for this Newsletter are another biotech and an Internet marketing outfit, both on NASDAQ.
GENVEC, INC. (NASDAQ: GNVC) – $1.12. Twelve-month hi-low has been $2.35 – 91 cents. Located in Gaithersburg, MD, with about 105 employees, this biopharmaceutical has 63.8 million shares outstanding, $29.3 million in total current assets, $32.84 million in total assets, and $9.7 million in total liabilities, of which $2.29 million is long-term debt. Institutional ownership is around 19%. One analyst rates the stock a “moderate buy”. www.genvec.com
The one real trepidation we have about GenVec, Inc. is that the stock could drift back to under a dollar and set off alarms at NASDAQ. Other than that, the company has a healthy-looking balance sheet and some promising drug candidates.
Founded in 1992, and public for nearly five years, GenVec is a clinical-stage biopharmaceutical that is developing gene-based therapeutics to treat cancer, heart disease, and vision loss; and vaccines to prevent infectious disease. Its therapeutic pipeline includes: TNFerade, GenVec’s lead product candidate, treats cancer in combination with radiation by introducing TNF-alpha, a potent protein, directly into the tumors; this is in Phase II/III trial for treating locally advanced pancreatic cancer, and in Phase 2 trials for treating rectal and melanoma cancer. AdPEDF is being developed to treat macular degeneration (AMD) in hopes of preventing vision loss; data is still being collected from a Phase 1 study.TherAtoh is a product concept to restore hearing or balance through regeneration of critical cells of the inner ear. BIOBYPASS, which is in a Phase 2 trial for treating severe coronary artery disease, is intended to induce new blood vessel formation in tissues with inadequate blood flow.
In addition, GenVec provides what it calls adenovector-based vaccine candidates that target the major strains of HIV in collaboration with the National Institute of Allergy and Infectious Diseases (NIAID); a vaccine for seasonal and pandemic flu, also in cahoots with NIAID; for preventing malaria in conjunction with the U.S. Navy and PATH’s Malaria Vaccine Initiative; and for the prevention of foot and mouth disease in collaboration with the USDA. In addition, GenVec has collaboration pacts with Cordis Corp., J&J, Fuso Pharmaceuticals, the University of Chicago, and Johns Hopkins.
At the end of August, the company reported that its HIV vaccine studies were encouraging and supported a rationale for further development of the compound.
GenVec is a small R&D biotech receiving most of its revenues in the form of grants and licensing fees. For FY2005, ending 12/31/05, revenues were $26.55 million with $13.99 million in losses. During the first six months of FY2006, ending 6/30/06, revenue was $11.08 million with $8.16 million in losses.
GenVec has several product candidates now in the hopper that could, at any time, grab some headlines, and that is usually the bet on small biotechs.
Our 24-month target for the stock is $2.00 to $2.25.
For more information, contact GenVec’s Tricia Richardson at 240-632-0740.
AUTOBYTEL, INC. (NASDAQ: ABTL) – $2.90. Twelve-month hi-low has been $5.55 – $2.35. Based in Irvine, CA, with about 425 employees, this Internet automotive marketer has 42.4 million shares outstanding, $59 million in total current assets, $135.5 million in total assets ($71 million is goodwill), little debt, and $20.33 million in total liabilities. Institutional ownership is around 62%. One analyst has the stock as a “hold”. www.autobytel.com
This has been a pretty rocky year for some Internet marketers, a recent example being Yahoo!, and Autobytel, Inc. has not been an exception. However, the company has a decent balance sheet and should have the wherewithal to turn things around.
Founded in 1995, and public for about seven years, Autobytel operates one of the largest automotive marketing services companies in the U.S. It owns and operates automotive web sites including Autobytel.com, Autoweb.com, Car.com, CarSmart.com, AutoSite.com, AICAutoSite.com, Autoahorros.com, and CarTV. The company enables dealers to sell cars and manufacturers to build brands through the Internet and claims to generate over a billion dollars monthly in car sales for the dealers. Car makers like GM, Ford, Lincoln, Honda, Mazda, Mercedes, and Mitsubishi use ABTL automotive data to power their sites. Major consumer portals such as MSN and Yahoo! also use the company’s content and technology.
Besides enabling dealers to sell cars and manufacturers to build brands though the Internet, Autobytel offers new vehicle purchasing services, used car programs, finance requests, Web control, automotive download services, automotive information center, and insurance and finance services. The company also provides customer relationship management products and programs, including lead management products and programs, lead management products, customer loyalty and retention marketing programs, and data extraction services.
Since its founding, Autobytel claims to have helped 27 million car buyers.
As we alluded, Autobytel has been struggling to stop the bleeding while attempting to transition the company toward a media-centric business model, so, 2006 numbers are below those of 2005. For FY2005, revenue was $125.26 million with $6.26 million in losses. During the first six months of the current FY, ending 6/30/06, revenue was $58.44 million with $16.33 million in losses.
It could be a while before Autobytel revives revenue growth and trims the losses, but the company has good web sites. Some of the recent troubles may be due to a slumping auto market, which at some point should see a rejuvenation.
Our 24-month target for the stock is $4.75 to $5.25.
For more information, contact ABTL’s Jennifer Klein at 949-225-4553; ir@autobytel.com
Expect the October 20, 2006 Newsletter to be posted on 10/16 or 10/17.
Thank you,
George