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Hello Readers,
Since the last Newsletter, we closed three positions; two for some nice gains and one for a loss.
ADVANCED ANALOGIC TECHNOLOGIES (9/20/10). Closed position 5/27/11 at $6.04 for a 78% GAIN.
BIOSANTE PHARMACEUTICALS (9/20/09). Closed position 5/24/11 at $3.02 for a 61% GAIN.
LINKTONE (11/5/07). Closed position 5/26/11 at $1.02 for a 70% LOSS.
Takeover news is what you want to read when owning any stock, and that is what propelled Advanced Analogic Technologies to soar, as Skyworks Solutions announced it was buying the company at $6.13 a share. BioSante Pharmaceuticals went on run for no apparent reason, but we will take the gain. And, we closed Linktone for a loss.
It is an understatement to say that the markets have been a little nervous, and the main worry seems to be that no one knows the effects of the Fed phasing out QE2 this month. NEWS FLASH: The Fed has already helped to place the country into a staggering deficit for the next few decades in the hopes of igniting a recovery, which really isn’t happening. So, the Fed won’t stop now; after all, what’s a few more trillion? The government will continue with the easy money policies for the simple fact that the Great Recession is far from over. They will either give the new policy a new name or just use a bunch of back doors. Yes, that’s overly simplified, but you get the idea.
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.
Neostem (NBS)(5/20/11). Enters agreement with Nankai Hospital in Tianjin to offer company’s licensed orthopedic technology.
MediciNova (MNOV)(5/20/11). Latest balance sheet still looks pretty healthy.
Biostar Pharmaceuticals (BSPM)(4/20/11). Posts some pretty good quarterly numbers along with a decent balance sheet, which should have moved the stock higher, but, did not.
Jamba, Inc. (JMBA)(3/20/11). Recent numbers not that great, but stock holds up; balance sheet still looks good.
Pluristem Therapeutics (PSTI)(3/20/11). Oppenheimer initiates coverage.
Oculus Innovative Sciences (OCLS)(3/5/11). Sets earnings call for June 2, the day after we post this Newsletter.
Biodel (BIOD)(2/20/11). Global Hunter Securities initiates coverage.
Network Engines (NEI)(2/5/11). Says largest customer plans to dual source specific product line which will impact future quarters, but company says it will remain profitable; however, this news has had a negative impact on the stock.
Great Basin Gold (GBG)(1/5/11). Gives a pretty upbeat quarterly report.
Sprint Nextel (S) (1/5/11). The usual four or five dozen news articles that mention the company. Formerly requests FCC to deny AT&T’s takeover of T-Mobil.
SuperGen (SUPG)(12/5/10). To present live online at RetailInvestor.com on June 2, the day after we post this Newsletter.
BluePhoenix Solutions (BPHX)(10/20/10). Latest quarterly report disappoints; balance sheet still looks good.
NAPCO Security Technologies (NSSC)(7/5/10). Recent quarterly report looks good, as does balance sheet.
NovaBay Pharmaceuticals (NBY)(4/20/10). Latest balance sheet looks okay. Results from Phase 2 clinical trial of NVC-422 for adenoviral conjunctivitis were a mixed bag.
China Direct Industries (CDII)(4/5/10). Releases good-looking quarterly report; balance sheet still looks strong. Subsidiary completes shipment of 20,000 metric tons of iron ore from Mexico.
Cerus Corp. (CERS)(3/20/11). To present at Jefferies healthcare conference on June 9.
Cytokinetics (CYTK)(2/5/10). To present data at the annual sessions of the Society for Vascular Medicine June 2-4.
CytRx (CYTR)(1/5/10). Completes sales of molecular chaperone assets to Danish company in deal worth up to $120 million plus future royalties.
Anadys Pharmaceuticals (ANDS)(8/20/09). To present ANA773 data at the ASCO meeting on June 4.
Performance Technologies (PTIX)(7/20/09). Globacom selects SEGway Signaling Solution to enable network expansion in Nigeria.
USA Technologies (USAT)(6/5/09). Coverage initiated by Northland Securities.
Bridgeline Digital (BLIN)(6/5/08). Honored with four Horizon Interactive awards. Quarterly results not bad, but balance sheet could use more cash.
Hollywood Media (HOLL)(1/5/08). Recent numbers not great, balance sheet still looks good.
Move, Inc. (MOVE)(1/5/08). To participate in the annual Craig-Hallum Institutional Investor Conference on June1, the day we post this Newsletter.
YM Biosciences (YMI)(11/5/06). Gets orphan drug designation for JAK1/JAK2 inhibitor CYT387 in Europe.
Our picks for this Newsletter are a brokerage firm and another of those small biotechs, both NASDAQ-listed.
GLEACHER & COMPANY, INC. (NASDAQ: GLCH) – $2.20. Twelve-month hi-low has been $3.99 – $1.50. Based in New York City, with about 340 employees, this brokerage firm has 129.79 million shares outstanding, $1.872 billion in total assets, and $1.515 billion in total liabilities. Institutional ownership is around 57%. One analyst rates the stock a “strong buy”, one a “moderate buy”, one as a “hold”, and one as a “moderate sell”. www.gleacher.com
Over our fifteen year history, we have picked about a handful of brokerage firms, and, to the best of our recollection, all of them worked out. So, since things seem to be getting better for the industry, we thought we would try another and Gleacher & Company, Inc. appears to be getting its legs back.
Founded in 1952, and public for over twenty five years, Gleacher is an independent bank that provides corporations and institutional investors a wide array of investment services, operating in five segments. The Broadpoint Descap segment offers sales and trading services on a range of mortgage and asset-backed securities; U.S. Treasury and government agency securities; and structured products, such as collateralized loan obligations and collateralized debt obligations, whole loans, swaps, and other securities. This segment also executes services for institutional investor customer trades. The Debt Capital Markets segment offers sales and trading on corporate debt securities, including bank debt and loans, investment grade and high-yield debt, convertibles, distressed debt, preferred stock, and reorganization equities. The Investment Banking segment provides advisory services on mergers and acquisitions, restructurings, and corporate finance-related matters. This segment also raises capital through underwritings, and private placements of debt and equity securities. The Equities segment provides sales, trading, and research on equity securities and offers services for corporate repurchase activities. The other segment provides early-stage growth capital to companies.
For FY2010, ending 12/31/10, revenue was $270.88 million with $20.62 million in losses compared to FY2009 revenue of $341.84 million and $54.92 million in net income. However, in the 1stQT of this FY, ending 3/31/11, revenue was $94.66 million with $7.2 million in net profits, leading one to believe that the firm is getting back on track.
There really isn’t anything sexy about brokerage firms. They either make money or they don’t. Gleacher appears to be making it, again.
Our 24-month target for the stock is $3.75 to $4.25.
For more information, contact GLCH’s Jeffrey Kugler at 212-273-7100.
IDERA PHARMACEUTICALS, INC. (NASDAQ: IDRA) – $2.45. Twelve-month hi-low has been $5.81 – $2.32. Based in Cambridge, MA, with about 35 employees, this biotech has 27.62 million shares outstanding, $28.34 million in total current assets, $30.65 million in total assets, little debt, and $3.71 million in total liabilities. Institutional ownership is around 21%. Two analysts rate the stock as a “strong buy”. www.iderapharma.com
Yes, here we go, again, with another biotech, and like many of the others we have in the Current Portfolio, Idera Pharmaceuticals, Inc. has a pretty healthy-looking balance sheet. The company also has a nice variety of products/candidates in the hopper, coupled with agreements from some pretty big names in the biopharmaceutical business.
Founded in 1989, and public for over fifteen years, Idera develops DNA and RNA based drug candidates for treating infectious diseases, autoimmune and inflammatory diseases, cancer, and asthma and allergies, and for use as vaccine adjuvants. The company designs and creates proprietary Toll-Like Receptors (TLR) to modulate immune responses, including TLR agonist, a compound that stimulates an immune response through targeted TLR; and TLR antagonist, a compound that blocks activation of an immune response through the targeted TLR. Its drug candidates include IMO-2125, a TLR9 agonist, which is in Phase 1 clinical trial for hepatitis C virus infection; and TLR7, 8, and 9 agonists that are in research stage for viral diseases. Idera also develops IMO-3100, a dual TLR7/TLR9 antagonist, which is in preclinical development stage for autoimmune and inflammatory diseases, such as lupus, rheumatoid arthritis, MS, psoriasis, and colitis. Its other drug candidates are in research stage for solid tumor cancers.
Idera has a licensing and collaboration agreement with Merck KGaA to research, develop, and commercialize TLR9 agonists for treating cancer, excluding cancer vaccines; a license and research collaboration with Merck & Co. to R&D and commercialize therapeutic and prophylactic vaccine products containing its TLR7, 8, and 9 agonists in the fields of cancer, infectious diseases, and Alzheimer’s disease; and a research collaboration and option agreement with Novartis to develop and commercialize TLR9 agonists for treating asthma and allergies.
Unlike many small biotechs, Idera does have some sort of revenue stream. For FY2010, revenue was $16.11 million with $17.96 million in losses. During the 1stQT of the current FY, ending 3/31/11, revenue was $4.55 million with $6.85 million in losses.
There’s a lot going on here, and one has to really like the alliances with Merck and Novartis.
Our 24-month target for the stock is $4.25 to $4.75.
For more information, contact IRDA’s Teri Dahlman at 617-679-5519; tdahlman@iderapharma.com
Look for the June 20, 2011 Newsletter to be posted on 6/16 or 6/17.
Thank you,
George