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Hello Readers,
Since the last Newsletter, we have closed four more positions; three for gains and one for a loss.
SPHERIX (6/20/06). Closed position 4/25/07 at $2.91 for a 60% GAIN.
CURIS (6/5/06). Closed position 4/24/06 at $2.33 for a 50% GAIN.
ZIX CORP (3/20/07). Closed position 4/20/07 at $2.48 for a 60%GAIN.
POINT THERA (7/5/06). Closed position 4/20/06 at 53¢ for a 78% LOSS.
To our knowledge, there wasn’t any earth-shaking news that pushed both Spherix and Curis, and with 60% and 50% gains, respectfully, we don’t mind closing the positions. Zix was in the Current Portfolio for just over a month, and once again, we are compelled to remind you that this is the exception and not the norm. ZIXI had performed well since we selected it and got an extra boost, so it appears, from a deal with the Screen Actors Guild. In mid-April, Point Therapeutics made a presentation to a cancer research group and the stock did zilch, so, we closed the position, which had been on the “Endangered List”.
We have said many times that these things seem to come in bunches and April proved it again as we closed ten positions during the month. Helping us, no doubt, was the best market upturn in quite some time. We feel this upward march has a long way to go, but the thing that gives us pause is that each time Nasdaq goes over 2500, it seems to peter out. Should it get to 2600 and higher, then hold on tight; the only impediments to a raging bull would be the usual snags, namely higher interest rates and energy prices or major acts of terror.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we recommended them.
Gene Logic (GLGC) (4/20/07). We hate it when this happens. A new pick tanks due to worse than expected earnings news: balance sheet still looks very healthy.
DepoMed (DEPO) (4/5/07). To announce 1st QT results on May 8. Completes $20 million registered direct offering.
Immunicon (IMMC) (3/20/07). To release earnings May 2, the day we post this Newsletter. To present at Deutsche Bank Securities confab on May3.
CommTouch (CTCH) (3/5/07). To release 1st QT number May 3. LG N-Sys offers company’s anti-spam to UTM customers across Asia-Pacific. Releases first quarter spam trends report.
Neurobiological Technologies(NTII) (2/20/07). Dutton Associates maintains “strong speculative buy” rating on stock.
Urologix (ULGX) (2/20/07). To host quarterly conference call on May 9.
UQM Technologies (UQM) (2/5/07). Receives order from Denver RTD for generators and motor controllers to retrofit 18 more hybrid electric mall buses. Teams with Phoenix Motorcars to develop a plug-in hybrid sport utility truck. Rodman and Renshaw initiate coverage on the stock.
Endologix (ELGX) (1/20/07). Reports more revenue growth though losses widen a little; balance sheet still looks very good. Gets FDA nod to make coating for Powerlink aorta treatment device.
Critical Therapeutics (CRTX) (1/5/07). To report 1st QT results May 8. Claims positive preclinical data on HMGB1.
Neose Technologies (NTEC) (12/20/06). Slates earnings call for May 3. Two abstracts accepted for medical confab presentations.
Lantronix (LTRX) (12/5/06) To preset at AeA Micro Cap confab on May 8. Earnings call scheduled for May 3.
WJ Communications (WJCI) (12/5/06). Earnings news slated for May 2, the day we post this Newsletter. To restate 2006 balance sheet.
Target Logistics (TLG) (11/20/06). Slates earnings call for May 2, the day we post this Newsletter.
YM BioSciences (YMI) (11/5/06). Company’s partner Daiichi Sankyo receives clearance for initial clinical trial in Japan.
Terabeam (TRBM) (11/5/06). Enters into an assignment agreement with SPH America. City of Radford, VA deploys Proxim wireless mesh network.
HealthStream (HSTM) (10/20/06). Net income falls compared to same period a year ago; cash position falls more than we would have liked to see.
Autobytel (ABTL) (10/5/06). Announces inducement options grants to certain employees. Recognized by CA trade group. To report earnings on May 10. Inks national marketing pact with Wilson Automotive Group.
Hydrogenics (HYGS) (9/20/06). To announce 1st QT results on May 11. Signs multiple orders toward development of pre-commercial fuel cell markets.
TVI Corp (TVIN) (9/5/06). Stock plummets after CEO and EVP both step down: company names a retired general as interim CEO. To announce 1st QT results May 8. This is making us a little squirrelly.
NTN Buzztime (NTN) (7/5/06). Earnings call slated for May 9.
02 Diesel (OTD) (5/20/06). OTD’s Asian distributor secures substantial order backlog.
Kintera (KNTA) (5/5/06). Slates earnings call for May 10. Says it helped Komen Maryland increase online giving by 84% in 2006. Lung association renews as company client. Win CA innovation award.
Pharmos (PARS) (4/20/06). Sees mixed results from midstage study of pain treatment candidate.
ThermoGenesis (KOOL) (4/5/06). To present at Deutsche Bank health care confab May 2, the day we post this Newsletter. Gets positive review in a Motley Fool article. Announces record revenues and makes management changes.
Inventure Group (SNAK) (3/5/06). Post 1st QT profit with slight dip in revenues; balance sheet still looks good.
Lipid Sciences (LIPD) (2/20/06). Licenses unique assay technology from Children’s Hospital of Philadelphia.
Gateway (GTW) (2/5/06). Now offering quad-core desktop in retail stores. Sets earnings call for May 8.
MIND C.T.I. (MNDO) (2/5/06). Sets earnings news for May 10.
8×8 (EGHT) (1/20/06). To present at CIBC World Markets confab on May 10. To release FY results on May 7.
Castelle (CSTL) (1/5/06). Being bought out by Captaris for $10.8 million or $3.95 a share. Needless to say, we’ll be closing this in the near future.
Fusion Telecom (FSN) (12/5/05). Launches its first advanced IP-based service offerings designed for business. This may be to little too late and we are placing this on the “Endangered list”.
RAE Systems (RAE) (10/5/05). To present at AeA Micro Cap confab on May 8. Demonstrates certain products at fire instructors conference.
EntreMed (ENMD) (9/5/05). Presents results for several of its drug candidates.
Zi Corp (ZICA) (8/5/05). Unveils joystick-A unique Chinese text input solution. Announces Decuma integration with MediaTek and license with Konka.
Innodata (INOD) (7/5/05). Stock gets a nice boost due to several pieces of good news: teams with Lockheed Martin to deploy system for the F-35 Lightning 2; announces $10 million in new wins and marketing successes. To report 1st QT results May 10.
B.O.S (BOSC) (1/5/05). Announces that DASH-APEX Holdings of Israel, has become an “interested party” now holding about 9% of BOSC. Raises $4.4 million through rights offering.
Applied Micro Circuits (AMCC) (11/20/04). Stock takes a header as company’s 4th QT sales weaken.
Nova Measuring (NVMI) (11/5/04). To release 1st QT results May 7.
Aviza (AVZA) (10/5/04). Receives multiple system order for thermal processing tools from Taiwan foundry; ditto for Celsior Single Wafer ALD System. $55 million credit facility completed.
Network Engines (NENG) (6/5/04). Earnings call set for May 3. Selects Multis Group for logistics support. Partners with FCS to bring Cryoserver forensic compliance appliance to market.
TMNG Global (TMNG) (4/20/04). To be key advisor to emerging Chinese communications industry.
OpenTV (OPTV) (3/20/04). Licenses Participate Solution to Active Loop TV.
AVANT Immuno (AVAN) (12/5/03). Company to cut 30% of workforce and even though it just raised a nice chunk of change, we’re placing it on the “Endangered List”.
Our picks for this Newsletter are another biotech and another one of those Israeli companies, both trade on NASDAQ.
HANA BIOSCIENCES, INC. (NASDAQ: HNAB) – $1.83. Twelve-month hi-low has been $12.94 – $1.82. Located in South San Francisco, CA, with about 35 employees, this biotech has 29.3 million shares outstanding, $35.75 million in total current assets, $36.3 million in total assets, little debt, and $5.94 million in total liabilities. Institutional ownership is around 43%. Two analysts give the stock a “strong buy” and five have it as a “hold”. www.hanabiosciences.com
Besides having a decent-looking balance sheet and promising drug candidates, Hana Biosciences, Inc. also has a nice following of analysts, which is rare for a company of this size; and, even though Hana recently hit a snag, these analysts still appear to be holding on.
Founded in 2002, and public since 2004, Hana acquires and develops products to advance cancer care. The company has a pipeline of at least half dozen of oncology-based drug candidates, most of which are in some stage of clinical development. These include therapeutic product candidates designed to destroy cancer cells, and supportive care product candidates to treat or prevent side effects caused by therapeutic cancer treatment.
The company’s therapeutic products include Marqibo, an anti-drug vincrintine for treating non-Hodgkin’s lymphoma and acute lymphoblastic leukemia; Talvesta, a novel anti-folate product candidate used as a chemotherapy agent in treating various solid tumors and hematological malignancies, including non-small cell lung cancer (NSCLC) and other solid tumors; Alocrest, an anticancer drug vinorelbine for treating solid tumors, such as NSCLC and breast cancer; and Sphingosome encapsulated topotecan for treating metastatic carcinoma of the ovary after failure of initial or subsequent chemotherapy, and small cell lung cancer sensitive disease after failure of first-line chemotherapy.
Hana’s supportive care products are Zensana, which is developed to alleviate chemotherapy and radiation induced, and post-operative, nausea and vomiting; and Menadione for preventing and treating skin rash associated with the use of epidermal growth factor receptor.
At the end of March, Hana halted development of Zensana due to a precipitation issue and suspended trials on Talvesta after observing toxicities. This caused several analysts to drop the stock from a “buy” to a “hold”, but the sentiment seems to be that the company has sufficient breadth in its pipeline to reposition its drug candidates and continue to make progress.
When it comes to the P&L, Hana is typical of many small biotechs in that it has little income and heavy losses. For FY2006, ending 12/31/06, revenue was zero with $44.8 million in losses.
Hana seems to have promise despite the recent setbacks. Maybe this is a case of buying “when there is blood on the streets”.
Our 24-month target for the stock is $3.25 to $3.50.
For more information, contact HNAB’s Remy Bernarda at 650-228-2769; investor.relations@hanabiosciences.com
ECTEL, LTD. (NASDAQ: ECTX) – $3.48. Twelve-month hi-low has been $5.75 – $3.02. Located in Rosh Ha’ayin, Israel, with about 180 employees, this communications service provider has 18.2 million shares outstanding, $38.66 million in total current assets, $65.52 million in total assets, little long-term debt, and $15.56 million in total liabilities. Institutional ownership is around 43%. One analyst has the stock as a “hold”. www.ectel.com
Is it any wonder why we have developed an appetite for Israeli stocks, since several of our recent “Closed Position” gainers have been in this genre. In addition, ECtel, Ltd. has a pretty decent-looking balance sheet and has been showing good revenue growth for the last three years.
Founded in 1990 as ECI Telesystems, and public since 1999, ECtel develops and markets its Integrated Revenue Management (IRM) solutions for communications service providers. These solutions allow the providers to deploy, execute, and oversee multiple revenue management programs, such as fraud prevention and revenue assurance products, on the same platform. The company’s products comprise proprietary software and hardware, as well as off-the-shelf components. Its solutions equip telecom service providers with data gathering and analysis capabilities by detecting real-time fraud and prevention of fraud losses; supporting revenue assurance, including call leakage detection; enabling settlement of disputes between operators; and monitoring network usage and providing traffic trend reports. ECtel’s IRM platform components also include probes, data management layer or data loaders, and dashboards.
ECtel claims more than 100 installations in over 50 countries. Among their customer base are Telefonica Group, E-Plus, 02, Vodafone, Qwest, Remtelcom, MCI, Telenor, Cesky Telecom, Slovak Telecom, and Cellcom.
In mid-April, Bulgaria’s M-Tel, a wireless operator, placed a follow-on order for ECtel’s revenue assurance solution (RAP). During March, Digitel GSM, a Venezuelan wireless operator, placed a first-time order for the company’s IRM solutions; and Thai provider CAT Telecom awarded ECtel a follow-on order.
For FY2006, ending 12/31/06, revenue was $28.8 million with $2.3 million in losses compared to 2005 revenues of $23.15 million and $1.37 in losses. On May 8, the company is to release FY2007 1st QT results and has already warned that the numbers are apt to be below expectations due to slower-than-expected orders and an order delay.
ECtel may be having a temporary setback, for now, but the company should be back on track sooner rather than later.
Our 24-month target for the stock is $6.00 to $6.50.
For more information, contact ECTX’s Dan Rubin at +972-3-9002656; ir@ectel.com
Look for the May 20, 2007 Newsletter to be posted on 5/16 or 5/17.
Thank you,
George