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Hello Readers,
The markets are still all about the world’s central bankers. They more they flood the financial system with new money the more the markets cheer, and, therein, is one of history’s all-time paradoxes. The reason for the constant flow of new liquidity is because the underpinnings of the globes economic structures are damaged and weak. Shouldn’t the markets be acting adversely to future fiascos? The rational answer is “yes”, but markets are seldom rational. They live for the here and now. Investors, namely fund managers and institutions, are able to borrow at minimal rates so as to buy more equities. Talk about Ponzi schemes! During the last few years, the main beneficiaries have been big and mid cap stocks. However, during recent months, some of the largesse has started trickling down to the small caps.
How much longer can this continue? We don’t know. What we do know is that some unforeseen event, or some glaring inadequacy that has been overlooked, will cause a massive sell-off at some point. We are still in one of those mini-droughts as for closing positions in our Current Portfolio, but, as we have seen during our sixteen-year history, these droughts are often followed by deluges.
Here are the headlines since the last Newsletter about companies in our 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.
Meru Networks (MERU)(8/20/12). Provides flexible Wi-Fi to Faith Lutheran students. Files shelf registration statement.
SemiLEDS (LEDS)(8/20/12). Announces senior management changes.
pSivida (PSDV)(8/5/12). U.K. National Institute for Health and Clinical Evidence accepts ILUVIEN subgroup data for review.
Overland Storage (OVRL)(7/20/12). Latest numbers come in almost as expected; balance sheet still looks good.
Avanir Pharmaceuticals (AVNR)(6/5/12). Enrolls first patient in study of AVP-923 for treating agitation in patients with Alzheimer’s. To present at UBS life sciences confab on September 20.
Capstone Turbine (CPST)(5/20/12). Craig-Hallum initiates a “buy” on the stock. Introduces first-of-its-kind iPad App to determine ways to reduce energy costs and carbon dioxide emissions.
Bacterin International (BONE)(5/5/12). Reports positive clinical results on using its OsteoSponge SC product for regenerating subchondral bone.
Five Star Quality Care (FVE)(5/5/12). Sells pharmacy unit to Omnicare.
Ballard Power Systems (BLDP)(3/20/12). Announces supply agreement in Africa.
Majesco Entertainment (COOL)(3/5/12). Launches several new games. Needham downgrades stock from a “buy” to “hold” as company announces a miss on earnings; balance sheet still looks good. Partners with Zynga to launch Mini Putt Park.
Complete Genomics (GNOM)(2/20/12). Robert W. Baird downgrades stock to a “neutral”.
Geron Corporation (GERN)(2/5/12). Ouch! This one hurt. We were within a few percentage points of closing this position when the stock got slammed on news the company discontinued its Phase 2 breast cancer trial with Imetelstat. We are not yet placing this on the “Endangered List” but it is a wait-and-see.
Nexxus Lighting (NEXS)(12/5/11). This one is on the “Endangered List” but the stock jumped from its bottom on new that Aston Capital was investing $6 million in the company.
Anadigics (ANAD)(11/20/11). Introduces dual-band ProEficient power amplifiers.
ECOtality (ECTY)(11/5/11). Names new CEO – let’s hope he can do things that juice the stock price.
Synthesis Energy Systems (SYMX)(8/20/11). Provides progress update.
Cover-All Technologies (COVR)(7/20/11). Imperium Partners grants credit facility to company for working capital. Announces the addition of advanced automated renewal functionality to Cover-All policy.
NeoStem (NBS)(5/20/11). Subsidiary, Amorcyte, announces significant expansion in its claims granted to protect the use of CD34+cells.
ThermoGenensis (KOOL)(4/5/11). Announces new integrated distribution strategy for cord blood products in Western Europe. Sets earnings call for September 20.
Jamba, Inc. (JMBA)(3/20/11). Announces change in stock ownership, significantly reducing preferred stock dividend payment.
Oculus Innovative Sciences (OCLS)(3/5/11). Announces issuance of new U.S. patent for the use of Microcyn Technology in preventing and treating peritonitis. Receives $5.1 million licensing fee from More Pharma. Vista Partners initiates coverage on company.
Sprint Nextel (S)(1/5/11). The usual several dozen articles and press releases.
Astex Pharmaceuticals (ASTX)(12/5/10). Initiates HSP90 inhibitor AT13387 clinical trial in prostate cancer patients. Enters an epigenetic drug discovery collaboration with cancer researchers.
Inovio Pharmaceuticals (INO)(10/20/10). Claims major stride toward universal influenza vaccine.
Rexahn Pharmaceuticals (RNN)(7/20/10). Provides update on 2012 strategic goals.
NovaBay Pharmaceuticals (NBY)(4/20/10). Announces expansion of strategic marketing agreement for NeutroPhase in Southeast Asia; to receive up to $700,000 in payments. Company NeutroPhase used in new therapeutic technique for managing necrotizing fasciitis. Co-authors novel study demonstrating chemical impact of N-Chlorotaurine and NVC-422 on bacterial toxins.
Our picks for this Newsletter are another biotech and a maker of medical robotics, both NASDAQ-listed.
IMMUNOCELLULAR THERAPEUTICS, LTD. (AMEX: IMUC) – $2.90. Twelve-month hi-low has been $4.00 – 98 cents. Based in Woodland Hills, CA, with about ten employees, this biotech has 40.6 million shares outstanding, $11.34 million in total current assets, $12 million in total assets, little debt, and $9.72 million in total liabilities. Institutional ownership is around 19%. One analyst rates the stock a “strong buy”, one as a “buy”, and one as a “hold”. www.imuc.com
Sometimes we see a company like ImmunoCellular Therapeutics, Ltd. that periodically pops up on the most active charts for a few days, then disappears for a few weeks, then appears again. This has been the case for the last several months. So, we thought it’s worth a look. IMUC has a decent balance sheet and a decent product pipeline.
Public for nearly six years, ImmunoCellular is developing immune-based therapies for treating brain, ovarian, and other solid tumor cancers. Its portfolio comprises cellular immunotherapies targeting cancer and cancer stem cell antigens; peptide based immunotherapies targeting cancer stem cells; and monoclonal antibodies to diagnose and treat such cancers as glioblastoma multiforme (GBM), ovarian cancer, small-cell lung cancer, and pancreatic cancer. The company’s lead product candidate, ICT-107, is a dendritic cell-based vaccine that is in Phase II clinical trial targeting multiple tumor associated antigens for GBM, a lethal type of brain cancer. This trial is expected to enroll up to 200 patients at 20 U.S. medical centers.
ImmunoCellular Therapies is also developing ICT-121, a CD-133 targeting cancer stem cell vaccine in pre-clinical stage to treat GBM, pancreatic cancer, and other solid tumor cancers; and ICT-140, a dendritic cell-based vaccine targeting cancer stem cells and cancer antigens in pre-clinical development stage for treating ovarian cancer. In addition, the company is developing various monoclonal antibody candidates, which are all in pre-clinical development stage to treat small cell lung cancer, lung and colon cancer, pancreatic cancer, multiple myeloma, and ovarian cancer.
This is another of those small biotechs that makes little or no money but piles up a mountain of losses. For example, during the quarter ending 6/30/12, income was zero and losses totaled $6.45 million.
The company has some pretty interesting products in its pipeline and it appears to have drawn some attention from certain investors.
Our 24-month target for the stock is $4.75 to $5.50.
For more information, contact IMUC at 818-992-2907.
HANSEN MEDICAL, INC. (NASDAQ: HNSN) – $1.56. Twelve-month hi-low has been $4.46 – $1.46. Based in Mountain View, CA, with about 170 employees, this robotics maker has 61.4 million shares outstanding, $44.54 million in total current assets, $52.43 million in total assets, and $40.82 million in total liabilities, of which $29.28 million is long-term debt. Institutional ownership is around 40%. Once analyst rates the stock a “strong buy”, one as a “but”, and two have it as a “hold”. www.hansenmedical.com
At first glance, Hansen Medical, Inc. appears to be a crap shoot. It has more debt than we would like to see, have suffered somewhat in revenue growth, and the stock has been clocked over the last several months. However, some recent developments could help the company spring back.
Founded in 2002, and publicly trading for over five years, Hansen Medical makes and sells medical robotics designed for positioning and control of catheters and catheter-based technologies. Its products comprise Sensei Robotic Catheter System and its related Artisan and Lynx catheters. It offers Sensei Robotic Catheter systems and Artisan catheters for manipulation, positioning, and control of mapping catheters during electrophysiology procedures. The company also provides robotic platforms consisting of the Magellan Robotic System and the NorthStar Robotic Catheter for treating vascular disease.
In addition, Hansen Medical offers CoHesion 3D Visualization Module, a software interface that provides physicians with 3D visualization to augment their ability to move a catheter throughout the heart, as well as control the placement of the catheter in specific locations. It has a joint development and co-marketing agreement with St. Jude Medical, and a collaboration agreement with Philips Medical Systems.
Of particular note is that at the end of August, Hansen Medical announced that it has been issued 30 additional U.S. patents since January, 2011. The company also shares rights to more than 250 issued U.S. patents relating to medical robotics through licensing agreements with third parties. Back in June, the FDA cleared the Magellan Robotic System for commercialization, which the company immediately launched in the U.S. and on which the Hansen will focus more of its resources.
For FY2011, ending 12/31/2011, revenue was $22.12 million with $16.7 million in losses. During the first six months of the current FY, ending 6/30/12, revenue was $8.18 million with $23.28 million in losses.
The company is re-focusing on the Magellan, for which many of those new patents will apply. Hansen feels it has the cash to get the new effort off the ground. As we said, this is a gamble.
Our 24-month target for the stock is $2.75 to $3.00.
For more information, contact HNSN’s Peter Mariani at 650-404-5800.
Look for the October 5, 2012 Newsletter to be posted on 10/1 or 10/2.
Thank you,
George