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Hello Readers,
Since the last Newsletter, we closed one position for a nice gain:
PARTICLE DRILLING (8/5/07). Closed position 8/9/07 at $3.28 for a 60% GAIN.
It happens once in two blue moons. A brand new pick gets to our 50%-plus threshold within a week or so after we recommend it. Particle Drilling went on a tear after announcing several pieces of good news about its technology, and, even though we closed PDRT for a 60% gain, the stock feels as if it could go higher in a better market.
And so, the massacre continues, especially on small stocks. We haven’t seen our own Current Portfolio look this red since September 16, 2001, the first day of trading after 9/11. Even the Russell 2000 is down nearly 10% from its all-time high set just over a month ago. What’s next? We don’t know, and nor does anyone else, really. We suspect there may be more shoes dropping before everything settles down in a month or two. In the meantime, we think that most of our picks are at bargain basement prices, but they could go even lower.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
Radcom (RDCM) (7/20/07). Mediacom deploys company’s VoIP service quality monitoring system. Demonstrates Omni-Q service monitoring solution to cable operators. You will find that Radcom is typical of many of our picks, lately. The company comes out with some pretty decent news only to see its stock price get clobbered. This is pretty indicative of a scared market.
SCOLR Pharma (DDD) (7/5/07). Balance sheet still looks pretty good.
Pharmacyclics (PCYC) (6/20/07). Schedules year-end results for August 16, the day we post this Newsletter.
Alphatec (ATEC) (6/20/07). Quarterly numbers not bad, balance sheet still looks good, but company cuts 2007 forecast. Dismisses SVP, COO.
Xenonics (XNN) (6/5/07). Inks Supervision deal with Army & Air Force Exchange Service. Results show some revenue growth and company seems optimistic this will continue. Ships its new NightHunter3 weapons-mounted illumination system to the U.S. Army for evaluation.
Oncolytics (ONCY) (6/5/07). Is issued 22nd U.S. patent.
American Caresource (XSI) (5/20/07). Releases pretty upbeat quarterly report showing year-over-year revenue growth.
Encorium Group (ENCO) (5/20/07). Recent numbers seem positive as does order backlog; balance sheet still looks good.
Hana Biosciences (HNAB) (5/5/07). Recent balance sheet still looks healthy. Initiates Marqibo Phase 2 clinical trial in relapsed acute lymphablastic leukemia (ALL). Licenses North American commercial rights for Zensana to Par Pharmaceutical in a $50 million deal.
ECTel (ECTX) (5/5/07). Recent quarterly results not great, but show some improvement over previous quarter; balance sheet still looks pretty good.
VocalTec (VOCL) (4/20/07). Company says recent numbers show continuing momentum; balance sheet still looks good.
Immunicron (IMMC) (3/20/07). Company releases okay numbers and balance sheet still looks very strong, but IMMC lowers expectations somewhat. The stock seems way oversold, due to the recent carnage, as do most of our picks.
TTI Team Telecom (TTIL) (3/5/07). Posts some pretty nice profits; balance sheet still looks very good.
Neurobiological Technologies (NTII) (2/20/07). Receives $2 million royalty payment. Files for $65 million stock offer, which seems like an overly gutsy move, given the market’s mood. Needless to say, this hasn’t helped the stock one bit.
Urologix (ULGX) (2/20/07). Sets earnings call for August 22.
Eon Communications (EONC) (2/5/07). Receives NASDAQ delisting notice. Has until 1/30/08 to regain compliance. Makes equity investment in Symbio Group. Do we smell a reverse split coming up? Launches VoIP telecommunications services partner program.
Neose Technologies (NTEC) (12/20/06). Provides clinical update in quarterly report; balance sheet still looks good.
CardioTech (CTE) (12/20/06). Says quarterly results continue to show improved performance; balance sheet cash position weakens from previous quarter.
Lantronix (LTRX) (12/5/06). Announces third annual Wireless Design Contest.
WJ Communications (WJCI) (12/5/06). Quarterly results not stellar; balance sheet still looks good. Company had the misfortune of lowering 3rdquarter forecast right as the markets started their dive.
YM Biosciences (YMI) (11/5/06). European partner completes patient enrollment in Phase III brain cancer trial of Nimotuzumab.
Terabeam (TRBM) (11/5/06). Numbers not bad as company greatly pares its losses from a year ago; balance sheet still seems okay. Subsidiary and Civitas Wireless announce acquisition of Denver network by Civitas.
HealthStream (HSTM) (10/20/06). Listed on Motley Fool Hidden Gems.
Hydrogenics (HYGS) (9/20/06). Posts some pretty promising revenue numbers; balance sheet still looks strong. Says order backlog is up 43% to $33 million.
TVI Corp (TVIN) (9/5/06). Releases 2nd QT numbers. Names new CEO. This one is on the “Endangered List”.
Advanced Life Sciences (ADLS) (7/20/06). Balance sheet still shows $16 million in cash but company may need more by year-end. NTN Buzztime (NTN) (7/5/06). Quarterly numbers show losses narrow; balance sheet still looks strong.
02Diesel (OTD) (5/20/06). Quarterly numbers not good. Announces management changes. Inks deal with Spanish bus fleet. This is on the “Endangered List”.
Tri-S Security (TRIS) (5/5/06). Quarterly numbers show good revenue growth compared to year ago; balance sheet still looks good. Reports new contract wins during quarter.
Pharmos (PARS) (4/20/06). Quarterly report refers to restructuring and cost reduction program; balance sheet still looks okay, but weaker than six months ago. This is making us nervous.
Cytogen (CYTO) (3/20/06). Company is upbeat in quarterly statement; balance sheet still seems okay.
TII Network (TIII) (3/20/06). Chosen by Australia’s largest telecom to provide station electronics and surge protection products. Quarterly numbers look pretty nice; balance sheet still looks good even though cash has dropped a lot.
Lipid Sciences (LIPD) (2/20/06). FDA approves expansion of clinical trial sites. Recent balance sheet still looks okay.
Adherex (ADH) (2/20/06). Recent balance sheet still looks good.
Gateway (GTW) (2/5/06). Company posts 2nd QT profit, but sales slide a little; balance sheet, as usual, could be better. Still, is this also way oversold?
MIND C.T.I. (MNDO) (2/5/06). Revenue drops but income rises from year-ago quarter; balance sheet still seems very strong.
8×8 (EGHT) (1/20/06). Company posts nice revenues and earnings; balance sheet still looks good.
Digital Angel (DOC) (12/20/05). We’re sort of disgusted with this one. It has consistently cranked out good news only to see the stock go nowhere but down. It came out with some pretty nice-looking quarterly numbers and a few upbeat technology releases over the last several weeks. THEN, last week said it was merging wit sister subsidiary Applied Digital. We’ll keep following the bouncing ball.
RAE Systems (RAE) (10/5/05). Releases upbeat revenue numbers and reaffirms 2007 guidance; balance sheet still looks okay. Brokerage firm downgrades the stock to a “hold”.
EntreMed (ENMD) (9/5/05). Recent balance sheet still looks healthy.
Zi Corp (ZICA) (8/5/05). Stock falls to under a dollar despite some upbeat quarterly numbers; balance sheet still seems viable. Problem now is that NASDAQ may move to delist because of low stock price.
Innodata (INOD) (7/5/05). Releases nice looking numbers as it returns to profitability; balance sheet still looks good. Expects sustained financial performance into 2008.
Vion Pharma (VION) (5/20/05). Releases QT numbers. This is on “Endangered List”. Gives Phase 2 trial update.
B.O.S. (BOSC) (1/5/05). Enters into a strategic pact with Galbital for launch of a BOS RFID middleware server and controller.
Applied Micro Circuits (AMCC) (11/20/04). Demonstrates new serial RAID technologies at LinuxWorld Expo. Morgan Stanley upgrades stock.
Nova Measuring (NVMI) (11/5/04). Licenses several patents to a top ten semiconductor manufacturer. Posts $1.1 million profit in 2nd QT; balance sheet still looks good.
Aviza Tehcnology (AVZA) (10/5/04). Quarterly numbers not bad, but down from previous QT; balance sheet still looks good.
AIXTRON (AIXG) (7/5/04). Quarterly numbers look good; confirms upper end of its guidance.
Network Engines (NENG) (6/5/04). Quarterly numbers not bad as company posts a profit; balance sheet still looks strong.
TMNG Global (TMNG) (4/20/04). Second QT numbers seem okay as losses narrow; balance sheet still looks good.
OpenTV (OPTV) (3/20/04). Numbers about usual; balance sheet still appears to remarkably strong. Stock has fallen like a rock.
Our picks for this Newsletter and two more biotechs, both NASDAQ-listed, whose recent stock prices have held rather steady over the last month.
IOMAI CORPORATION (NASDAQ: IOMI) – $1.75. Twelve-month hi-low has been $6.85 – $1.75. Located in Gaithersburg, MD, with about 100 employees, this biotech has 25.5 million shares outstanding, $34.58 million in total current assets, $37.38 million in total assets, and $9.28 million in total liabilities, of which $2.9 million is long-term debt. Institutional ownership is around 19%. Two analysts give the stock a “strong buy” and one has it on “hold”. www.iomai.com
We know that recently small biotechs were pounded worst than most other industry groups, but Iomai Corporation, with its strong-looking balance sheet and promising technologies, may be a bit oversold.
Founded in 1997, and public for under two years, Iomai is developing vaccines and immune stimulants delivered to the skin by a needle-free technology called transcutaneous immunization (TCI), a proprietary technology designed to trigger an immune response by targeting Langerhans cells. Its two main products under development are a IS patch for the pandemic flu program, which is in Phase 1 clinical trial that, when used in conjunction with an injectible flu vaccine, is designed to stimulate an immune response, as well as allow public health officials to extend vaccine supply in the event of an influenza pandemic; and an IS patch for the elderly receiving flu vaccines, which is in Phase 2 clinical trial, and is designed to improve the immune response of the elderly to existing injectible flu vaccines.
Iomai is also developing a needle-free flu vaccine patch, in Phase 1, which combines flu antigens with an adjuvant in a single patch; a needle-free pandemic flu vaccine patch, under preclinical development, which combines pandemic flu antigen with an adjuvant in a single patch to solve issues regarding mass vaccination in the event of a pandemic flu outbreak; and a needle-free travelers’ diarrhea vaccine patch, in Phase 2 clinical trial, which is designed to induce an immune response that diminishes the severity and delayed onset of the common form of e-coli related travelers’ diarrhea.
In early August, Iomai announced that its patch-based vaccine for e-coli bacteria conferred protection from travelers’ diarrhea as compared to placebo, particularly for more severe cases, according to data from a double-blind Phase 2 study. Also, at the same time, brokerage firm UBS upgraded the stock to a “buy”.
Worth repeating: Ioami is another small biotech with little revenue and lots of red ink. For example, during the quarter ending 3/31/07, revenues were $1.58 million with $9.22 million in losses.
The company’s technology seems novel enough for UBS to give the stock a “buy”, so, it may be worth a shot.
Our 24-month target for the stock is $3.35 to $3.50.
For more information, contact IOMI at 301-556-4500.
SIGA TECHNOLOGIES, INC. (NASDAQ: SIGA) – $3.35. Twelve-month hi-low has been $6.04 – $1.00. Based in New York City, with about 40 employees, this drug maker has 33.5 million shares outstanding, $11.61 million in total current assets, $13.56 million in total assets, little debt, and $8.25 million in total liabilities. Institutional ownership is around 5%. One analyst rates the stock a “strong buy”. www.siga.com
Not every company is added to the Russell Microcap Index and this is what first caught our eye with SIGA Technologies, Inc. Of course, it helps that the company has a decent-looking balance sheet and promising vaccines.
Founded in 1995, and public for nearly ten years, SIGA develops anti-infectives, antibiotics, and vaccines for serious infectious diseases. It focuses on products for use in defending against biological warfare agents, such as smallpox and arenaviruses. The company’s product candidates include SIGA-246, an orally-administered anti-viral drug that targets the smallpox virus and is in Phase 1 clinical trial; and ST-294, which demonstrates antiviral activity in cell culture assays against arenaviruses pathogens. It also develops antiviral products, including Smallpox, New World Arenavirus, Old World Arenavirus, Filovirus (Ebola and Marburg), Dengue Fever, and Bunyavirus to prevent or limit the replication of the viral pathogen; and antibiotics including Gram-positive, Gram-negative, and broad spectrum antibiotic technologies for addressing drug-resistant bacteria and hospital-acquired infections.
SIGA is also developing a technology for the mucosal delivery of its vaccines, which might allow the vaccines to activate the immune system at the mucus lined surfaces of the body. The company has license agreements or collaborations with the National Institutes of Health, U.S. Army Medical Research and Material Command, U.S. Army Medical Research Acquisition Activity, St. Louis University, Oregon State University, Regents of the University of California, Rockefeller University, and TransTech Pharma, Inc.
Back in May, SIGA announced successful results of a proof of concept guinea pig trial of its Lassa Fever virus drug ST-193. In June, the company made The Motley Fool Contrarian Shopping Lists.
SIGA’s numbers seem typical for a small drug developer. For FY2006, ending 12/31/06, revenue was $7.25 million with $9.9 million in losses. During the 1stQT of 2007, ending 3/31/07, revenue was $1.86 million with $3.14 million in losses.
SIGA has collaborations with some high profile institutions, and, sadly, it may be just a question of time before its biological warfare focus gets more attention.
Our 24-month target for the stock is $5.00 to $6.00.
For more information, contact SIGA at 212-672-9100; info@siga.com
Look for the September 5, 2007 Newsletter to be posted on 9/4 or 9/5.
Have a Safe Labor Day,
George