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Dear Reader,
Since the last issue, we have closed another six positions; four for gains and two for losses.
HARVARD BIOSCIENCE (10/20/02). Closed position 6/5/03 at $4.86 for a 74% GAIN.
CONCURRENT COMPUTER (4/5/03). Closed position 6/5/03 at $3.38 for a 57% GAIN.
LOGIC VISION (12/20/02). Closed position 6/4/03 at $2.81 for a 52% GAIN.
NANOGEN (5/20/02). Closed position 6/2/03 at $4.96 for a 68% GAIN.
EXEGENICS (5/5/02). Closed position 6/2/03 at 57¢ for a 54% LOSS.
DETWILER, MITCHELL (8/5/99). Closed position 6/4/03 at $1.07 for a 83% LOSS.
That patent Nanogen received at the end of May really sent the stock on another tear. We suspect that Harvard Bioscience got a big uplift thanks to the new biotech buying spree. Both Concurrent and LogicVision had been making steady up moves for the last month and hit our 50% threshold on not much volume. As for eXegencics, we said in the last Newsletter that because of the tender offer, that we would close this one, soon, and we did. Detwiler, Mitchell said it may deregister their shares, so, it was finally time to say goodbye.
Well, once again, barring war or terror, our feelings about the markets are the same as they have been for the past several months, and, despite what some of the gurus are now parroting, we still feel there is plenty of upside remaining, and for all of the reasons we have been making. Now, add two more. The Bush Tax Cut was made for one purpose only, and that is to juice the markets. It’s been working. The next new ingredient could occur on June 25 when the Fed decides whether to cut rates, again. The betting is that they will, which may stagger the markets for a few days. However, this will add a whole ton of new liquidity into the system, and force more money out of low interest rate money markets and into stocks. We feel that the stage is now being set for what could become the greatest summer rally of all time.
The Russell 2000 had been flirting with 460 and appears poised to make a run to 500. Our Current Portfolio, as we have been crowing about, looks a lot better today than it did six months ago. In fact, since April 1, we have closed 30 positions; 21 for gains and 9 for losses. During our seven year history, we have never closed this many positions in so short a time – not even in 1999 or 2000.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
New York Health Care (BBAL) (3/20/97). Clinical study confirms Probactrix highly promising for IBS symptoms. As we said in the last Newsletter, if the stock doesn’t move higher real soon, we’ll be shutting it down.
Genetronics (GEB) (10/5/00). We are real tempted to remove this one from the “Endangered List” since the news just seems to get better and better, as doe the stock, which is up about 50¢ in the last ten days. Announces issuance of two new patents for electroporation therapy. Inks collaborative pacts with U.S. Navy to evaluate EP-enhanced therapy. Inks collaborative pacts with U.S. Navy to evaluate EP-enhanced delivery of DNA for wound healing.
ViroLogic (VLGC) (7/20/01). Company data support widespread clinical utility of drug resistance testing in HIV treatment. Announces senior management promotions and changes.
Saba Software (SABA) (11/20/01). Novartis deploys Saba to increase sales productivity. On “Endangered List” because of that reverse split.
Orthovita (VITA) (12/20/01). Reports positive Cortoss study data. Names new board chairman.
Airspan (AIRN) (1/20/02). Launches WipLL in India. Mobitel expands AIRN Wireless DSL deployment with $1.2 million of orders.
Magic Software (MGIC) (3/20/02). Launches Premier Partner program for eDeveloper. Pilgrim Software releases solution using eDeveloper.
Spectrum Pharmaceuticals (SPPI) (5/5/02). This is another one we placed on the “Endangered List” a while back, because of a reverse split. In the last few weeks, stock made a nice move due news of positive clinical data on two of its drug candidates.
Optibase (OBAS) (5/20/02). British Pathe selects OBAS for archive management system.
Generex (GNBT) (8/5/02). Here’s another that at one point had dropped to around 80¢ in early May, but is now back to our recommended price of $2.20 on a slew of nifty news. Announces start of U.S. clinical trials for Oralin. Moving to Nasdaq Small Caps (a bump down, but no big deal, now). Proposes to buy Antigen Express. Raises $1 million through private placement.
Viewpoint Technology (VWPT) (11/20/02). Forbes.com launches “Best Cities for Singles” using Viewpoint technology. We placed this on the “Endangered List” shortly after recommending it, because of improper reporting charges. However, if over the next few quarters it cleans up its act, we may remove it from the list.
Interactive Intelligence (ININ) (12/5/02). Will host communications technology seminar in Dallas.
Interep (IREP) (2/5/03). Receives Nasdaq delisting notice, but stock goes up anyway. Company basically says it doesn’t sweat being on Bulletin Board.
Interwoven (IWOV) (3/20/03). CEO to stay on. Australia’s Transport department portal goes live with IWOV. IWOV agrees to buy MediaBin to provide industry’s first intelligent digital brand management solution.
Cyro-Cell (CCEL) (5/5/03). We said this one would be a crap shoot at the time we picked it, and it has been. Stock price keeps holding up despite the fact that seven different law firms have filed suits ”on behalf of investors”. There may be some people who would view these firms as bottom feeders and scum suckers, but we, of course, see them as true champions of the people.
Sequenom (SQNM) (6/5/03). Adds to executive management and board. Publishes method for long-range Haplotyping with MassARRAY platform.
There was not a lot of news during the last several weeks, because the period between mid-June to mid-July is usually a slow news time for most companies.
Our selections for this issue are another Israeli hi-tech company, and, of course, one more biotech whose lead drug candidate has received the FDA fast-track.
JACADA, LTD. (NASDAQ: JCDA) – $2.46. Twelve-month hi-low has been $2.91 – $1.08. Based in Herzliya, Israel, with about 150 employees, this Internet software company has 18.6 million shares outstanding, $29.66 million in total current assets, $55.3 million in total assets, $1.1 million in long-term liabilities, and $8.32 million in total current liabilities. One analyst rates the stock a “strong buy”. http://www.jacada.com
We have had pretty good success with Israeli companies over the years, the most recent being Nanogen. Optibase and Magic Software, which are still in the Current Portfolio, have been making nice rebounds since being clawed by the hopefully now-defunct bear market. So, why not add Jacada, Ltd. to the list, since it appears to have some nifty technology and a pretty strong balance sheet.
Founded in 1990, Jacada bills itself as the world’s leading provider of legacy integration and web-enablement solutions, or, to be more clear, their software and services help large companies prepare data on their established mainframes, where most of today’s corporate information still resides, for e-commerce. Basically, Jacada juices up these mainframes so they can jive with Java. Their Jacada for Java software applies graphical Java-based interfaces to huge databases and enterprise resource planning applications, eliminating the need to rewrite code or move data off the mainframes.
Jacada supports a broad range of platforms including IBM zSeriesS/390, iSeries AS/4000, DEC VAX, Amdahl, Unisys, Bull, ICL, and HP. They company enjoys a strong relationship with IBM, and has also partnered with software vendors such as Cincom, Computer Associates, Geac(JBA), HTE, and Mapics.
With headquarters offices in four countries, Jacada has over 1000 global customers from a varied assortment of industries. Among them are Bank of America, AIG, Boeing, Caterpillar, Cendant, Delta Air, U.S. Department of Labor (and Interior), Manpower, Porsche, Prudential, and Saab.
A few weeks ago, the company announced it had enhanced its leading web-to-host solution with release of Jacada Interface Server Version 8.0. This adds a multitude of capabilities to JCDA’s web-to-host solution, which the company feels is the only offering capable of generating open, non-proprietary graphical thin-client interfaces as either Java or XHTML.
For FY2002, ending 12/31/02, revenue was $21.5 million with $2.9 million in losses versus FY01 revenue of $25.5 million and $8.8 million in losses. During the 1stQT of this year, ending 3/31/03, revenue was $5.06 million with $631,000 in losses. Obviously, the global slowdown of the last few years has affected the revenue steam, but JCDA also appears to be trimming the losses with some belt-tightening.
Jacada has proprietary technology that has been recently upgraded, a strong balance sheet, and a pretty solid customer base. At some point, the stock should catch up with the market upturn.
Our 20-month target for the stock is $4.50 to $5.00.
For more information, contact JCDA’s Ann Conrad at 770-352-1300 (Atlanta, GA), aconrad@jacada.com
ALLOS THERAPEUTICS, INC. (NASDAQ: ALTH) – $3.30. Twelve-month hi-low has been $9.89 – $1.66. Headquartered in Westminister, CO, with around 60 employees, this biotech has 25.9 million shares outstanding, $50.21 million in total current assets, $56.9 million in total assets, little debt, and $7.05 million in total liabilities. Institutional ownership is about 81%. Two analysts rate the stock a “strong buy”, one a “moderate buy”, and two as a “hold”. http://www.allos.com
With what appears to be a kinder and gentler FDA, of late, it is making more sense to keep loading small biotechs into the Current Portfolio. And Allos Therapeutics, Inc., with a seemingly healthy balance sheet and a product candidate that has already been fast-tracked by the FDA, fits our criteria.
Founded in 1994, Allos’ focus is on developing and commercializing drugs for improving cancer treatments by increasing the amount of oxygen released from red blood cells, since poorly oxygenated cancer cells resists radiation. The company likes to boast that its lead candidate RSR13, also known as Efaproxiral, is to chemotherapy as spinach is for Popeye. This is the drug that has received fast-track designation from the FDA as having the potential to increase efficacy of radiation therapy with brain metastases, non-small cell lung cancer, and glioblastoma multiforme. It is currently in late-stage Phase 3 for treating patients with brain metastases.
Other drugs in the Allos pipeline are BGP-15, which was licensed in March, 2002 from N-Gene. This is an orally bioavailable small molecule that has shown promise as a chemoprotectant in preclinical studies. This past January, Allos licensed PDX from Sloan-Kettering, Southern Research Institute, and SRI Int’l. PDX has shown significant single-agent activity in a 39-patient Phase 2 trial in previously treated patients with non-small cell lung cancer.
At the end of May, Allos said it was reducing its workforce to 60 people, which could reduce costs by $6 million to $7 million per quarter. This may be a good move, so as to ensure its financial viability that would be needed if Allos was to get RSR13 to market quickly, depending upon final FDA approval.
And, of course, the financials for Allos are typical of most small biotechs. For instance, during 1stQT of FY2003, ending 3/31/03, revenue was zip and losses totaled $7.13 million.
The bet here is that Allos has the funds to take RSR13 to market, providing the FDA gives the eventual okay. As we said above, the FDA seems to be less stringent, lately.
Our 24-month target for the stock is $5.50 to $6.50.
For more information, contact ALTH’s Monique Greer at 303-426-6262; corpcomm@allos.com
Look for the July 5, 2003 issue to be posted on 7/1 or 7/2.
Thank you,
George