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Hello Readers,
Since the last Newsletter, we closed four positions; two for gains and two others for losses.
HANSEN MEDICAL (9/20/12). Closed position 11/1/12 at $2.50 for a 60% GAIN.
SPRINT NEXTEL (1/5/11). Closed position 11/6/12 at $5.80 for a 36% GAIN.
A123 SYSTEMS (1/20/12). Closed position 11/5/12 at 13 cents for a 93% LOSS.
SOMAXON PHARMA (7/5/11). Closed position 11/2/12 at $1.67 for an 89% LOSS.
(price reflects reverse stock split)
A new patent license deal with Intuitive Surgical sent Hansen Medical stock on a nice tear. Several issues back, we said we would soon close Sprint Nextel, and we did for an okay gain; we have no idea what impact the Softbank acquisition will have on the stock. We closed now-bankrupt A123 Systems and Somaxon Pharmaceuticals, which recently did a reverse split, for some nasty losses.
It looks as if the markets were none too elated with the election results, or is the current turmoil due to the looming Fiscal Cliff, which is likely to dominate market action until it is resolved. The next question then will be what effect that resolution will have on various industry sectors. While the markets digest all of this over the next few months, don’t expect a lot of good times. And, yes, over the last few weeks, our Current Portfolio has been whacked, like the rest of the markets.
Here are the headlines since our 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 there is news that we feel to be highly significant.
TeleCommunication Systems (TSYS)(11/5/12). Gets a piece of $10 billion Defense contract. Opens new African sales office.
Lionbridge Technologies (LIOX)(11/5/12). Reports good quarterly numbers and plans an $18 million share repurchase program; balance sheet still looks strong.
Response Genetics (RGDX)(10/20/12). Ladenburg upgrades stock to a “buy”. Latest numbers and balance sheet look okay.
Delcath Systems (DCTH)(10/20/12). Receives regulatory approval for the generation two hepatic Chemosat delivery system in Australia. Balance sheet still looks good.
Anthera Pharmaceuticals (ANTH)(10/5/12). Presents additional data from Phase 2b PEARL-SC.
Zynga (ZNGA)(10/5/12). CFO leaves for Facebook. Also, several dozen news articles about the company.
ImmunoCellular Therapeutics (IMUC)(9/20/12). Quarterly report shows both good revenue growth and balance.
AXT, Inc. (AXTI)(9/5/12). Latest numbers not that great; balance sheet still looks good. Needham downgrades stock.
Meru Networks (MERU)(8/20/12). Launches its new Meru Education-Grade (MEG) wireless platform.
SemiLEDS (LEDS)(8/20/12). Sets earnings call for November 20.
Novatel Wireless (NVTL)(8/5/12). Misses on both revenues and earnings; balance sheet still looks strong.
pSivida (PSDV)(8/5/12). Recent balance sheet still looks good. Gets FDA okay for Phase III clinical trial.
Overland Storage (OVRL)(7/20/12). Recent numbers are disappointing; balance sheet still looks okay.
Aviat Networks (AVNW)(7/20/12). Quarterly report reflects positive revenue growth; balance sheet still looks good.
Metabolix (MBLX)(7/5/12). Recent balance sheet still looks pretty good.
Athersys, Inc. (ATHX)(7/5/12). Latest balance sheet could look better as company is optimistic about Phase 2 trials.
Vermillion (VRML)(6/20/12). Balance sheet still looks healthy.
Rare Element Resources (REE)(6/20/12). Files quarterly report.
Capstone Turbine (CPST)(5/20/12). Recent numbers look good, as does balance sheet.
Senomyx (SNMX)(5/20/12). Shows some revenue improvement; balance sheet still looks good.
Bacterin International Holdings (BONE)(5/5/12). Recent quarterly report reflects good revenue growth; balance sheet still looks good.
Air Media Group (AMCN)(4/20/12). Sets earnings call for November 19.
Axcelis Technologies (ACLS)(4/5/12). Latest numbers not great; balance sheet still looks good.
Echo Therapeutics (ECTE)(3/20/12). Balance sheet could look better.
Ballard Power Systems (BLDP)(3/20/12). Ballard and Anglo American Platinum developing fuel cell home generator for African market.
Geron Corp. (GERN)(2/5/12). Announces non-binding letter of intent with BioTime regarding stem cell assets.
Anadigics (ANAD)(11/20/11). To present at the Credit Suisse technology conference on November 29. Powers Samsung Galaxy Note II. Expands hybrid line amplifier module family. WiFi front-end solutions specified on leading reference designs to start production shipments in 1stquarter 2013.
ECOtality (ECTY)(11/5/11). Sets 3rd QT earnings call for November 20.
BioMimetic Therapeutics (BMTI)(9/20/11). Revenue growth looks good as company slightly pares losses; balance sheet still looks good.
Synthesis Energy (SYMX)(8/20/11). Balance sheet still looks pretty good.
Cover-All Technologies (COVR)(7/20/11). Recent numbers not great, and neither is the balance sheet. Both Mountain West Farm Bureau and ACE Puerto Rico select COVR’s policy for commercial lines underwriting and rating.
Gleacher & Company (GLCH)(6/5/11). CEO sends more signals about possible sale as company beats quarterly forecast and sets plan to sell ClearPoint.
Idera Pharmaceuticals (IDRA)(6/5/11). Initiates dosing in Phase 1 trial of IMO-8400. Completes $7 million financing, which helps balance sheet.
NeoStem (NBS)(5/20/11). Balance sheet could look better.
Energy Recovery (ERII)(5/5/11). Latest numbers how good revenue growth; balance sheet still looks strong.
GSE Systems (GVP)(4/20/11). Latest numbers look pretty good, as does balance sheet.
ThermoGenesis (KOOL)(4/5/11). Revenue numbers down but new Asian customers ramping up AXP operations; balance sheet still looks okay.
Jamba, Inc. (JMBA)(3/20/11). Releases pretty good quarterly numbers; balance sheet still looks good.
Oculus Innovative Sciences (OCLS)(3/5/11). Completes patient enrollment in study of Microcyn Hydrogel in managing scars. To host New York City analysts on November 28. Reports record revenue for 2nd QT; balance sheet still looks good.
Real Goods Solar (RSOL)(1/20/11). Balance sheet could look better as revenue decrease.
RELM Wireless (RWC)(11/5/10). Quarterly numbers look good, as does balance sheet.
Inovio Pharmaceuticals (INO)(10/20/10). Expands vaccine licensing deal with Univ. of Penn. Says its hepatitis B vaccine killer T cells demonstrate potential to clear HBV in liver. Balance sheet still looks okay.
ProPhase Labs (PRPH)(10/5/10). Improves upon revenue and earnings; balance sheet looks so-so.
CombiMatrix (CBMX)(8/20/10). Sadly, we are placing this on “Endangered List” as balance sheet deteriorates.
Alpha Pro Tech (APT)(7/20/10). Revenue and income numbers look good, as does balance sheet.
NovaBay Pharmaceuticals (NBY)(4/20/10). Balance sheet still looks okay and company shows some revenue growth.
Novavax (NVAX)(4/5/10). Revenue shows some growth but losses worsen; balance sheet still looks good.
Qualstar (QBAK)(10/20/09). Revenues dip; balance sheet still looks good. Announces LTO 6 availability.
Performance Technologies (PTIX)(7/20/09). Latest numbers are just plain lousy; balance sheet still looks good.
GlobalScape (GSB)(5/20/08). Revenues show good growth but losses mount; balance sheet still seems to be good.
YM BioSciences (YMI)(11/5/06). Balance sheet still looks very strong, which, after all of this time, is the only reason we still keep it in the Current Portfolio.
Our picks for this Newsletter are a media services provider and a drug developer, both trading on NASDAQ.
LIMELIGHT NETWORKS, INC. (NASDAQ: LLNW) – $1.80. Twelve-month hi-low has been $4.33 – $1.68. Located in Tempe, AZ, with about 480 employees, this business services provider has 99.1 million shares outstanding, $170.68 million in total current assets, $316.26 million in total assets, little debt, and $33.76 million in total liabilities. Institutional ownership is around 62%. Three analysts rate the stock a “strong buy” and seven have it as a “hold”. www.limelightnetworks.com
The reason Limelight Networks, Inc. has a lot of shares outstanding may be on account that, over the last several years, this company has grown a lot through acquisitions. While this may not have been best for its bottom line, revenue growth has been quite strong, as it the balance sheet.
Founded in 2001, and public for over five years, Limelight basically provides content delivery network services to North America, Europe, the Middle East, Africa, and the Asia Pacific. It offers delivery services to deliver media files, such as video, music, games, and software, or live streaming of corporate or entertainment events; video content management services, which enable organizations to publish, manage, syndicate, analyze, and monetize video content through a cloud-based service; Web content management services that enable publishers to create, manage, and publish Web content through a cloud-based service; and mobility and monetization services that help publishers to deliver content to media-enabled mobile handsets or tablets.
Limelight also provides Web acceleration services, which enhance Web experiences for content, online commerce transactions, and Web applications; cloud storage services that comprise customer services for the storage of media and enterprise content; and global consulting and technical services that allow customers to optimize their publishing, e-commerce, mobility, or content distribution overflows, as well as to provide support for network architecture design, storage infrastructure, Web application development, creative design, live event execution, and design, deployment, and management of infrastructure.
Some of the company’s customers include Gray Television, Yahoo, TiVo, Swiss Re, Ciena, Carhartt, Fasig-Tipton, H.B Fuller,BGC, MTV, and the Kansas City Chiefs.
Earlier this month, the company announced a new $10 million share repurchase program, which should help thin the float.
For FY2011, ending 12/30/11, revenue was $171.29 million with $25.29 million in losses compared to 2011 revenue of $154.22 million and $20.35 million in losses. During the first nine months of the current FY, ending 9/30/12, revenue has been $133.76 million with $20.66 million in losses, which seems to indicate that 2012 revenue should top 2011.
Other than the losses, which are bearable because of the strong balance sheet, this appears to be a case of “what’s not to like?”
Our 24-month target is $3.25 to $3.50.
For more information, contact LLNW’s Gillian Reckler at 602-753-6965; ir@llnw.com
ACELRX PHARMACEUTICALS, INC. (NASDAQ: ACRX) – $3.75. Twelve-month hi-low has been $4.00 – $1.76. Based in Redwood City, CA. with about 20 employees, this drug developer has 22.6 million shares outstanding, $23.37 million in total current assets, $28.15 million in total assets, and $28.5 million in total liabilities, of which $13.5 million is long-term debt. Institutional ownership is around 78%. Three analysts rate the stock a “strong buy” and two as a “buy”. www.acelrx.com
One of the keys to picking a company like AcelRx Pharmaceuticals is to make sure they are more than a one-trick pony. The company has various product candidates in various stages of clinical trials and has the blessing of almost half a dozen analysts. Yes, the long-term debt is more than we usually like to see, but it doesn’t appear to be life-threatening to the company, at this point.
Founded in 2005, and public for a little under two years, AcelRx is developing therapies for treating acute and breakthrough pain. The company’s lead product candidate, ARX-01, which is a Sufentanil Nano Tab PCA system, is in Phase III clinical trials for acute and post-operative pain. Its other product candidates that have completed Phase II clinical trials are ARX-02, a Sufentanil Nano Tab BTP management system for treating cancer patients who suffer from breakthrough pain; and ARX-03, a Sufentanil/Triazolam Nano Tab to provide mild sedation, anxiety reduction, and pain relief for patients undergoing painful procedures in a physician’s office.
AcelRx’s newest product candidate under development is ARX-04, a Sufentanil Single-Dose Nano Tab for treating patients with moderate-to-severe acute pain either on the battlefield or in civilian settings of trauma or injury. Earlier this month, the company announced it was dosing the first patients in a Phase 2 clinical study, which was funded by the Department of Defense (DOD) and will enroll nearly 100 patients.
In mid-November, the company announced top-line data showing that the open label Phase 3 study of its investigational sublingual (under the tongue) Sufentanil NanoTab PCA (patient-controlled analgesia) system met its primary endpoint of non-inferiority in patient global assessment with method of pain control in comparison to intravenous PCA with morphine.
This is like many small R&D biotechs/drug developers in that it has scant revenues and mega losses. For example, during the quarter ending 9/30/12, revenue was nil and net losses totaled $28.84 million.
We like this for all the reasons stated above. Also, interest was further piqued when the DOD gave funding for the ARX-04 trials.
Our 24-month target for the stock is $6.00 to $7.00.
For more information, contact ACRX at 650-216-3500.
Look for the December 5, 2012 Newsletter to be posted on 12/3 or 12/4.
Have a HAPPY THANKSGIVING!
George