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Hello Readers,
Since the last Newsletter, we closed three more positions; two for gains and one for a loss.
PLX TECHNOLOGIES (12/20/09). Closed position 1/27/10 at $5.17 for a 60% GAIN.
WAVE SYSTEMS (9/5/07). Closed position 1/19/10 at $2.85 for a 78% GAIN.
LANTRONIX (12/5/06). Closed position 1/19/10 at $3.69 for a 58% LOSS.
PLX Technologies maintained a pretty nice upward bent ever since we picked it two months ago, and the stock got even more juiced thanks to a very upbeat quarterly report. Sometimes, albeit rarely, does a stock from the Endangered List pull a Lazarus, but that is what happened with Wave Systems as it soared with no apparent fundamental reason; however, we suspect that WAVX became a favorite of the “hype crowd”, as it was three years ago. Lantronix recently did a reverse stock split, and since those seldom benefit current shareholders, we closed it for a loss.
Looks as if the markets are finally waking up to a few realities; actually, we are stunned that it has taken this long. The markets’ drubbing of the last several weeks has obviously impacted much of our Current Portfolio. Hey, we said to brace yourselves for the wild rides expected for the next year or two. Many gurus are saying that we are in the midst of the long-overdue 10% correction, but we get a chilly feeling that it may be more than that.
Here are the headlines since the last Newsletter about companies in the Current Portfolio; dates in parentheses are when we first recommended them. We are not giving updates on companies that are on the Endangered List unless we feel the news to be highly significant.
NIVS IntelliMedia (NIV)(1/20/10). Several news releases on product advancements. Expands presence in mobile phone manufacturing with acquisition of Huizhou Dongri Digital Co., Ltd.
CytRx (CYTR)(1/5/10). Announces 2010 clinical and development milestones.
Uranerz Energy (URZ)(11/20/09). Receives technical report for the Doughstick Project. BUYINS.NET issues URZ SqueezeTrigger report.
Helicos Biosciences (HLCS)(10/20/09). Introduces new sequencing kits to enhance versatility of the HeliScope Single Molecule Sequencer. Announces sale of a Helicos Genetic Analysis System to the Turku Centre of Biotechnology.
Avanir Pharmaceuticals (AVNR)(10/5/09). Sets earnings call for February 2, the day after we post this Newsletter.
Anadys Pharmaceuticals (ANDS)(8/20/09). Brokerage Merriman gives the stock a “buy”. Provides progress update on Phase II study of ANA598 in hepatitis C patients.
Performance Technologies (PTIX)(7/20/09). Slates earnings call for February 4.
Salary.com (SLRY)(7/5/09). Announces new banking and financial services industry job models with functional competencies.
Durect (DRRX)(4/20/09). Initiates U.S. pivotal Phase 3 POSIDUR clinical trial.
Ligand Pharmaceuticals (LGND)(2/20/09). Completes acquisition of Metabasis.
Market Leader (LEDR)(12/20/08). Slates earnings results for February 25.
Oilsands Quest (BQI)(10/20/08). Announces sale of Pasquia Hills oil shale assets, resignation of CEO, and senior management changes. This is making us nervous, so, wait and see.
Akeena Solar (AKNS)(10/20/08). Sets earnings call for February 11.
Identive Group (INVE)(10/5/08). Announces preliminary 4thQT results and preview of new business structure.
Energy Focus (EFOI)(6/5/08). Regains NASDAQ compliance. Receives awards worth $1.6 million to develop LED lighting for DARPA and NASA. Awarded $2.1 million in lighting retrofit contracts for municipal buildings and U.S. Army base. This is still on the “Endangered List”, for now.
Bridgeline Software (BLSW)(6/5/08). Smithers-Oasis chooses iAPPS content manager and iAPPS analytics.
Ziopharm Oncology (ZIOP)(5/5/08). Coverage initiated by Rodman & Renshaw. Receives important Palifosfamide US patent allowance.
ActivIdentity (ACTI)(3/5/08) Sets earnings call for February 4. Solidifies cloud computing services initiative.
Move, Inc (MOVE)(1/5/08). Sets earnings news for March 4.
Sunesis Pharmaceuticals (SNSS)(11/5/07). Completes enrollment of Voreloxin Phase 1b/2 combination trial in acute myeloid leukemia.
American Technology (ATCO)(10/5/07). Slates earnings news for February 2, the day after we post this Newsletter. U.S. military deploys ATCO’s LRAD communications systems to assist Haiti survivors. Receives $1.1 million LRAD order from US Special Operations Command.
Alliance Fiber Optic (AFOP)(7/20/07). Although revenues drop year-over-year, company still shows a profit; balance sheet still seems strong.
Pharmacyclics (PCYC)(6/20/07). Brokerage firm Merriman gives the stock a “buy” rating.
Urologix (ULGX)(2/20/07). Comes out with a pretty good quarterly report; balance sheet still looks okay.
YM BioSciences (YMI)(11/5/06). FDA clears two ongoing Phase 2 Nimotuzumab trials into USA.
8×8 (EGHT)(1/20/06). Once again, the company releases pretty decent earnings news along with a strong balance sheet, and the stock just marks time, as has been the case for four years!! And, that is why we still keep it here. Maybe, just maybe, someday some brilliant bunch of people will give the stock a boost. Company also introduces several new products.
Our picks for this Newsletter are another semiconductor and another small biotech, both NASDAQ-listed.
MICROTUNE, INC. (NASDAQ: TUNE) – $2.20. Twelve-month hi-low has been $2.70 – $1.32. Located in Plano, TX, with about 302 employees, this semiconductor has 53.5 million shares outstanding, $100.88 million in total current assets, $115.06 million in total assets, little debt, and $11.9 million in total liabilities. Institutional ownership is around 35%. One analyst gives the stock a “strong buy”, one a “moderate buy”, and two have it as a “hold”. www.microtune.com
It’s no secret that Microtune, Inc. had a tough 2009 as far as the top and bottom lines are concerned, but, if you believe better days are ahead for the tech sector, then TUNE may turn it around. The company has a very strong balance sheet to perhaps help it make that turn.
Founded in 1996, and public for nearly ten years, Microtune designs and markets radio frequency (RF) integrated circuits and subsystem module solutions for the cable, automotive entertainment electronics, and digital TV markets. The company offers microtuner single-chip broadcast tuners; and silicon amplifiers, intermediate frequency amplifiers, and broadband antenna amplifiers. It also provides subsystem level RF solutions, including tuner and/or transmit/receive functions for various applications, such as analog and digital car radio, analog and digital in-car TV, in-flight entertainment, antenna amplifiers, and cable system headend upconverters.
Microtune also offers automotive electronics products, including components for traditional AM/FM radios, as well as components for entertainment applications, such as in-car TV, in-flight video, digital radio and HD radio. In July, 2009, the company completed the acquisition of privately-held Auvitek Int’l., a developer of demodulation integrated circuits.
In early January, Microtune showcased its Receiver IC technologies for digital TV at the Consumer Electronics Show. Also at that time, it formed a strategic supply relationship with Samsung Electro-Mechanical. During December it introduced what it believes to be several new breakthrough products for the digital TV and automotive radio markets.
For FY2008, ending 12/31/08, revenue was $108 million with $6.37 million in net income. During the first nine months of FY2009, ending 9/30/09, revenue was $53.46 million with $12.1 million in losses (ouch!)
If the company can translate some of their new product offerings into a better P&L, then the stock could see 2008 levels.
Our 24-month target for the stock is $3.75 to $4.25.
For more information, contact TUNE at 972-673-1600; ir@microtune.com
CYTOKINETICS, INC. (NASDAQ: CYTK) – $3.00. Twelve-month hi-low has been $5.55 – $1.39. Based in South San Francisco, CA, with about 100 employees, this biotech has 60.9 million shares outstanding, $128.15 million in total current assets, $134.16 million in total assets, little debt, and $21.81 million in total liabilities. Institutional ownership is around 54%. Six analysts rate the stock a “strong buy” and one has it as a “hold”. www.cytokinetics.com
A very healthy-looking balance sheet, a half-dozen analysts giving it a “strong buy”, and some promising product candidates make it easier to place Cytokinetics, Inc. into the Current Portfolio.
Founded and 1997, and trading on NASDAQ for nearly six years, Cytokinetics is developing small molecule drug therapeutics for treating cardiovascular diseases and cancer. All of CYTK’s drug candidates and potential drug candidates are directed toward the cytoskeleton, which is a complex biological infrastructure that plays a fundamental role in every human cell. The company’s lead product includes CK-1827452, a cardiac muscle myosin activator, which is in Phase IIa clinical trials for treating heart failure. Its products under development stage comprise Ispinesib, kinesin spindle protein inhibitor that is in Phase I/II clinical trials for treating metastatic breast cancer; SB-743921, which is in Phase I/II trials to treat patients with non-Hodgkin or Hodgkin lymphoma; and GSK-923295, centromere-associated protein E inhibitor, which is in Phase I clinical trials to treat patients with refractory solid tumors.
Cytokinetics products under preclinical stage consist of CK-2017357, a skeletal sarcomere activator for treating diseases and conditions associated with muscle weakness or wasting; and smooth muscle myosin inhibitor for treating pulmonary arterial hypertension and diseases and medical conditions associated with bronchoconstriction. It has a strategic alliance with Amgen to discover and develop novel small-molecule therapeutics that activate cardiac muscle contractility for applications in treating heart failure.
In early January, Cytokinetics announced positive data from a Phase 1 clinical trial of CK-2017357, which demonstrated significantly increased muscle force production. Over the last few months, the company has presented non-clinical data on several other products.
Unlike many small biotechs, the company does generate revenues, but like many others, it racks up big losses. For FY2008, ending 12/31/08, revenue was $12.42 million with $56.4 million in losses. During the 3rdQT of FY2009, ending 9/30/09, revenue was $5.5 million with $8.2 million in losses.
Our number one reason for picking Cytokinetics is the six analysts giving the stock a ‘strong buy’. Sometimes when that many analysts are piling on a small stock, something may be up.
Our 24-month target for the stock is $5.00 to $5.50.
For more information, contact CYTK’s Jodi Goldstein at 650-624-3060; investor@cytokinetics.com
Look for the February 20, 2010 Newsletter to be posted between 2/15 to 2/17.
Thank you,
George