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Hello Readers,
Yes, things just keep getting uglier and uglier, and, if we see a slew of disappointing earnings from the big caps over the next few weeks, maybe the market will have the capitulation that some gurus think it needs. The main cause for the doldrums is the ever-rising price of oil, which, has now seeped into all aspects and areas of the economy. At some point, the carnage will end, and, as we said last issue, it should be sooner rather than later. And yes, once again, our Current Portfolio has also taken a beating.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
BSQUARE (BSQR) (6/20/06). Slates earnings call for August 3. Ends contract with consultant.
Spherix (SPEX) (6/20/06). Hopes to begin pivotal Phase III clinical trial for its diabetes drug in March, 2007.
Curis (CRIS) (6/5/06). CRIS and Genetech halt early-stage study on skin cancer drug.
Micro Linear (MLIN) (6/5/06). Sampling next generation ML1905 Personal Handyphone System (PHS) transceiver.
ICAD (ICAD) (5/20/06). Premier Purchasing Partners awards exclusive group buy program to iCAD for SecondLook computer-aided detection system.
Kintera (KNTA) (5/5/06). Stock downgraded from a “buy” to a “hold” by Roth Capital, but it doesn’t seem to impact stock price. KNTA, in conjunction with Microsoft, announces social constituent relationship management roadshow.
Pharmos (PARS) (4/20/06). Expands corporate Web site and adds Hebrew language site.
Investors Capital (ICH) (4/20/06). Reports its first $20 million quarter, balance sheet still looks good.
ClickSoftware (CKSW) (4/5/06). Sets earnings call for July 26.
Gateway (GTW) (2/5/06). Selects North Sioux City, SD for new facility. Credit agreement amendment expands borrowing base. Reduces price of its 21” hi-def LCD to $499.
MIND C.T.I. (MNDO) (2/5/06). Names new COO and CFO. Sets earnings call for August 2.
8×8 (EGHT) (1/20/06). CEO issues open letter to shareholders that says company is on the “right track” and that stock price is “unjustifiably” impacted.
Ceragon Networks (CRNT) (1/5/06). Selected by CellularOne for Phase 2 of Cellular backhaul expansion and broadband access. Plans earnings call for July 31.
Digital Angel (DOC) (12/20/05). Forms panel to look at strategic options; seeks investment bankers. Could mean that DOC may want to sell part or all of its company.
Fusion Telecommunications (FSN) (12/5/05). Launches efoLink, which allows subscribers to make low-cost calls without access to the Softphone or SIP device.
Westell (WSTL) (10/20/05). Boosts credit line. Earnings call due on July 20.
RAE Systems (RAE) (10/5/05). Acquires assets of Aegison for $2 million. To increase assets of its China subsidiary to 96%.
Discovery Partners (DPII) (10/5/05). Completes sale of Drug Discovery service operations to Biofocus.
Zi Corp (ZICA) (8/5/05). Extends date for annual general meeting. CFO stepping down.
Electric City (ELCY.BB) (7/5/05). Several releases. This one is on the “Endangered List”.
Commerce Energy (EGR) (6/5/05). Signs energy pact with national hotel chain, Accor North America.
Verticalnet (VERT) (4/5/05). Product release. This one is on the “Endangered List”.
Advancis Pharma (AVNC) (12/20/04). Completes $12 million credit facility.
Applied Micro Circuits (AMCC) (11/20/04). Receives NASDAQ delisting notice because company is late in filing its Form 10-K. AMCC will appeal. Company is target of an options suit.
Nova Measuring (NVMI) (11/5/04). Introduces its next generation HVM Scatterometry-based Metrology solution and an advanced Scatterometry modeling and application development tool.
Aviza Technology (AVZA) (10/5/04). Receives order for Celsior single wafer ALD system from leading Taiwanese foundry. Receives several awards for product excellence.
Aixtron (AIXG) (7/5/04). Receives first order for merged ALD and AVD technologies.
Network Engines (NENG) (6/5/04). Schedules earnings call for July 27. Joins forces with SurfControl to offer next generation of co-branded security appliances for Microsoft Internet security and acceleration server. Wins Microsoft “Partner of the Year” award.
NexMed (NEXM) (4/5/04). Gets new patent allowance for Alprox-TD. To appeal NASDAQ delisting determination. This is on the “Endangered List”.
Insmed (INSM) (11/5/03). Court rules that Insmed drug infringes on Tercica patent claim, and stock tanks. We may put this on the “Endangered List”.
Chordiant (CHRD) (9/20/04). Quarterly results to be announced August 8.
Dynacq Healthcare (DYII) (1/20/06). Reviewed quarterly results not great.
Our picks for this Newsletter are another biotech and an electronics outfit, both listed on NASDAQ.
MICROVISION, INC. (NASDAQ: MVIS) – $1.75. Twelve-month hi low has been $6.53 – $1.71. Based in Redmond, WA, with about 140 employees, this electronics company has 25.2 million shares outstanding, $22.59 million in total current assets, $27.8 million in total assets, and $19.55 million in total liabilities, of which $1 million is long-term debt. Institutional ownership is around 6%. http://www.mvis.com
We should also mention that Microvision, Inc. has nearly $8 in short-term debt, however, they recently closed a $25 million equity offering, which should juice the next balance sheet. The company’s nifty-looking technology is another reason why we are adding it to the Current Portfolio.
Founded in 1993, and public for about ten years, Microvision bills itself as the world leader in developing light scanning technologies for high-resolution display and imaging systems. These systems use MVIS’ proprietary silicon micro-mirror technology to enable OEM, ODM, Tier 1, and other select partners solutions for a range of medical, industrial, consumer, and military applications. The company supplies its core expertise to partners in what are called integrated photonic modules (IPM), which are fully integrated display and imaging engines. These engines are being designed to be embedded in partners’ product offerings.
Microvision has also developed two end-user products incorporating first generation IPM elements, the Nomad Display System and the Flic Laser Bar Code System. The Nomad is a wireless, head-worn see-through display that overlays computer-based information over the real-world allowing hands-free head-up access to digital information. The Flic is as its name implies and allows customers to bar code and enable price sensitive applications.
Of particular interest is that Microvision has a patent portfolio of 119 U.S. patents and 79 pending patents. Of further note is that in 2005, about 35% of the company’s consolidated revenue came from the U.S. government.
This U.S government money spigot still seems to be turned on for MVIS. In mid June the company received a $915,000 contract from the U.S. Air Force for more development of portable eyewear display.
For FY2005, ending 12/31/05, revenue was $14.74 million with $28.18 million in losses (UGH!). During the 1stQT of FY2006, ending 3/31/06, revenue was $2.47 million with $6.5 million in net losses before equity transactions.
Microvision is obviously a turnaround play with a lot riding on the Flic product. Based upon Flic’s first quarter shipments, the company may be able to pull it off.
Our 24-month target for the stock is $3.50 to $4.00.
For more information, contact MVIS’ Jeff Wilson at 425-936-6847; ir@microvision.com
ADVANCED LIFE SCIENCES HOLDING, INC. (NASDAQ: ADLS) – $2.95. Twelve-month hi-low has been $6.00 – $2.31. Located in Woodridge, IL with about 18 employees, this biotech has 28.3 million shares outstanding, $47.21 million in total current assets, $47.5 million in total assets, and $8.95 million in total liabilities, of which $5.91 million is long-term debt. Institutional ownership is around 34%. One analyst rates the stock a “buy”. http://www.advancedlifesciences.com/
Even though Advanced Life Sciences Holdings, Inc. has a healthy wad of cash, we usually like to see less debt; however we decided to add the company to the Current Portfolio after reading an article at BusinessWeek Online.
Founded in 1999, and public for nearly a year, Advanced Life Sciences is developing drugs for use against infectious diseases, inflammation, and oncology. It has a pipeline of drug candidates for treating respiratory tract infections, HIV, acute respiratory distress syndrome (ARDS), and cancer. The company has four product candidates that are either in clinical development or nearing approval for clinical development, and seven candidates that are in preclinical development. Its most advanced-stage drug currently is Cethromycin, from which ADLS has an exclusive worldwide license from Abbott Laboratories to develop and commercialize. Cethromycin is a Ketolide antibiotic in Phase 3 clinical development for treating respiratory tract infections, most notably community acquired pneumonia.
Advanced Life Sciences also develops ALS-886, a therapeutic in preclinical development for treating inflammation-related tissue damage, including tissue damage associated with ARDS; and ALS-357, a compound that has shown promise of anti-tumor activity against malignant melanoma in preclinical studies. The company also develops additional product candidates that include compounds derived from natural products to treat infectious diseases; a class of synthetic chemotherapeutics to treat various cancers; and small molecule inhibitors for treating Alzheimer’s disease. ADLS also has a 50% joint venture interest in Sarawak MediChem Pharmaceuticals.
At the end of June, a story at BusinessWeek Online reported that George Soros, Morgan Stanley, and T.Rowe Price were all putting money into ADLS mainly because of the oral antibiotic Cethromycin. Also, in the same article, an analyst for Lazard Capital Markets gave the stock a “buy” signal with a 12-month target of $5.00.
Advanced Life Sciences is pretty typical of small biotechs in that it makes little money and chalks up big losses, i.e. during the quarter ending 3/31/06, revenue was $35,000 with $3.28 million in losses.
ADLS has been drawing attention and money from some pretty notable investment powerhouses, which seems like a good thing to us.
Our 24-month target for the stock is $4.75 – $6.00.
For more information, contact ADLS’ Edward Flavin at 630-739-6744; ir@advancedlifesciences.com
Look for the August 5, 2006 Newsletter to be posted on 8/1 or 8/2.
Thank you,
George