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Hello Readers,
The bright spot during the first part of February is that the Russell 2000 ripped through 800 and was touching 820 a few days ago. And, of course, on Valentine’s Day, the Dow hit a new high, thanks to upbeat remarks by the Fed chairman. Up until then, most of the month was just plain blah. The market did a lot of churning, as did our Current Portfolio. What bothers us is that NASDAQ is still struggling to break 2500, and hold there; remember, it’s record high was around 5400, although 2000 of those points were perhaps because of the Internet Bubble. Still. Given the performance of the Dow and the Russell 2000, NASDAQ should be much higher. Maybe a correction is in order? That is what we are expecting sometime over the next several weeks. It may be short-lived and very scary.
Here are the headlines since the last Newsletter about companies in our Current Portfolio. Dates in parentheses are when we recommended them.
UQM Technologies (UQM) (2/5/07). Receives additional order from Eaton for compressor motors used in fuel cells. Forms strategic alliance with Altair Nanotechnologies with whom it is working to build an electric truck.
Endologix (ELGX) (1/20/07). Says its Powerlink System demonstrated success in difficult AAA anatomies. To release earnings on February 22.
Etrials (ETWC) (1/20/07). Collaborates with Microsoft to offer software solutions that provide global reach for conducting clinical trials.
DeltaThree (DDCC) (1/5/07). To present at Roth Capital confab on February 22. Sets earnings call for March 1.
Critical Therapeutics (CRX) (1/5/07). Beckman Coulter exercises option to continue HMGB1 diagnostic development. Recent balance sheet still looks pretty healthy.
CardioTech (CTE) (12/20/06). Quarterly numbers so-so; balance sheet still fair. Plans to sell its Gish Biomedical unit.
Lantronix (LTRX) (12/5/06). Quarterly numbers look good; as does balance sheet. Introduces first digital I/O industrial device server with enterprise grade security and email alerting.
WJ Communications (WJCI) (12/5/06). Slates earnings release for February 21. SK Telecom selects company’s Gen2 UHF RDID reader chipset for cellular mobile handsets.
Target Logisitics (TLG) (11/20/06). Quarterly numbers disappoint, but company reaffirms upbeat guidance; balance sheet still looks good.
YM Biosciences (YMI) (11/5/06). President steps down. Recent balance sheet still looks very healthy.
Terabeam (TRBM) (11/5/06). Adrian College deploys company’s Proxim wireless mesh network for campus-wide Internet access. Introduces Mesh MAX product line.
ImmunoGen (IMGN) (10/20/06). Quarterly numbers show improvement; balance sheet still looks strong and company upgrades its 2007 forecast.
Healthstream (HSTM) (10/20/06). Sets end-of-year earnings call for February 21.
Autobytel (ABTL) (10/5/06). Becomes first third-party buying service to automate long-term follow up for dealers with launch of MyRide.com. GM certifies company’s web control system for new GM OneSource. Inks national marketing pact with Potamkin Automotive. R.L. Polk buys company’s spec business.
TVI Corp (TVIN) (9/5/06). Sets earnings release for March 1. Receives more than $2 million in contracts from U.S. and Canada militaries.
RIT Technologies (RITT) (8/5/06). Launches 10 Giga cabling solution for UTP environments. Recent numbers look good, as does balance sheet.
Point Therapeutics (POTP) (7/5/06). For now, we’re giving up on this as we place it on the “Endangered List”. Stock keeps sinking and now faces NASDAQ delisting. Hopes to raise $4.76 million through equity sales.
Curis (CRIS) (6/5/06). Recent numbers show slight revenue drop, but a 4th QT profit; balance sheet still looks good.
Kintera (KNTA) (5/5/06). Names new president and chairman. Roth Capital gives the stock a “buy” rating, and KNTA will present at their confab on February 21.
ThermoGenesis (KOOL) (4/5/06). Did MDB Capital upgrade or downgrade the stock? Recent balance sheet still appears healthy. Seeks FDA okay for AutoXpress cord blood processing system. Submits response to FDA on CryoSeal U.S. pre-market approval application.
Cytogen (CYTO) (3/20/06). Says seven-year data shows use of PROSTASCINT independently predicts recurrence of prostate cancer. Settles suit with Advanced Magnetics.
Inventure Group (SNAK) (3/5/06). Although revenues drop a little, SNAK posts 4th QT profit; balance sheet still looks good.
Gateway (GTW) (2/5/06). Sales slip nine percent but company has $8.8 million profit. Plans to cut expenses and lay off more employees.
MIND C.T.I. (MNDO) (2/5/06). Slates earnings call for February 21.
8X8 (EGHT) (1/20/06). Quarterly numbers look okay as loss narrows; balance sheet still seems good. Will present at Roth Capital confab on February 22.
RAE Systems (RAE) (10/5/05). Introduces QRAE II next generation one-to-four sensor toxic gas monitor.
Zi Corp (ZICA) (8/5/05). Introduces QixLinks and QixLinks ads.
Vion Pharma (VION) (5/20/05). Plans to sell $60 million in senior notes and 7.8 million commons shares. Short term, this will probably put even more downward pressure on the stock.
Nova Measuring (NVMI) (11/5/04). Sets earnings releases for February 20.
Aviza Technology (AVZA) (10/5/04). Stock is up nearly $3 since releasing quarterly numbers on February 1, which were pretty good, as is balance sheet. Numbers were good, but a $3 pop? Hey, who cares.
Chordiant Software (CHRD) (9/20/04). Stock rises on quarterly results and outlook, which it raises for 2007; balance sheet still looks fair.
Aixtron (AIXG) (7/5/04). Announces further orders from Novalux and from Genesis Photonics. Recent numbers look pretty good.
Network Engines (NENG) (6/5/04). Expands Intelligent Application gateway 2007 product line with single-height Rackmount appliance. Quarterly numbers so-so; balance sheet still looks strong.
Management Group Network (TMNG) (4/20/04). Provides 4th QT update. Says revenue growth will be good and cash on hand is still healthy.
Palatin (PTN) (4/5/04). Stock feels even more pressure as company plans a $27.5 million stock offering, which it probably needs since balance sheet cash has dropped nearly 50% in six months.
Socket Communications (SCKT) (3/20/04). This is still on the “Endangered List”, but lets see company’s earnings release on February 21.
OpenTV (OPTV) (3/20/04). Solution powers NBC’s live interactive events on “Heroes”.
AVANT Immuno (AVAN) (12/5/03). Inks deal with Select Vaccines to develop improved viral vaccines.
Our picks for this issue are another biotech and a medical appliance maker, both trading on NASDAQ.
NEUROBIOLOGICAL TECHNOLOGIES, INC. (NASDAQ: NTII) – $2.65. Twelve-month hi-low has been $4.20 – $1.99. Located in Emeryville, CA, with about 30 employees, this biotech has 29.6 million shares outstanding, $17.87 million in total current assets, $18.66 million in total assets, little debt, and $9.34 million in total liabilities. Institutional ownership is around 30%. One analyst rates the stock a “strong buy” and another as a “speculative buy”. www.ntii.com
Too often, small biotechs have huge losses and almost zero income, so, it is heartening when one of them, like Neurobiological Technologies, Inc., is able to garner some nice chunks of money, as it has been doing for the past year. For it to be receiving some hefty milestone payments augurs wells for the company’s technology.
Founded in 1987, and public since 1989, NTII acquires and develops central nervous system (CNS)-related drug candidates. The company focuses on therapies for neurological conditions that occur in conjunction with ischemic stroke, brain cancer, Alzheimer’s, and dementia. NTII’s strategy is to in-license late-stage CNS agents and pursue regulatory approval and commercialization either by itself or with strategic partners. It currently has one product in the marketplace, memantine, an orally dosed compound; brand name is Namenda. This is now being sold by Forest Labs in the U.S. for Alzheimer’s disease; in Europe, Merz Pharmaceutical is the marketer and will pay NTII royalty payments. Forest Labs is also evaluating Namenda for treating neuropathic pain, and has completed Phase II trials.
NTII has one product in clinical development, Viprinex (ancrod) for treating acute ischemic stroke. This completed a Phase II program and a statistically Phase III trial in the U.S., and a failed Phase III trial in Europe (multiple-day dosing regimens). It is to undergo additional Phase III testing. Back in November, 2005, NTII sold its worldwide rights and assets related to Xerecept, a compound for treating brain swelling associated with tumors, which is in late-stage trials. In January, of this year, NTTI got $4 million from Celtic Pharmaceutical, the buyer of the compound, as the final non-contingent payment rights. With this payment, the company has received $33 million in guaranteed payments for selling the compound and will receive up to an additional $15 million if Xerecept meets certain regulatory milestones. At the end of last month, NTII received $1.7 million from Merz on sales of Memantine.
Although NTII has received some nifty payments over the last year, or so, it still must be viewed as your typical small biotech that carries a hefty loss. For FY2006, ending 6/30/06, revenue was $12.33 million with $27.84 million in losses.
The company seems to be doing something right, since some big name pharmas have been forking over some rather large sums of money. A brokerage firm recently gave the stock a 12 to 18 month target price of $7.00. We’ll be happy with around 60% of that.
Our 24-month target for the stock is $4.50 to $5.00.
For more information, contact NTII’s Craig Carlson at 510-595-6000.
UROLOGIX, INC. (NASDAQ: ULGX) – $3.60. Twelve-month hi-low has been $4.45 – $2.25. Based in Minneapolis, MN, with about 100 employees, this medical appliances maker has 14.3 million shares outstanding, $20.37 million in total current assets, $43.45 million in total assets, little debt, and $3.25 million in total liabilities. Institutional ownership is around 21%. Two analysts have the stock as a “hold”. www.urologix.com
The Baby Boomers are hitting old age, and, if stats can be trusted, over half the men will have prostate problems. Yep, for a lot of you these are the “quality years”. So, one would think that business should only get better for Urologix, Inc., which has a healthy looking balance sheet and technology that should help those “going ” problems.
Founded in 1991, and public for over ten years, Urologix makes and markets minimally invasive medical products for treating urological disorders. The company offers nonsurgical, anesthesia-free, catheter-based (you guessed right) treatments that use a proprietary cooled microwave technology for treating benign prostatic hyperplasia (BPH), a noncancerous disease in which the prostate enlarges and constricts the urethra causing changes in urinating patterns, such as bad streams, increases in frequency, or difficulty in starting. Urologix claims that BPH affects 23 million men worldwide, but that figure seems low; maybe in the U.S. alone?
All systems utilize the company’s Cooled ThermoTherapy, which is a microwave energy combined with a unique cooling mechanism that protects healthy tissue, supposedly enhances patient comfort, and provides relief of BPH symptoms. The procedure can be performed without sedation and can be done in a doctor’s office or outpatient clinic.
Urologix claims proven, long-term clinical results with more than 200,000 patients treated. The two systems that the company markets are Targis that delivers precisely targeted microwave energy deep into hyperplastic prostate tissue creating coagulative necrosis for durable clinical outcomes; and Prostatron that delivers targeted microwave energy to heat and destroy the hyperplastic prostate tissue while a unique cooling mechanism simultaneously protects surrounding healthy tissue. The company claims that both are more cost effective than a lifetime of drug therapy.
For FY2006, ending 6/30/06, revenue was $25.88 million with $5.49 million in net income. During the first six months of the current FY, ending 12/31/06, revenue is slightly lower than the comparable period last FY with $11.42 million and $379,000 in losses. The company had some stumbles, recently, but points out that the 2ndQT was better than the 1stQT, and that the 3rdQT should be even better. At the end of January, brokerage firm CE Unterberg Towbin upgraded the stock.
This is a “Boomer Play” and the company appears to have the resources to pump up its sales and marketing efforts even more.
Our 24-month target for the stock is $5.50 to $6.50.
For more information, contact ULGX’s Elissa Lindsoe at 763-475-1400; customerservice@urologix.com
Look for the March 5, 2007 Newsletter to be posted on 3/1 or 3/2.
Thank you,
George