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Hello Readers,
Since the last Newsletter, we closed another position, for a gain.
DEPOMED (4/5/07). Closed position 6/14/07 at $5.25 for a 50% GAIN.
In the last Newsletter, we said that DepoMed had pierced our 50% threshold and to consider the position closed.
At the beginning of June, we sensed there would be a sell-off in the markets and it happened. Then, in mid-month, we though the selling was just about over. Well, it wasn’t. June was one of the bloodiest months of the year; it certainly did not help much of our Current Portfolio. However, despite the carnage, we still do not see a lot that is fundamentally wrong with the markets and our long-term view is positive.
Here here the headlines since the last Newsletter about companies in the Current Portfolio. Dates are when we first recommended them.
Pharmacyclics (PCYC) (6/20/07). Announces interim results from two ongoing Phase 2 trials supporting potential of Xcytrin plus chemotherapy to treat recurrent non-small cell lung cancer.
Alphatec (ATEC) (6/20/07). Expands its spinal disorder solution technology by launching non-small cell lung cancer.
Oncolytics (ONCY) (6/5/07). Starts patient enrollment in Phase II Sarcoma clinical trial. Issued sixth Canadian patent.
Encorium (ENCO) (5/20/07). Gets $3.8 million contract for Phase 2 clinical trial in herpes zoster, also known as shingles. Signs pact with Oramed Pharmaceuticals to start IND application for Oramed’s oral insulin product.
Gene Logic (GLGC) (4/20/07). To look for new uses for Lundbeck drugs. Study with Mayo Clinic reveals genomic predictors of Parkinson’s disease.
VocalTec (VOCL) (4/20/07). Mcbifon-2000 selects company’s next generation VoIP solution.
Immunicon (IMMC) (3/20/07). Selects new chairman.
TTI Telecom (TTIL) (3/5/07). Launches FaM Analyzer, which leverages fault management data to report network behavior metrics.
Urologix (ULGX) (2/20/07). Receives CE mark for CoolMax microwave catheter.
UQM Technologies (UQM) (2/5/07). Completes $5.2 million private placement. Launches ProxyAccess solution. Receives follow-on contract from U.S. Army. Introduces 150kW propulsion system.
CardioTech (CTE) (12/20/06). Recent numbers show 4th QT loss narrows; balance sheet still looks okay. Files patent for antimicrobial polymers designed to avoid infections without using antibiotic drugs.
Lantronix (LTRX) (12/5/06). Dutton Associates rates stock as a “strong speculative buy”. Announces contract for wireless medical point-of-care application.
WJ Communications (WJCI) (12/5/06). Launches online store for RFID solutions.
Target Logistics (TLG) (11/20/06). TheStreet.com downgrades the stock from a “buy” to a “hold”, which didn’t have much impact on stock. We have often wondered what “hold” means? Maybe a better translation is “I’ve already sold it, and you’re still holding it”.
YMI Biosciences (YMI) (11/5/06). FDA grants IND for YMI’s fentanyl-based pain product AeroLEF.
Terabeam (TRBM) (11/5/06). Proxim Wireless products to be used to build wireless Internet access in Rockville, MD town square development. Working with Indian partner to supply wireless broadband access to certain parts of India.
HealthStream (HSTM) (10/20/06). Learning solutions selected to support leading Catholic healthcare systems learning strategy.
Hydrogencis (HYGS) (9/20/06). Provides update on advances.
Advanced Life Sciences (ADLS) (7/20/06). Stock tanked on confusion over antibiotic data. This needs more time to sort itself out. To host conference call on July 2, the date we post this Newsletter, about Phase 3 trial.
Pharmos (PARS) (4/20/06). Commences Phase 2a trial of topical Diclofenac NanoEmulsion cream. Starts Phase 2b irritable bowel syndrome study.
ThermoGenesis (KOOL) (4/5/06). Gets a nice mention at TheStreet.com. Partners with UC Davis to develop stem cell treatments.
Cytogen (CYTO) (3/20/06). Presents Phase 1 data showing promising antitumor activity and safety profile of Quadramet. To raise $10.1 million in private placement.
Lipid Sciences (LIPD) (2/20/06). Says vaccine preparation for SARS virus is effective in animal model. Presents In vivo kinetic data that demonstrates activation of reverse cholesterol transport by pre-beta HDL in selectively dilapidated plasma.
Gateway (GTW) (2/5/06). Te usual ten to twenty stories/releases. Updates its convertible notebook with graphic technologies. To add new software for healthcare-targeted PCs. Recalls 14,000 battery packs due to fire risks.
8×8 (EGHT) (1/20/06). Will offer Packet8 subscribers digital courier service from YouSendIt. Awarded 2007 TMC Labs Innovation Award for Packet8 Tango Video terminal adapter. Files 2007 annual financials and is current with SEC filings.
Westell (WSTL) (10/20/05). Media Terminal features opera browser. Company and 4HomeMedia offer world’s first “connected home” multi-service residential gateway.
Zi Corp (ZICA) (8/5/05). Files amended annual report due to sale of Archer Education Group.
Innodata (INOD) (7/5/05). Forms partnership with British Library to provide digitization and conversion services for publishers.
B.O.S. (BOSC) (1/5/05). Announces $600,000 private placement; and conversion of secured convertible notes totaling about $2.22 million.
Applied Micro Circuits (AMCC) (11/20/04). AMCC and Fulcrum Microsystems demonstrate industry’s highest density evaluation platform for 10 gigabit Ethernet SFP+ at NXTcomm. Introduces new 10G ENET/OTN/SONET/SDH mapper and FEC devices.
TMNG Global (TMNG) (4/20/04). Names new president/CFO.
Palatin Technologies (PTN) (4/5/04). PTN and King Pharmaceuticals announce end-of-Phase 2 meeting with FDA for Bremeanotide for treating ED (and, no, that’s not short for Eddie).
OpenTV (OPTV) (3/20/04). Launches “Rapid Porting Program”.
Our picks for this Newsletter are another AMEX-listed biotech and a NASDAQ listed biotech catering to pets.
SCOLR PHARMA, INC. (AMEX: DDD) – $2.20. Twelve-month hi-low has been $6.05 – $1.51. Based in Bellevue, WA, with about 25 employees, this specialty pharmaceutical company has 38.1 million shares outstanding, $16.23 million in total current assets, $17.57 million in total assets, little debt, and $1.69 million in total liabilities. Institutional ownership is around 6%. www.scolr.com
Here is another of those biopharmas that has a healthy-looking balance sheet, and SCOLR Pharma, Inc. appears to have some nifty technology that it is testing on a variety of drugs.
Basically founded in 2002, and public since 2004, SCOLR develops and formulates over-the-counter products, prescription drugs, and dietary supplements that use its patented Controlled Delivery Technology (CDT). The CDT platform is based on technologies for the programmed release of active pharmaceutical ingredients and nutritional products. These technologies enable the company to formulate capsules or tablets that release their active agents predictably over a specified timeframe of up to 24 hours. SCOLR’s technology can be incorporated into oral formulations to increase the solubility characteristics of previously non-soluble and sparingly soluble drugs without using micro-milling and coated patented technologies.
Currently in SCOLR’s drug delivery pipeline are over half a dozen products in preclinical or clinic stages including combinations of glucogamine and chrondrotin, niacin, and other dietary products. Also included are Ibuprofen, for treating pain, fever, and inflammation, which is marketed as Advil; Pseudoephedrine, a decongestant used to relieve sinus pressure; Ondansetron, a drug in Zofran, which is used to relieve vomiting and nausea associated with radiation and chemotherapy; Raloxifene, an ingredient in Evista, which is used for osteoporosis; Fenofibrate, a drug in Tricor, used for hypercholesterolemia; Rivastigmine, an ingredient in Exelon, used for managing Alzheimer’s; and Risperidone, an ingredient in Risperal, used in managing schizophrenia and bipolar mania.
SCOLR has strategic alliances with Perrigo Company for making and marketing certain supplements in the U.S.; and with BioCryst Pharmaceuticals to develop an oral formulation of peramivir, an antiviral compound using its CDT platform.
In June, SCOLR was issued its fifth drug delivery patent for its CDT platform. Also, in that month, the company, in conjunction with Perrigo, launched shipping of its new extended-release CDT-based calcium.
For FY2006, ending 12/31/06, revenue was $2.27 million with $10.74 million in losses. During the 1stQT of FY2007, ending 3/31/07, revenue was $1.12 million with $1.9 million in losses.
During the last several quarters, the company has seen a modest jump in revenues, but it will probably take some time to develop the products in its pipeline, which appear promising.
Our 24-month target for the stock is $4.00 to $4.25.
For more information, contact DDD at 425-373-0171; info@scolr.com
HESKA CORPORATION (NASDAQ: HSKA) – $2.35. Twelve-month hi-low has been $2.79 – 98 cents. Located in Loveland, CO, with about 300 employees, this biotech (of sorts) has 51 million shares outstanding, $29.39 million in total current assets, $38.25 million in total assets, and $29 million in total liabilities, of which $1.73 million is long-term debt. Institutional ownership is around 45%. www.heska.com
Periodically, we stumble across a company that has a decent balance sheet, good revenue growth, and some consistent earnings and we ask, “shouldn’t this stock be a lot higher?”. That seems to be the case with Heska Corporation.
Founded in 1998 as Paravax, Inc., changing its name in 1995, and public for over ten years, Heska makes and sells veterinary products with its core focus on the cat and dog health markets. No, it’s not sexy, but it has been making money. The company has two business segments. The Core Companion Animal Health segment includes diagnostic and other instruments and supplies, as well as single use diagnostic and other tests, vaccines, and pharmaceuticals primarily for cats and dogs. This segment sell its products to veterinarians through its direct sales force and varied outside distributors. The Other Vaccines, Pharmaceuticals and Products segment produces private label vaccines and pharmaceuticals for cattle and other animals, including small mammals and fish. It offers bovine vaccines, and biological and pharmaceutical products; and turnkey services, which include research, licensing, production, labeling, and product packaging. This segment sells its products under third party labels.
Heska has collaborations with Quidel Corp. for developing SOLO STEP CH Cassettes, SOLO STEP CH Batch Test Strips, and SOLO STEP FH Cassettes; and with Diagnostic Chemicals for developing canine and feline E.R.D. HEALTHSCREEN Urine tests and ERD Reagent Packs to detect microalbuminuria; and with Boule Medical AB for developing veterinary applications for the Heska CBC-DIFF Hematology System and associated reagents.
Heska is not the type of company that cranks out many press releases, and as long as they keep growing revenues, we don’t care about PR. For FY2006, ending 12/31/06, revenue was $75 million with $1.82 million in net income. During the 1stQT of FY2007, ending 3/31/07, revenue was a quarterly record of $22.71 million with net income of $2.39 million; marking at least four consecutive quarters of earnings.
As we said, this has no sex appeal, but its numbers look pretty good, and, at some point, that should account for something.
Our 24-month target for the stock is $4.00 to $4.25.
For more information, contact HSKA at 970-493-7272; investorrelations@heska.com
Look for the July 20, 2007 Newsletter to be posted on 7/16 or 7/17.
Have a happy and safe 4th, George