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Hello Readers,
Since the last Newsletter, we closed three positions; two for gains and one for a loss.
CERES, INC. (6/5/13). Closed position 6/12/13 at $3.90 for an 80% GAIN.
AVANIR PHARMACEUTICALS (6/5/12). Closed position 6/14/13 for a 55% GAIN.
ECHO THERAPEUTICS (3/20/12). Closed position 6/7/13 at $5.61 for a 74% LOSS.
(price reflects reverse stock split)
About once or twice a year, we get real lucky and have a position closed within days of recommending it, as was the case with Ceres, Inc., and, at the time we covered it, there was no apparent reason for its meteoric surge; and, with an 80% gain, we don’t care. An FDA okay and a ‘buy’ on the stock from Mizuho gave Avanir Pharmaceuticals a nice upward push. And, we closed Echo Therapeutics when they announced a 1 for 10 reverse stock split; these reverse splits seldom work for current shareholders.
Too often, the financial media glues itself onto certain buzz words and then proceeds to beat them to death. The latest in-vogue phrase is “Fed tapering”. Will the Fed start tightening its QE forever program by the end of 2014 or won’t they? Judging from the smallest of increases in certain interest rates and yields, the current answer is “a very good possibility” and this has created wild mood swings in the markets over the past several weeks. Until most of the gurus come to a consensus, expect more market gyrations.
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 about companies on the “Endangered List” unless we feel the news is highly significant.
Flow International (FLOW)(6/5/13). Hires UBS to start process of evaluating strategic alternatives. Provides preliminary 4th quarter results.
Antares Pharma (ATRS)(5/20/13). Announces that Subcutaneous, a self-administered methotrexate for rheumatoid arthritis, demonstrated significantly greater bioavailability over current standard of care.
iPASS (IPAS)(4/5/13). Zain Jordan to offer global Wi-Fi access through iPASS open mobile exchange.
XOMA Corp. (XOMA)(4/5/13). Initiates pilot trial studying Gevokizumab in patients with Pyoderma Gangrenosum.
Joe’s Jeans (JOEZ)(3/20/13). B. Riley & Co. upgrades stock to a “buy”.
AlphaTec Holding (ATEC)(2/20/13). Postpones annual shareholders meeting to June 21.
Ventrus Biosciences (VTUS)(2/20/13). More lawsuits filed against company.
Apricus Biosciences (APRI)(2/5/13). Company’s impotence drug approved in Europe.
Codexis (CDXS)(1/5/13). Company and Chemtex achieve key milestone in commercial development of bio-based chemicals from non-food cellulosic biomass.
Palatin Technologies (PTN)(12/5/12). Law firm launches investigation against PTN.
Telecommunication Systems (TSYS)(11/5/12). Makes broadband SMS9-1-1 capabilities available to public safety access points. Introduces PerformanScore cyber security skill assessment tool. To showcase next generation of public safety solutions at NENA 2013 between June 15 and June 20.
Response Genetics (RGDX)(10/20/12). Achieves milestone payments totaling $1 million for services provided to GlaxoSmithKline.
Zynga (ZNGA)(10/5/12). The usual several dozen stories, most notable perhaps is the news that the company will cut over 500 jobs and close some offices, which put pressure of the stock.
ImmunoCellular Therapeutics (IMUC)(9/20/12). Announces recommendation of Data Monitoring Committee to continue ICT-107 Phase II trial following interim analysis.
SemiLEDS (LEDS)(8/20/12). Broadens vertical UV-LED portfolio with mid and high power offerings.
pSivida (PSDV)(8/5/12). Announces UK’s NICE says yes to ILUVIEN in some patients with diabetic macular edema in new draft guidance.
Rare Element Resources (REE)(6/20/12). 2013 development drilling program underway. Independent labs confirm success of REE’s proprietary technology; pilot plant testing underway.
Capstone Turbine (CPST)(5/20/12). Gets follow-on order for ten micro turbines for super yachts. Secures C800 and CC125 order to fuel groundbreaking renewal energy anaerobic digester system. Posts record quarterly and annual revenues but losses still nag; balance sheet still looks good. Ardour Capital downgrades the stock.
Bacterin International (BONE)(5/5/12). Announces new financing.
Axcelis Technologies (ACLS)(4/5/12). Receives follow-on order for Optima HDx high current implanter.
Anadigics (ANAD)(11/20/11). Names new top officers. Expands 12 V surface mount CATV line amplifier product family and unveils unique RF amplifier solution for small-cell applications.
ECOtality (ECTY)(11/5/11). Raises $8.19 million in private placement.
Synthesis Energy Systems (SYMX)(8/20/11). Forms new business unit to sell to the global distributed power market. Launches ‘Capital-Lite’ approach for commercializing its patented gasification technology. Develops novel approach for large-scale production of ‘green chemicals’ including methanol and methanol derivatives.
ThermoGenesis (KOOL)(4/5/11). Gets new AXP customer in the UK.
Pixelworks (PXLW)(11/20/10). To unveil tablet and ultrabook display processor technology at COMPUTEX TAIPEI, and this news seems to have sent the stock on a minor tear.
Inovio Pharma (INO)(10/20/10). Claims that its H7N9 DNA vaccine generates first protective antibody responses against virulent H7N9 virus in 100% of vaccinated animals.
NovaBay Pharmaceuticals (NBY)(4/20/10). Provides mid-year clinical updates.
Novavax (NVAX)(4/5/10). Produces MERS-CoV vaccine candidate.
Cytokinetics (CYTK)(2/5/10). Expands collaboration with Amgen. This one is on the “Endangered List”.
Qualstar (QBAK)(10/20/09). Slates shareholder conference call for June 19. Adds two authorized resellers to expand storage sales internationally. To join Hitachi Data Systems’ technology alliance program.
Our picks for this Newsletter are a developer of branding solutions and a biotech with whom we have had past success; both are NASDAQ-listed.
VELTI PLC (NASDAQ: VELT) – $1.46. Twelve-month hi-low has been $10.43 – $1.43. Based in Dublin, Ireland, with about 1100 employees, this technology solution provider has 66.1 million shares outstanding, $322 million in total current assets, $373.87 million in total assets, and $227.45 million in total liabilities. Institutional ownership is around 47%. One analyst rates the stock a “buy” and four have it on “hold”. www.velti.com
Too often, we see a stock get really clocked when a company’s future projections are not what The Street was expecting. Such has been the case with Velti PLC, and we feel, given the company’s reach, that the thumping was excessive.
Founded in 2000, and public for over two years, Velti bills itself as the leading global marketing platform, connecting brands with consumers around the world. The company has grown greatly through four acquisitions over the last two or three years, giving it a global imprint in over fifteen countries. Velti provides mobile marketing and advertising technology and solutions for brands, advertising agencies, mobile operators, and media companies. It operates the Velti mGage platform that enables brands to build, plan, execute, and measure integrated advertising and marketing campaigns across various channels. Their products include mGage Advertise, an enterprise grade ad server that simplifies conversion tracking to provide brand insight into campaign performance; mGage Create, a mobile Web development platform that enables brands and agencies to create, deploy, host, and measure mobile sites that can be rendered on various devices in the market; and mGage Communicate, a mobile measuring and mobile community management platform that allows brands to implement personalized messaging campaigns.
Yelti’s products also comprise mGage Inspire, a multi-channel loyalty platform that enables brands to implement loyalty and customer relationship management programs, and mGage Excite, a platform that enables, operators, agencies, media groups, and brands to conduct robust and scalable promotions on a massive scale. In addition, the company offers Mobclix for publishers and developers to monetize their mobile inventory on their apps and sites; and Mobclix, which connects advertisers with the global inventory that is needed to reach audiences; as well as Velti Media, a mobile advertising network that connects brands and agencies to mobile Web sites or mobile applications that host advertisements.
For FY2012, ending 12/30/12, revenue was $270.34 million with $61.23 million in losses compared to 2011 revenue of $189.2 million and $15.37 million in losses. During the 1st QT of FY2013, ending 3/31/13, revenue was $41 million with $157.04 million in losses (ouch!).
As a result of the continuing losses, the company recently declared a major reorganization staring with a 20% reduction in “headcount” or staff, as we understand it. Also, during the last quarter, Velti added key new seven-figure deals with American Express, Ford, AT&T, Panasonic, Vodafone, Orange, Claro, and Coca Cola. It also launched Velti Media, which counts among its users Disney, Toyota, and Unilever.
It just seems that even though the company hit a rough patch that it has too much going for it not to be able to turn things around.
Our 24-month target for the stock is $2.50 – $2.75.
For more information, contact VELT’s Leslie Green at 415-315-3400; lgreen@velti.com
VICAL, INC. (NASDAQ: VICL) – $2.93. Twelve-month hi-low has been $4.74 – $2.61. Located in San Diego, CA, with about 115 employees, this biotech has 86.2 million shares outstanding, $77.82 million in current assets, $87.99 million in total assets, little debt, and $6.85 million in total liabilities. Institutional ownership is around 46%. Four analysts rate the stock a “strong buy” and one as a “buy”. www.vical.com
Lately, we have been on a little roll by chasing past dance partners, so we thought why not try it again with another successful previous pick like Vical, Inc. The company has a pretty healthy-looking balance sheet and seems to have more in the hopper than our first time around.
Founded in 1987, and public for nearly eighteen years, Vical researches and develops products based on its DNA delivery technologies. Its products include Allovectin, a Phase III clinical trial product to treat metastatic melanoma; CyMVectin prophylactic vaccine for cytomegalovirus (CMV), which completed preclinical trial to prevent infection before pregnancy to preclude fetal transmission; and therapeutic and prophylactic vaccines for herpes simplex type 2 virus, which are under preclinical trial to prevent and protect against recurring flare-ups, reduce viral shedding, and transmission.
Vical, through various collaborations, develops TransVax, which is in Phase III clinical trial to protect against CMV infection after stem cell transplants, as well as in Phase II clinical trial to protect against CMV infection after solid organ transplants; Collategene, an angiogenic therapy encoding hepatocyte growth factor that is in Phase III clinical trials to reduce local growth of blood vessels to restore blood flow to limbs affected by critical limb ischemia; Apex-IHN prophylactin vaccine for infectious hematopoietic necrosis virus, which is marketed for prevention of infection and disease in farm-raised salmon when exposed to infected wild salmon in Canada; and ONCEPT therapeutic cancer vaccine encoding human tyrosinase for the treatment to enhance survival time of dogs with oral melanoma; developing prophylactic and/or therapeutic HIV vaccine, a Phase IIb clinical trial product to prevent/treat infection, disease, and/or viral shedding; and Tetravalent dengue vaccine, a Phase I clinical trial product to prevent dengue disease caused by all four dengue serotypes.
Like many small biotechs, Vical has little revenue and mega losses. For example, during the quarter ending 3/30/13, revenue was $1.57 million with $9.28 million in losses.
To quote one analyst, “Vical has a deep bench and near-term catalysts”, which we think sums it up quite nicely.
Our 24-month target for the stock is $5.00 to $5.50.
For more information, contact VICL’s Alan Engbring at 858-646-1127; ir@vical.com
Look for the July 5, 2013 Newsletter to be posted on 7/1 or 7/2.
Thank you,
George