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Hello Readers,
Since the last Newsletter, we closed two more positions, one for a gain and another for a loss.
BIOCLINICA (8/5/09). Closed position 3/23/11 at $5.57 for a 55% GAIN.
CATALYST PHARMACEUTICAL (12/20/07). Closed position 3/23/11 at $1.12 for a 63% LOSS.
For the last several months, BioClinica woke up from its slumber, and, finally, pierced our 50%-plus threshold on no real dramatic news. And, sadly, we closed Catalyst for a disappointing loss.
For the moment, nothing seems to knock this market down. Not higher oil prices or the spread of violence in the Middle East nor a natural/nuclear disaster in Japan. What can trip up this market? Rising interest rates, which could happen if the Fed really puts the brakes on its quantitative easing, aka the printing of funny money. The current gossip has it occurring in June and that may mean a bumpy April and May while the markets digest and then reallocate funds.
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 providing updates about companies on the “Endangered List” unless we feel the news to be highly significant.
Jamba (JMBA)(3/20/11). Debuts nutritious fruit and veggie smoothie line.
Inhibitex (INHX)(3/5/11). Reports positive safety and antiviral data from its Phase 1b study of HCV Nucleotide Inhibitor INX-189. Note: this has crossed our 50%+ threshold and we will soon be closing the position.
Network Engines (NEI)(2/5/11). Awarded U.S. patent for “digital fingerprinting” software to update physical, virtual, and cloud application platforms. Mavenir selects NEI’s AdvancedTCA platform and deployment services for converged solutions.
Sprint Nextel (S)(1/5/11). The usual several dozen news items. Until a few weeks ago, the stock had been doing nicely and seemed poised for a breakout, and, then, came news of the AT&T/T-Mobile deal and the stock took a tumble. It has recouped, somewhat, as many begin to realize that the proposed merger may take a few years, if it happens at all.
SuperGen (SUPG)(12/5/10). To webcast annual investor and analyst day on April 12.
Inovio Pharmaceuticals (INO)(10/20/10). To present at two scientific conferences during the first half of April. Balance sheet still looks pretty good. Receives U.S. DOD Small Business Innovation Research grant for multi-vaccine DNA delivery device development.
Blue Phoenix Solutions (BPHX)(10/20/10). Wins a modernization contract for $840,000 with a leading European financial company.
Banner Corp (BANR)(8/5/10). Declares one cent quarterly dividend; sets earnings call for April 27.
Rexahn Pharmaceuticals (RNN)(7/20/10). To present at cancer conference on April 4. Closes $10 million secondary offering, which causes stock to tank. Enrolls 100 patients in Serdaxin Phase IIb clinical trial for depression.
American Caresource (ANCI)(4/20/10). Latest numbers not great, but not that bad; balance sheet still looks good. Self Funding Administrators Corp. joins ANCI’s client portfolio. Contracts with national TPA to lower healthcare costs.
China Direct Industries (CDII)(4/5/10). Completes delivery of initial iron ore shipment from Mexico to China for a major European trading company. China Investing upgrades CDII to the China Dragon Undervalued Index.
Novavax (NVAX)(4/5/10). Balance sheet still looks pretty good.
Cytokinetics (CYTK)(2/5/10). To present at the annual Needham Life Sciences Conference on April 5.
NIVS IntelliMedia (NIV)(1/20/10). Company’s auditor reports certain “issues” that spark a half-dozen shareholder lawsuits.
CytRx Corp (CYTR)(1/5/10). Begins Phase 1b clinical trial with INNO-206 in patients with advanced solid tumors.
BioSante Pharmaceuticals (BPAX)(9/20/09). Completes enrollment in both pivotal LibiGel Phase III efficacy trials. Balance sheet still looks healthy. Schedules presentations for June, August, and November.
Performance Technologies (PTIX)(7/20/09). Latest quarterly results “disappointing” according to management, but they see a rosier 2011; balance sheet still looks good.
USA Technologies (USAT)(6/5/09). Raises $10.7 million in private placement. We are removing this from the “Endangered List” since stock has recovered from what appeared to be near-death.
Bridgeline Digital (BLIN)(6/5/08). iAPPS Product Suite selected to power website for world’s leading chemical information agency.
Linktone (LTON)(11/5/07). Unaudited year-end result look pretty good; balance sheet still appears to be very strong.
Our picks for this Newsletter are another biotech and a medical device maker, both trade on NASDAQ.
VICAL, INC. (NASDAQ: VICL) – $2.95. Twelve-month hi-low has been $4.12 – $1.70. Based in San Diego, CA, with about 110 employees, this biotech has 71.7 million shares outstanding, $56.2 million in total current assets, $72.9 million in total assets, little debt, and $8.55 million in total liabilities. Institutional ownership is around 56%. Three analysts give the stock a “strong buy” and two have it as a “hold”. www.vical.com
Over the last 15 years, we have recommended nearly 720 stocks, so, periodically, we will walk the same road twice; as we first did with Vical, Inc. several years back, and it worked at the time. Now, their balance sheet appears even better as does their pipeline of drug candidates.
Founded in in 1987, and public for about eighteen years, Vical develops biopharmaceutical products based on its DNA delivery technologies for preventing and treating serious or life-threatening diseases. Its products include Allovectin-7 immunotherapeutic, a Phase III clinical trial product to treat metastatic melanoma; TransVax, a Phase III clinical trial product to prevent viral reactivation and disease after transplant; Prophylactic vaccine for H5N1 pandemic influenza virus , which completed Phase I clinical trial to protect against infection, disease and/or shedding; CyMVectin prophylactic vaccine for cytomegalovirus, which is under preclinical trial to prevent infection before and during pregnancy; and Therapeutic vaccine for herpes simplex type 2 virus, which is under research to prevent recurring flare-ups.
Vical, through corporate collaborations, is also developing Collategene angiogenic therapy encoding Hepatocyte Growth Factor, Temusi angiogenic therapy encoding Fibroblast Growth Factor 1, and Angiogenic therapy encoding Hepatocyte Growth Factor to induce local growth of blood vessels to restore blood flow to limbs and heart affected by ischemia; Therapeutic vaccine encoding human telomerase reverse transcriptase to treat non-small cell lung, prostate cancer, melanoma, or carcinomas of the upper GI tract, colon, kidney, or bladder; Prophylactic and/or therapeutic hepatitis C vaccine to protect farm-raised salmon from infection; and ONCEPT therapeutic cancer vaccine encoding human tyrosinase for treating the survival time of dogs with oral melanoma.
In early March, Vical received positive scientific advice from the European Medicines Agency (EMA) for the TransVax Phase 3 trial. At the end of February, the company extended its collaboration with the U.S. government for emerging disease vaccines.
Vical is typical of many small biotechs in that its losses greatly outpaces its revenues. For FY2010, ending 12/31/10, revenue was $8.71 million with $30.38 million in losses.
There seems to be a lot in Vical’s hopper and the company has a nice chunk of money to help it get where it wants to go.
Our 24-month target for the stock is $5.00 to $5.50.
For more information, contact VICL’s Jill Broadfoot at 858-646-1127.
THERMOGENESIS CORPORATION (NASDAQ: KOOL) – $2.10. Twelve-month hi-low has been $3.95 – 48 cents. Based in Rancho Cordova, CA, with about 75 employees, this medical device maker has 14.1 million shares outstanding, $21.33 million in total current assets, $22.93 million in total assets, little debt, and $5.1 million in total liabilities. Institutional ownership is around 15%. www.thermogenesis.com
Sometimes, we find a company with unique technologies and that appears to be on the verge of a breakout. That may be the case with ThermoGenesis Corporation, which also has a half-decent balance sheet. Not included in the above numbers is a recent secondary offering.
Found in 1986, and public since 1987, ThermoGenesis offer automated and semi-automated devices, and single-use processing disposables that enable the collection, processing, and cryopreservation of stem cells other cellular tissues from cord blood and bone marrow used in regenerative medicine, which is a field that aims to repair or restore lost or damaged tissue and cell function using cell-based therapies. The company offers AXP AutoXpress Platform for processing cord blood; and BioArchive System, an automated cryogenic device used by cord blood banks for the cryopreservation and archiving of cord blood stem cell units for transplant. Its offerings also comprise MXP MarrowXpress, which is used for isolating stem cells from bone marrow, and the Res-Q 60 BMC, a point-of-care marrow stem cell processing system. In addition, ThermoGenesis markets the Thermoline product line, which includes the ultra-rapid plasma Thermoline Freezer and Thermoline Thawer.
In early February, ThermoGenesis announced an agreement for AXP and BioArchive cord blood systems with Beike Biotechnology Co., a leading stem cell and regenerative medicine company in China. This is one of 37 countries to which the company sells its products and its customers include private and public cord blood banks, surgeons, hospitals, and research institutions.
For the FY ending 6/30/10, revenue was $23.08 million with $5.19 million in losses compared to the previous FY revenues of $19.79 million and $8.55 million in losses. During the first six months of the current FY, ending 12/31/10, revenue has been $12.85 million with $554,000 in losses.
The company has been steadily growing for the last two-plus years, and with the latest China deal, it could grow even faster.
Our 24-month target for the stock is $4.00 to $4.25.
For more information, call KOOL at 916-858-5100.
Look for the April 20, 2011 Newsletter to be posted on 4/18 or 4/19.
Thank you,
George