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Hello Readers,
Since the last Newsletter, we closed four positions; three for some okay gains and one for a loss.
GENVEC (10/5/06). Closed position 10/19/06 at $1.80 for a 62% GAIN.
ORCHARD CELLMARK (9/20/06). Closed position 10/19/06 at $3.38 for a 50% GAIN.
INFINITY PHARMA (10/5/05). Closed position 10/18/06 at $15.50 for a 20% GAIN.
VERTICALNET (4/5/05). Closed position 10/18/06 at 75¢ for a 88% LOSS. (price reflects reverse split)
As we said in the last Newsletter, we lucked out with GenVec, since shortly after posting it, the stock tore on news of its government pact to develop an HIV vaccine. Orchid Cellmark seems to have had a nice boost when it was awarded a U.K. scrapie plan genotyping contract extension. Remember, that GNVC and ORCH were not in the Current Portfolio for too long and they are the exceptions rather than the norm. There was not much point in keeping Infinity Pharmaceuticals in the Portfolio, since it is no longer in our price range; fortunately, this is on merger/reverse split that worked out. We finally threw in the towel on Verticalnet, which turned into one of the biggest disasters we have seen in a long time.
October was a great month for big caps and a lot of small caps. Our own Current Portfolio keeps looking better than it did only a few months ago, when the markets were in a year-long malaise. What’s next? The elections should determine the market movement for the short-term at least. Since the markets hate change, we’re thinking that a Democrat rout of Congress will put most investors in a negative mood.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
ImmunoGen (IMGN) (10/20/06). Slates earnings call for November 2, the day after we post this Newsletter. Signs license deal with sanofi-aventis.
HealthStream (HSTM) (10/20/06). Quarterly numbers look okay, but not quite what was expected; balance sheet still appears healthy.
Autobytel (ABTL) (10/5/06). Will hold earnings call on November 9.
Hydrogenics (HYGS) (9/20/06). Quarterly results due November 13.
TVI Corp (TVIN) (9/5/06). Stock gets a nice lift on news of a $2 million contract from the U.S. Army. Receives follow-on order from State of California. Receives major order from U.S. Air Force. Slates earnings call for November 2, the day after we post this Newsletter.
Tellular (WRLS) (8/2/06). Slates earnings call for November 2, again, the day after we post this Newsletter.
RiT Technologies (RITT) (8/5/06). Schedules earnings call for November 9.
Microvision (MVIS) (7/20/06). Launches mobile bar code scanning solution. Also sets earning call for November 2, the day after this Newsletter is posted.
Advanced Life Sciences (ADLS) (7/20/06). Will present at Rodman & Renshaw’s healthcare conference on November 6. Coverage initiated by Susquehanna Financial.
NTN Buzztime (NTN) (7/506). Receives non-compliance letter from the AMEX; the problem seems easy to fix.
Point Therapeutics (POTP) (7/5/06). Releases positive preclinical data for Talabostat in bone cancer.
BSQUARE (BSQR) (6/20/06). Sets earning call for November 9.
Spherix (SPEX) (6/20/06). Gets $6 million in contract dispute. Says Naturalose dosage test shows positive effect.
Curis (CRIS) (6/5/06). Earnings news slated for November 9. To present at investors conference on November 2, the day after we post this Newsletter.
ICAD (ICAD) (5/20/06). Since the stock pierced our 50% threshold as we were going “to print”, we’ll be closing this very soon. Stock seems to have had a nice boost from quarterly numbers showing good revenue growth.
02Diesel (OTD) (5/20/06). Stock probably slumped on news about ethanol and corrosive tanks, but this may not be a long-standing problem. Selects exclusive distributor for Asia Pacific and South Africa. To begin testing new ethanol-biodiesel blend with a Washington state transit system.
Kintera (KNTA) (5/5/06). Selected by Notre Dame to enhance online alumni experience. Earnings news set for November 9.
ThermoGenesis (KOOL) (4/5/06). Granted broad patent protection from European Patent Office for its BioArchive Cryopreservation and storage system. Starts scale-up of AutoXpress production to meet demand.
Cytogen (CYTO) (3/20/06). Sets earnings call for November 2, the day after this Newsletter is posted. Names new CFO.
Inventure Group (SNAK) (3/5/06). Quarterly report shows a modest profit; balance sheet still looks decent.
Adherex (ADH) (2/20/06). Enters into pact with “SIOPEL” for conduct of Phase 3 trial of STS, a drug candidate for hearing loss.
Gateway (GTW) (2/5/06). Numerous stories, one of the more notable is that GTW introduces FX530 series desktop PC. Also, some investors ask for changes in the boardroom.
MIND C.T.I. (MNDO) (2/5/06). Quarterly numbers look okay and balance sheet still looks good, but stock slips a little as CEO talks of a “transition”.
8×8 (EGHT) (1/20/06). Reports second highest revenue quarter ever; balance sheet still seems decent-looking.
Ceragon (CRNT) (1/5t/05). Stock gets a good boost as First Albany initiates coverage, probably because of a positive earnings report showing revenues and profits setting all-time records; balance sheet still appears healthy. To present at AeA financial confab on November 7.
Castelle (CSTL) (1/5/06). Quarterly results not bad, but no great; balance sheet still looks good. Launches fax products into mainland China. Named HP premier partner.
Digital Angel (DOC) (12/20/05). With all of the good news, lately, we don’t understand why the stock isn’t off the charts. Patents glucose-sensing microchip for diabetics, which is sort of big news. Sets earnings call for November 6.
Fusion Telecom (FSN) (12/5/05). Introduces its Efonica VoIP services in Jordan.
Memory Pharma (MEMY) (11/5/05). FDA puts drug study on hold, but stock doesn’t seem to be affected. To receive $2 million milestone from Roche.
Cognitronics (CGN) (10/20/05. Names new board chairman.
Westell (WSTL) (10/20/05). Quarterly numbers seem okay; balance sheet still appears to be very strong.
RAE Systems (RAE) (10/5/05). Sets earnings call for November 6. Makes Deloitte’s Fast 50. Names new CFO. Stock upgraded by CE Unterberg Towbin. Gets order from National Guard.
Nephros (NEP) (9/20/05). Will present at Paulson investor confab on November 6. Positive results from a multi-center study on NEP product.
EntreMed (ENMD) (9/5/05). To present at Rodman/Renshaw healthcare confab on November 6 and at the CIBC healthcare conference on the same day. Begins clinical trial on lung cancer drug.
N.A. Scientific (NASI) (8/5/05). To present at CIBC healthcare confab on November 8. Partners with ROS and Acceletronics to provide complete serial tomotherapy solution to oncology center.
Innodata (INOD) (7/5/05). Reports earnings on November 2, the day after we post this Newsletter.
Commerce Energy (EGR) (6/5/05). Posts good-looking quarterly profits on falling revenues; balance sheet still looks strong. Sees a 50% increase in year-over-year customer growth.
Vion Pharma (VION) (5/20/05). Presents initial data from a Phase II trial of Cloretazine for refactory small cell cancer.
B.O.S. (BOSC) (1/5/05). Shareholders approve equity financing.
Applied Micro Circuits (AMCC) (11/20/04). Tellab s names AMCC supplier of the year. Moves shareholders meeting to November 17. About half dozen releases on products.
Nova Measuring (NVMI) (11/5/04). Sets earnings release for November 6. Says Nanometrics suit is without merit.
Aviza Technology (AVZA) (10/5/04). Receives grant from Welsh Assembly government.
Chordiant (CHRD) (9/20/04). Launches platform for lending growth. To present at Susquehanna confab on November 1, the day we post this Newsletter.
Network Engines (NENG) (6/5/04). Earnings call sets for November 9.
Socket Communications (SCKT) (3/20/04). Quarterly numbers not great; even though balance sheet still appears to be viable, we’re placing this one on the “Endangered List”.
OpenTV (OPTV) (3/20/04). Earnings call set for November 6. Swiss company acquires voting control of company.
AVANT Immuno (AVAN) (12/5/03). Earnings call due November 1, the day we post this Newsletter.
Insmed (INSM) (11/5/03). Sues Tercica for false advertising. To present at upcoming conferences on November 6 and November 28. Earnings call November 3.
Monogram Biosciences (MGRM) (7/20/01). Although recent balance sheet still seems healthy, we’re placing this one on the “Endangered List”. We’ve waited long enough.
Our picks for this Newsletter are another biotech that trades on the AMEX, and a wireless equipment provider trading on the NASDAQ.
YM BIOSCIENCES, INC. (AMEX: YMI) – $3.00. Twelve-month hi-low has been $6.50 – $2.47. Located in Mississauga, Ontario, Canada, with about 15 employees, this biopharmaceutical has 55.8 million shares outstanding, $81.16 million in total current assets, $89.35 million in total assets, little debt, and $10.3 million in total liabilities. Institutional ownership is around 23%. Four analysts rate the stock a “strong buy” and two have it as a “moderate buy”. www.ymbiosciences.com
It is rare when we see a small biopharma with a very healthy-looking balance sheet combined with six analysts giving the stock some sort of a “buy” rating, and, so, we add YM BioSciences, Inc. to the Current Portfolio.
Founded in 1994 as York Medical, and public for about two years on the AMEX, YM BioSciences is a development company primarily focusing on advanced cancer products. The company itself does little basic research, rather its product portfolio is outsourced to research institutions around the globe. YMI claims to have one of the broadest oncology portfolios in North America. Its current products target solid tumors and its current clinical emphasis is on metastatic breast cancer, advanced prostate cancer, unresectable head and neck cancer, specific types of brain tumors, and cancer pain.
YMI currently has four different anti-cancer compounds in clinical development: Tesmilifene, which has completed a 305-patient Phase 3 clinical trial with positive results, is a small molecule drug that enhances the activity of a broad spectrum of chemotherapy agents. Nimotuzumab, which is in Phase 2 clinical trial, is a humanized monoclonal antibody used in treating epithelial cancers. AeroLEF is a proprietary formulation, administered by pulmonary inhalation, for treating acute pain. Norelin, in Phase 2 clinical trials, is a therapeutic vaccine for treating sex hormone dependent cancers. The company also has a portfolio of preclinical compounds that enhance the cytotoxic activities of chemotherapeutic drugs. YMI also has financial interests in two additional anti-cancer immunotherapies in pre-clinical development.
In-mid October, YMI announced some positive results of the AeroLEF Phase 2b open-label study. At the end of September, the company received clearance to import Nimotuzumab for clinical research in the U.S.
YMI BioSciences is pretty typical of the small biotech genre in that it has scant revenues and mega losses. For the FY ending 6/30/06, revenue was $2.27 million with $23.53 million in losses.
As we said above, with its product portfolio, healthy balance sheet, and all of those analysts behind it, YMI seems to be a decent bet.
Our 24-month target for the stock is $5.50 to $6.00.
For more information contact YMI at 905-629-9761; . ir@ymbiosciences.com
TERABEAM, INC. (NASDAQ: TRBM) – $2.45. Twelve-month hi-low has been $5.19 – $1.75. Based in San Jose, CA, with about 255 employees, this wireless equipment provider has 21.5 million shares outstanding, $31.99 million in total current assets, $65.51 million in total assets, little debt, and $19.72 million in total liabilities. Institutional ownership is around 5%. www.terabeam.com
When a company has a good-looking balance sheet, it is also nice to see recent deals that can add to the revenue numbers, as well, and, so, we add Terabeam, Inc. to the Current Portfolio.
Founded in 1982 as YDI Wireless and public since 2000, Terabeam, through its subsidiaries, provides high-speed wireless communications equipment and services. The two main subsidiaries are Proxim Wireless and Ricochet Networks. Proxim offers wireless local area network (WLAN) including Wi-Fi, primarily for indoor use; outdoor broadband wireless access, including proprietary point-to-multipoint, standards-based WiMAX, and Wi-Fi mesh; and point-to-point. Ricochet is a portable wireless internet service provider (WISP) with operational markets in Denver and Aurora, CO and San Diego. Claiming a large customer base and over 216 square miles of portable coverage, Ricochet boasts of being perhaps the largest WISP with a “mesh network” operating exclusively in a license-free frequency.
This company doesn’t seem to be standing still. During the last six weeks alone, Terabeam: was chosen by China Netcom Gansu for Proxim’s end-to-end wireless solutions to shorten deployment time of integrated voice and data; announced that Proxim is providing wireless access solutions for Chicago’s Crowley Yacht Yard; was ranked the 390th fastest growing company in North America on Deloitte’s 2006 Technology Fast 500 list; announced that Proxim’s WiMAX equipment was selected by Asia Pacific Telecom Group as the core service communications platform in Taiwan’s M-Taichung project; licensed Proxim’s WiMAX technology to CPqD to enable local manufacturing of WiMAX products so as to accelerate WiMAX deployments; announced that Proxim end-to-end solutions have been deployed in twelve New Mexico cities as part of that state’s wireless initiative; and appointed a new senior VP of sales for the Americas.
For FY2005, ending 12/31/05, revenue was $58.98 million with $11.16 million in losses. During the first six months of the current FY, ending 6/30/06, revenue has been $39.28 million with losses of $7.47 million. Revenue appears on pace to exceed last year, now, our hope is that TRBM can pare the losses.
Terabeam seems to have a lot going for it, and, as we said, it doesn’t seem to be standing still.
Our 24-month target for the stock is $4.50 to $5.00.
For more information, contact TRBM’s David Renauld at 413-584-1425.
Look for the November 20, 2006 Newsletter to be posted on 11/16 or 11/17.
Thank you,
George