01/15/2007
VOLUME 272
Companies featured in the current edition of the newsletter: ADSX, ARGA, CYTR, HYTM, IRBO, ISON, LANW, NTRN, OXIS, POIG, RTK, SCLL, SWTS, VOII
The bulls trampled all over Wall Street last week, with all of the indexes posting sizable gains, helped by plunging oil prices and a few positive earnings announcements. The Dow finished the week up 158 points, and is up 0.7% for the year. The Nasdaq surged 68 points, and is now ahead a sizable 3.6% in just the first two weeks of trading. The S&P was up four out of the five days last week and closed up 21 points increasing its year to date gain to 0.9%. The Russell 2000 finished the week up 18 points, and is up 0.8% for the year.
Another collapse in prices of crude oil set the stage again for a rally in stocks, as the price of a barrel of crude fell from $56.31 a barrel to $52.99. Reassuring comments from Federal Reserve officials also helped calm inflation fears There was not much news on the earnings front but a few companies did post solid results. Alcoa and Genetech both posted solid results.
What should investors look for in the upcoming week? While all U.S. markets will be closed Monday in honor of the Martin Luther King holiday, a busy week of earnings will more than make up for the shortened trading schedule. Tuesday morning, Wells Fargo (NYSE: WFC), US Bancorp (NYSE: USB), and Charles Schwab (Nasdaq: SCHW) post results. Intel (Nasdaq: INTC) will announce earnings after the market close on Tuesday along with Linear Technology (NASDAQ: LLTC). Wednesday will be extremely active for announcements with reports from AMR Corp (NYSE: AMR), ASML Holding (Nasdaq: ASML), JP Morgan Chase (NYSE: JPM), Freeport-McMoRan (NYSE: FCX), Progressive (NYSE: PGR), Lennar (NYSE: LEN), Parker Hannifin (NYSE: PH), Mellon Financial (NYSE: MEL), and Southwest Air (NYSE: LUV) before the bell. Apple (Nasdaq: AAPL), Kinder Morgan Partners (NYSE: KMP), and Washington Mutual (NYSE: WM) will announce earnings after the market closes that day. Thursday is also going to be an active day for announcements with reports from Bank of New York (NYSE: BK), BB&T Corp. (NYSE: BBT), Motorcycle manufacturer Harley Davidson (NYSE: HOG), Continental Airlines (NYSE: CAL), United Health (NYSE: UNH), PPG Industries (NYSE: PPG), Merrill Lynch (NYSE: MER), and Novartis AG (NYSE: NVS) all before the bell. After the close announcements include Capital One (NYSE: COF) and IBM (NYSE: IBM). Reports continue Friday morning with reports from SunTrust Banks (NYSE: STI), Schlumberger (NYSE: SLB), Regions Financial (NYSE: RF), Citigroup (NYSE: C), General Electric (NYSE: GE), Johnson Controls (NYSE: JCI), and Motorola (NYSE: MOT).
Next week will be extremely active on the economic front as well. There are no economic events scheduled for Monday. The New York Empire State Index, before the open, will be the single announcement for Tuesday. Wednesday will be highly active for economic announcements beginning with the December Core PPI announced before the market opens. November Net Foreign Purchases will be announced later that morning followed almost immediately by the announcements of December Industrial Production and December Capacity Utilization. Weekly Crude Inventories will be announced mid-morning Wednesday. Investors will likely pay special attention to the release of the Fed’s Beige Book shortly before the market closes Wednesday afternoon. Thursday’s announcements include the December Core CPI, December Housing Starts and Building Permits, and the Weekly Initial Unemployment Claims before the bell. December Leading Indicators will be announced mid-morning and the January Philadelphia Fed Index will be announced at noon. The only economic announcement scheduled for Friday is the January Preliminary Michigan Sentiment Index. Some of the key economic events include San Francisco Fed President Yellen speaking on the economy in Arizona Wednesday, as well as St. Louis Fed President Poole speaking on GSE’s. Cleveland Fed President Pianalto is scheduled to speak on the economy in Dayton on Friday and Fed chief Bernanke will address the Senate Budget Committee in Washington, D.C.
The conference schedule for next week will be relatively tame. The three-day Goldman Sachs 2007 Energy Conference in New York, as well as the 2007 North American International Auto Show Conference in Detroit, begins Tuesday. The two-day New York Stock Exchange and Prudential Equity Group’s Growth Conference in New York begins Wednesday. Deutsche Bank Securities 2007 Real Estate Outlook Conference will take place on Thursday in New York.
New 52-week high: Shares of Hythiam, Inc. (NASDAQ: HYTM), a healthcare services management company that licenses the PROMETA™ physiological protocols designed to treat substance dependence, surged 12.2% on strong volume last week, and in the process the company established a new all-time high. Hythiam said last week that a commercial evaluation of the PROMETA protocols by HealthNow New York Inc., a parent company of BlueCross BlueShield of Western New York and BlueShield of Northeastern New York, will be conducted as a central component for substance dependence disease management. The study includes 50 patients who will receive the PROMETA protocols for alcoholism, stimulants, and poly-addiction to alcohol and stimulants. Outcomes of the program will be measured at 90 days with additional follow-up extending through 6 months. Results that will be evaluated in the pilot include the ability to rapidly transition individuals back to their families and employers by converting their care to an out-patient treatment modality. The pilot will take place in the chemical dependency unit of TLC Health Network. The TLC Health Network is a HealthNow care provider. HealthNow has a total membership of over 720,000 patients. HealthNow said it would reimburse for the protocols after 90 days if the outcomes are successful. Hythiam previously announced that Horizon Blue Cross Blue Shield of New Jersey will conduct a commercial evaluation of the PROMETA protocols. Horizon BCBSNJ has a total membership in excess of 3.2 million The stock ended the week up $1.11 at $10.21.
Volume Alert: Shares of Applied Digital (NASDAQ: ADSX), a leading provider of identification and security technology, surged 12% on Friday on three times average volume, closing at its highest level in more than one month. The company said last week that its VeriChip Corporation subsidiary had been granted a patent by the U.S. Patent and Trademark Office for its portable RFID asset location system. The RFID tagging technology is combined with a portable receiver used to track the location of assets within a fixed setting. The asset location system utilizes portable receivers to collect RFID messages instead of relying on a network of fixed systems. This allows the system to identify the unique ID of the asset as well as its room location. The patent was issued as No. #7,116,230. The stock ended the week up 28 cents at $2.14.
Volume Alert: Shares of CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical company focused on developing products primarily in the area of small molecules and ribonucleic acid interference (RNAi), surged 13% on Friday on more than two times average volume, and in the process established a new 52-week high and closed at their highest level since late 2003 as enthusiasm continues to increase for its RNAi business. Last week, CytRx along with a team of experts in RNAi, including Nobel Prize winner Craig C. Mello, created majority-owned subsidiary, RXi. In forming its subsidiary, CytRx assembled a team of some of the top scientists in the field, two of which come from Howard Hughes Medical Institute. Howard Hughes Medical Center is known for its cutting edge research into medical technology. Aside from being a Nobel Prize winner for his role in co-discovering RNAi, Craig C. Mello is an investigator for the institute. CytRx will maintain an 85 percent stake in the venture, while its scientific advisory team holds the remainder. RXi announced last week that it had entered into significant new agreements with the University of Massachusetts Medical School to license RNA interference intellectual property for all therapeutic applications. The agreements include a restricted therapeutic license with rights to sublicense for nanotransporters. Nanotransporters have been shown to deliver intact RNAi to a number of tissues in animal models. These licenses are contingent upon RXi’s receipt of working capital funding in the upcoming months. The financial terms were not disclosed for competitive reasons. The stock closed the week at $2.45 up 65 cents on strong volume.
Medicine Bow Fuel & Power LLC. recently announced the entrance into a long-term contract to sell 100% of the ultra-low-sulfur diesel fuel from its planned coal-to-liquids (CTL) facility in Medicine Bow, Wyoming, to Sinclair Oil Corporation. Sinclair will in turn market the fuel in the Rocky Mountain region. During the latter stages of the process, the synthetic gas will be liquefied using Fischer- Tropsch technology licensed from Rentech Inc. (AMEX: RTK), a developer of alternative energy sources. The facility will use an indirect liquefaction process to convert coal resources into refined products that meet significant energy needs and at the same time reduces the environmental complications associated with coal combustion. The CTL facility will utilize certain coal gasification technology to produce synthetic gas. The synthetic gas will be cycled through a cleaning process so that all of the sulfur and carbon dioxide is removed. This process is designed to reduce greenhouse gas emissions and other environmental impacts associated with the traditional use of coal as a boiler fuel. Rentech’s stock ended the week up 8 cents at $3.74.
Isonics Corporation (NASDAQ: ISON), the developer of innovative solutions for the homeland security and semiconductor markets, announced last week that the company received a staff determination letter from the Nasdaq Stock Market Listings Qualification Department notifying the company that its common stock is not in compliance with the $1.00 per share minimum bid price requirement for continued inclusion under Nasdaq Marketplace Rule 4310(c)(4) and is subject to delisting from the Nasdaq Capital Market. The company is entitled to request a hearing, prior to January 17, 2007, with a Nasdaq Listings Qualification Panel to attempt to obtain an additional period to regain compliance with the Nasdaq listing requirements and will do so. Isonics expects to present alternative plans for regaining compliance with the Nasdaq listing requirements. Note that the company’s shareholders have already approved a reverse stock split, which would allow the company to immediately regain compliance and maintain its Nasdaq listing. Shares ended the week at $0.72, up $0.04.
Biotechnology company ImmuneRegen BioSciences, Inc., a wholly owned subsidiary of IR BioSciences Holdings, Inc. (OTCBB: IRBO), recently announced the results from tests conducted using the company’s proprietary compound Viprovex™ in a severe influenza treatment study. Virion Systems, Inc., a Maryland biotechnology corporation, conducted the tests evaluating ImmuneRegen’s Viprovex™ as a measure in the possible treatment of influenza virus infection. The studies were performed using a cotton rat model system with the influenza A/Wuhan/359/95 (H3N2). This model is a strong, peer-reviewed model system for studying human influenza. The company is confident that this preliminary test data suggests that Viprovex could have positive effects in the treatment of influenza with the possibilities in the enhancement of innate immunity to influenza. Additional studies are presently underway in this and other influenza model systems to confirm and expand these results. Shares ended the week down 3 cents at $0.14.
Neutron Enterprises, Inc. (OTCBB: NTRN), a developer of digital media solutions, announced that the company completed the acquisition of Stock-Trak, Inc. Stock-Trak, Inc. is a leading provider of stock portfolio simulations for the educational and corporate markets. The previously announced acquisition is expected to boost the company’s earnings in the first year. Stock-Trak’s main site, stocktrak.com, provides educational stock market simulation services to over 800 college professors and over 50,000 students worldwide and its network of branded sites is used by over 100,000 middle and high school students each year. Neutron previously announced that it was working with Stock-Trak to develop a fantasy stock market competition. The acquisition is expected to accelerate the development of Neutron’s new fantasy stock-market competition. As a part of the competition, contestants will demonstrate their stock-picking skills by selecting and managing a portfolio of stocks and competing for significant cash prizes. The stock ended the week up a dime at $2.16.
Language Access Network (OTC: LANW), a leader in video language interpretation services, announced that the company will not proceed with its offer to acquire privately-held Healinc Telecom, LLC. Last week, the company said that after a long and detailed due diligence process, acquiring Healinc Telecom, LLC., was not in the best interest of the company and its shareholders. The company also announced that its video interpretation service, known as Martti™, is now available for use at three pharmacy locations in Central Ohio. The Martti™ service is free to customers and will allow Kroger’s pharmacies and their non-English speaking customers to connect to live interpreters in over 150 languages, including American Sign Language, Arabic, Japanese, Russian, Somali and Spanish. Shares ended the week at $3.00, down $0.30.
In a letter issued to stockholders last week, junior energy company Petrol Oil and Gas, Inc. (OTCBB: POIG), provided an update on recent corporate activities. The letter described Petrol’s progress in positioning itself for significant growth in 2007 and future years. The letter also discussed the company’s primary near-term goal as substantially increasing gas production from its Neodesha and Coal Creek properties in Kansas. Coal Creek, in particular, provides the key to the company’s growth. POIG has had delays in production from the location due to the need to de-water certain wells. Company revenue rose by a respectable 13% last year to approximately $6.8 million and many of the implemented initiatives were designed to build an oil and gas infrastructure capable of generating stable and growing production for the future. The stock ended the week up $0.02 at $0.52.
Cell biology company Stem Cell Innovations (OTCBB: SCLL), announced the issuance of an important patent last week covering human pluripotent stem cells in the United States. SCLL is currently developing PluriCells™, which represent a form of new human stem cell technology obtained from primordial germ cells of fetal tissue. PluriCells are different from embryonic stem cells and are believed to be outside the competitive patents on human embryonic stem cells. Primordial germ cells are one of only two types of cells known to be able to differentiate into more than 200 cell types found in the human body. Stem cell cultures produced from these cells show remarkable promise in advancing drug discovery and cell-based therapies for problems such as neurodegenerative disease. Stem Cell Innovations also recently announced a drug discovery program with the ALS Association. The stock ended the week up 5 cents at $0.19.
Sweet Success Enterprises, Inc. (OTCBB: SWTS), which has re-launched a product line made popular by Nestlé’s to tap into the rapidly growing demand for convenient and nutritious beverages, announced that the company has recently entered into an agreement with Kehe Food Distributors. Under the agreement, Kehe Food Distributors will carry the full line of available Sweet Success Fuel for Health™ beverages. Kehe is a leading natural and specialty foods distributor that services over 12,000 specialty food stores and supermarkets in 35 states. Kehe has already ordered Sweet Success products for their anticipated product placement in Texas-based food retailers. The company also recently announced the formation of a strategic alliance with Integrity Nutraceuticals International. This union will allow Sweet Success to utilize a variety of scientific research that shows the safety and effectiveness of Cinnulin PF®. Cinnulin PF® is the key ingredient in the company’s diabetic friendly beverage GlucaSafe™. Research suggests Cinnulin PF aids in maintaining healthy blood glucose, body composition, blood pressure and antioxidant function. The stock ended the week down $0.02 at $0.65.
It was certainly a volatile week for shareholders of VoIP, Inc. (OTCBB: VOII), a leading provider of Voice over Internet Protocol (VoIP) communications solutions for service providers, resellers and consumers. The company said early in the week that Google Mobile had expanded the use of Click-to-Call technology into China, as well as eight additional international markets using VoIP, Inc.’s network. Users who utilize Google for mobile searches in China now have the ability to call directly from their cell phones to an advertiser identified through Google’s mobile search capability. VoIP’s network is also being used by Google in the United States, United Kingdom, Germany and Japan, and recently expanded into France, Italy, the Netherlands, Spain, China, Ireland, India and Australia. VoIP receives an undisclosed fee each time it connects a call between the consumer and advertiser. This recent announcement of Google using the VoIP network in China follows the launch of Google Maps, which also uses VoIP’s technology. Shortly thereafter, the company said in a regulatory filing that it was in default under an agreement with one if its lenders. Just one day later, the lender granted the company a waiver. Still, the news unnerved investors, causing the stock to end the week at $0.24, down 5 cents.
On the Wires: Applied Digital (NASDAQ: ADSX), announced that the company had appointed Allison F. Tomek as Vice President of Investor Relations and Corporate Communications. Ms. Tomek brings nine years of investor and media experience with small and mid-cap companies to the newly created position where she will act as the primary liaison to the investment community and media. Additional duties include Ms. Tomek supporting similar programs at Digital Angel Corporation and VeriChip Corporation. Isonics Corporation (NASDAQ: ISON), a developer of innovative solutions for the homeland security and semiconductor markets, announced last week that Dr. Patrick Taylor been appointed as the Director of Quality Assurance for the semiconductor division. Dr. Taylor received his Ph.D. in silicon surface chemistry from the University of Pittsburgh. Dr. Taylor worked as manager of quality assurance, lead scientist, and director of analytical services operation for12 years at SUMCO and was hired by Isonics to support the significant growth that the semiconductor division has experienced over the past year. Auriga Laboratories, Inc. (OTCBB: ARGA) announced last week that company has appointed Jae Yu as its Vice President of Finance. With13-plus years of financial and accounting experience, including Sarbanes-Oxley compliance and capital markets expertise, Mr. Yu joins Auriga from Youbet.com, Inc. where he was Principal Accounting Officer and Corporate Controller.
SPECIAL SITUATIONS:
OXIS International (OTCBB: OXIS) $0.22
Biomarkers are the wave of the future in personalized medicine and the market for biomarkers in the use of individual patient therapies is growing rapidly. So what exactly is a biomarker? A Biomarker is a substance that is used as an indicator of a biologic state and can be any kind of molecule that indicates the existence of living organisms. These anatomic, physiologic, biochemical or molecular parameters that are associated with the presence and severity of specific diseases and illnesses can represent a number of different substances. Medical Biomarkers can be substances that are already present or are introduced in an organism in order to examine organ function and health. Biological Biomarkers can be used in the detection of disease states and can also be used for the detection and isolation of particular cell types. What this innovative technology represents is a much smoother combination of diagnostics and therapeutics.
OXIS International, Inc. is a company that specializes in biomarker technologies. The company is involved in the development of technologies and products to research, diagnose, treat and prevent diseases of oxidative stress/inflammation. The company is the premier source for state of the art research products in the field of Oxidative Stress/Inflammation biomarkers. The company’s lead products are the Bioxytech® assay kits that are at the source of the OxisResearch® product line. These kits offer a way to simplify testing of Oxidative, Antioxidant, Nitrosative and Inflammatory biomarkers thought to play a central role in many human diseases including Cancer, Diabetes, Atherosclerosis, Stroke, Alzheimer’s, MS and ALS. Currently, the company has focused its commercialization efforts on programs in clinical cardiovascular markers and holds the rights to three therapeutic classes of compounds in the area of oxidative stress that include Lipid Soluble Antioxidants, GPx (glutathione peroxidase) mimics, and a highly potent antioxidant, Ergothioneine, that may be sold over-the-counter as a dietary supplement.
Imagine clinical trials and studies that no longer rely on data gathered through endpoints and a reduction time and cost of Phase I and II clinical studies. The use of biomarkers has been shown to increase the efficiency and reduce the risks of the drug development process. The new trial designs and clear guidelines for using efficacy and safety biomarkers in product development will increase the pace and reduce the cost of developing safe and effective medical products; this is expected to produce the most profitable segment of the market for companies in this industry. What does this change mean for Oxis? Worldwide, the market for biomarkers in clinical trials is expected to jump from revenues of $427 million in 2006 to more than $1 billion in 2010. In the near future, a person may want to undergo a yearly Oxis blood biomarker assessment. Any change in this oxidative index may raise a flag for a personalized medical assessment with his doctor to potentially prevent onset of cancer, stroke, heart attack, etc.
OXIS has also acquired a 51% interest in, with the option to purchase the remaining 49%, of BioCheck, Inc. BioCheck. is a company that provides high quality enzyme immunoassay research services and products including immunoassay kits for cardiac and tumor markers, infectious diseases, thyroid function, steroids, and fertility hormones. The company operates a 15,000 square-foot, U.S. Food and Drug Administration certified cGMP, and ISO device-manufacturing facility near San Francisco, California and has advanced developmental programs on two innovative cancer biomarkers, related to the Id-gene, and the HMGA2 gene. Id proteins play a significant role in the process of tumor related angiogenesis and other functions related to blood vessel formation. The HMGA2 gene has been implicated in aggressive forms of breast cancer.
The company is headed by a highly experienced executive management team that includes medical doctors and accomplished business directors with backgrounds in pharmaceutical, research and technology companies. Marvin S. Hausman, MD is the company’s Chairman, President and CEO. Dr Hausman has over 30 years of experience in the field drug development and clinical care with various pharmaceutical companies, including working in conjunction with Bristol-Myers International, Mead-Johnson Pharmaceutical Co., and E.R. Squibb. Dr. Hausman was a co-founder of Medco Research Inc, a NYSE-traded biopharmaceutical company that was acquired by King Pharmaceuticals Inc. He later founded Axonyx Inc, an Alzheimer’s disease company that in October 2006 merged with Torrey Pines Pharmaceuticals.
Recent events highlight the potential for the company’s technology. Perhaps Pfizer’s highly publicized recent failure with its heart drug Torcetrapib could have been prevented if it had a way of screening treated patients for levels of oxidized HDL. Using immunoassay technology like OXIS’s, it may have been able to target specific responsive HDL subsets of patients with atherosclerotic disease who would have better outcomes with its drug Torcetrapib. However, despite the company’s biomarkers having the potential to become standards of practice in predicting certain myocardial events as well as early diagnosing cancer, the company has a market capitalization of just approximately $10 million. With a proven management team and explosive opportunities for its more than 80 biomarker assays and/or kits, OXIS represents an intriguing opportunity for speculative investors.
