Companies featured in this edition of the newsletter: ACTC, ENZ, NWCI, OMCM, ONBI, PHC, XSNX
Markets continued to display strength early on during this holiday shortened week, only to be led lower on Friday by concerns stemming from the announcement that the UAE was attempting to restructure debt with potentially adverse effects on lenders, chiefly, European banks. All told, the Dow finished marginally in negative territory, losing 0.1% on the week, surrendering 8 points to close at 10309, up 17.5% on the year. The Nasdaq performed slightly worse, losing 0.4% to close at 2138, while the S&P 500 finished the week flat and the Russell 2000 lost 1.3% to put their yearly gains at 20.8% and 15.6% respectively.
Stronger than expected Existing Home Sales reported on Monday helped indices climb to their highest levels of the week, as sales in October rose 10.1% to 6.1 million homes, handily beating forecasts for 5.7 million, on the strength of incentives created by the first-time buyers tax credit. Markets held Monday’s gains in two quiet sessions leading up to the Thanksgiving break, but as investors returned to action on Friday, they were greeted by news that European and Asian markets had reacted badly to the announcement of debt restructuring plans by the UAE, which ultimately led markets into negative territory on the week.
With US markets closed on Thursday, their Asian and European counterparts plunged on concerns about the potential effects of restructuring up to $20 billion in UAE debt coming due in the next 18 months. As many European banks are among those with the most exposure to the loans, markets reacted badly, with the FTSE declining over 3% on Thursday despite rebounding on Friday.
What should investors look for this week? Earnings reports will be light, but expect results from retailer Aeropostale (NYSE: ARO) on Wednesday after the close, followed on Thursday pre-market by home builder Toll Brothers (NYSE: TOL), with software developer Novell (NASDAQ: NOVL) reporting after the close that same day.
Economic releases for the week begin on Monday with the Chicago PMI due out at 9:45am. On Tuesday morning, look for Construction Spending and Pending Home Sales for October along with the ISM Index for November at 10:00am, followed by Truck and Auto Sales for November at 2:00pm. Challenger Job Cuts for November will be released on Wednesday morning at 7:30am, followed by ADP Employment for November at 8:15am, weekly crude inventories at 10:30am, and the Fed Beige Book for November at 2:00pm. On Thursday, weekly initial jobless claims and continuing claims will be released at 8:30am along with Revised Q3 Productivity and Q3 Employment Cost Index, followed at 10:30am by ISM Services for November. The week wraps up with Nonfarm Payrolls, the Unemployment Rate, Average Workweek and Hourly Earnings, all for November, due out at 8:30am, followed at 10:00am by Factory Orders for October.
Conference schedules pick up following the holiday; Piper Jaffray hosts their two-day Healthcare Conference in New York beginning on Tuesday along with the Citigroup Global Markets Basic Materials Conference. On Wednesday, the Jeffries Energy Summit begins in New York along with the Morgan Stanley Transportation Corporate Access Day, JP Morgan SMid Cap Conference, and two-day Bank of America and Merrill Lynch Credit Conference. Advanced Cell Technology (OTCBB: ACTC), ImmunoCellular Therapeutics (OTCBB: IMUC) and NewCardio (OTCBB: NWCI) present Thursday at the LD Micro Conference in Los Angeles, which brings together 75 presenting companies with over 100 institutions focused on investing in small and micro cap companies across a breadth of industries. Credit Suisse Group hosts its Technology Conference in Phoenix on Thursday.
Pioneer Behavioral Health (AMEX: PHC), a provider of inpatient and outpatient behavioral health services, announced last week that it has been awarded a contract renewal from the Detroit-Wayne County Community Mental Health Agency representing total commitments in excess of $10 million if all option years are exercised. PHC was the incumbent bidder for the contract, having serviced the residents of Wayne County for over five years prior to being awarded the new multi-year contract, which began on May 1, 2009. Under the terms of the contract, PHC will provide Access and Eligibility Services, Crisis Intervention, and Information and Referral, including an array of services delivered via Call Center operations and electronic review of records, change of level of services, credentialing and related behavioral services designed to help residents of Wayne County make informed behavioral health choices. Shares lost sixteen cents on the week to close at $1.00.
OmniComm Systems, Inc. (OTCBB: OMCM), a leader in integrated electronic data capture solutions for clinical trials, announced last week that its TrialMaster EDC solution has been chosen by Beardsworth, a full service contract research organization, to assist in a Phase II vaccine study that will enroll approximately 340 patients at ten sites over the course of three years. OmniComm and Beardsworth plan electronic imports of data to TrialMaster utilizing OmniComm’s native template matching subsystem. Electronic exports from TrialMaster EDC to Beardsworth’s BNet portal will be achieved utilizing OmniComm’s new RESTful Web Services, Application Programming Interface (API). This API technology, developed using a RESTful Web Services architecture, leverages CDISC standards and allows for easy integration with external data sources like BNet. The agreement adds Beardsworth to the list of clients participating in OMCM’s already successful CRO preferred program. Shares remained unchanged at $0.20 on the week
One Bio (OTCBB: ONBI), a company utilizing green process manufacturing to produce raw chemicals and herbal extracts, natural and health supplements and organic products, announced last week that its subsidiary, Green Planet Bioengineering, has entered into a distribution agreement with The Chinese Society of Traditional Chinese Medicine, under which, the Society has agreed to include ONBI’s recently launched over-the-counter natural and health supplements and beauty products to its network, distributing traditional and herbal medicine products throughout China, the US and European markets. Management expects to see improved sales of over-the-counter natural and health supplements as a result of the Society’s 30,000 points of sale in China and 3,000 in the United States; the agreement marks a key step in the company’s aggressive distribution strategy. Shares lost 40 cents on the week to close at $6.10.
XsunX (OTCBB: XSNX), a developer of advanced, thin-film photovoltaic (TFPV) solar cell technologies and manufacturing processes, announced last week that its Chief Technology Officer, Robert Wendt, has been invited to address over 300 senior thin-film experts at the second annual Thin-film Solar Summit in San Francisco, CA on December 1. Mr. Wendt will be part of a panel discussion on thin-film breakthrough technology along with several industry leading scientists, and will discuss the latest in cell and module innovation from a technical perspective, specifically advancements in high-rate single cell deposition of CIGS layers. The Thin-film Solar Summit U.S. attracts highly respected solar industry professionals including manufacturers, investors, engineers, scientists, project developers, researchers and key service providers looking to push the thin-film industry forward. Shares gained just over a penny on the week to close at $0.175.
On the Wires: Vertically integrated biotechnology company Enzo Biochem (NYSE: ENZ), announced last week that its Board of Directors has approved the termination of Shahram K. Rabbani’s as the company’s Secretary and Treasurer; Mr. Rabbani will continue to serve as a Director of the company. The board has appointed Dr. Elazar Rabbani to serve as Secretary and Barry W. Weiner to serve as Treasurer, effective immediately. Dr. Rabbani currently serves as the company’s Chairman of the Board and Chief Executive Officer and Mr. Weiner currently serves as the President, Chief Financial Officer, Principal Accounting Officer and as a member of the Board of Directors.
SPECIAL SITUATIONS:
NewCardio, Inc. (OTCBB: NWCI) $0.70
With all the attention surrounding health care reform and generally improved medical practices of late, companies with products that can facilitate more efficient patient care have been receiving increased attention from investors. NewCardio is a company seeking to incorporate novel, state-of-the-art technology to improve the diagnostic accuracy and precision of the analysis of signals from electrocardiograms (ECGs) in order to better diagnose heart conditions. The company’s focus on improving one of the most commonly employed medical diagnostic tests in use today presents investors with an opportunity to consider a company engaged in serving an extremely robust market at a time when improving efficiencies within the health care space is at the forefront of public policy initiatives.
What makes NewCardio’s technology unique is that it takes the standard 12 lead ECG input performed over 250 million times annually in the developed world, and displays the signals in a three dimensional output, providing significantly increased sensitivity, accuracy and precision to the potentially lifesaving diagnostic tool. In addition to providing for a more thorough, accurate diagnosis of potential heart conditions, it allows for the capability to automate what has historically been a more costly and labor intensive process. In order to more fully capitalize on the multibillion dollar a year potential market, the company is currently developing three unique solutions addressing distinct and rapidly growing segments of the industry, which it expects will greatly enhance its ability to diversify its revenue stream.
Initially, NewCardio has implemented its technology in cardiac toxicity testing done in conjunction with FDA mandated clinical trials for new drug development. Utilizing the 3D technology, the company expects that it will significantly reduce the costs associated with cardiac safety trials and will accelerate the drug development process, as clinical trial service providers, such as Contract Research Organizations (CROs) and drug companies will be able to automate the traditionally time consuming and costly manual or semi-automated processes typically done in conjunction with these trials; estimates put the potential market on cardiac toxicity testing near $$750 million annually for early and late-state drug testing. The company’s product offering targeted at facilitating clinical ECG activities, called QTinno, has already been licensed by several top tier CROs to deliver fully automated safety analysis of cardiac safety in drug development just months after its launch in August, with agreements expected to follow from additional leading CROs, ECG core labs, Phase I units and pharmaceutical companies.
Along with clinical applications, the company expects that use of its improved diagnostic tool VisualDX will have similarly positive effects on hospital operations, as the ability to more accurately and expeditiously diagnose heart conditions in Emergency Departments has the potential to save thousands of lives annually, in addition to significantly reducing costs associated with unnecessary hospital admissions resulting from inaccurate ECG readings. With 70 million ECGs performed in ERs in the US alone each year, the potential market for hospital applications has been estimated to be in excess of $2 billion annually. In addition to clinical and hospital applications, the company also plans to employ the technology in home monitoring of chronic heart conditions, which could potentially revolutionize the way patients monitor their disease outside of a healthcare facility. A unique, wireless hand held device (CardioBip) that could transmit heart information remotely to doctors is currently in development which would enable complete cardiac assessment outside of the immediate care of a physician, allowing for round the clock observation without the high costs associated with hospital stays.
To complement its innovative technology platform, the company also has a strong management team with backgrounds across a breadth of industries that serve to guide both product development and corporate operations. Spearheaded by Chairman Mark Kroll, the most prolific inventor of electrical medical devices in the world with over 280 patents to his credit, management includes veterans from the medical device, technology, CRO, biotechnology and finance industries, including high ranking executives from organizations such as Intel and St. Jude Medical with extensive experience in designing and marketing cutting edge medical devices. Along with leading technological development and attracting early adoption agreements for QTinno with several major CROs, management and Board have recently demonstrated their commitment to both the technological concept and the company itself, by buying up more than half of a recent $2.9 million private placement offering that, when coupled with a $3 million dollar line of credit, is expected to sufficiently fund operations into the second half of 2010, by which time management expects considerable strength in the sales of QTinno.
According to a regulatory filing, the company has begun to explore strategic relationships with one or more partners, to provide capital and to enhance the development and marketing of its products, with a primary focus on its 3-D Technology platform, specifically Visual3Dx for the urgent care market and CardioBip for cardiac monitoring applications. By the second half of next year, the company expects activity in clinical trials to drive acceptance of its automated cardiac safety tool.
With strong technological improvements made to an already well established medical test enabling reduced costs and improved diagnostic capabilities for one of the leading causes of death worldwide, NewCardio appears to be well positioned to capitalize on the growing trend towards providing better care while improving efficiencies within the healthcare system. The ability of their platform to provide more accurate readings in a less time consuming and less labor intensive manner has the potential to allow for better care and reduced cost across a wide breadth of applications, making it an extremely intriguing and timely prospective investment as the focus on more efficient healthcare continues to attract significant national attention.
