Companies featured in the current edition of the newsletter: ACTC, CUR,CVM, ENZ, FMTI, ICLK, IMUC, IWEB, MBCI, OMCM, ONEZ, ORMP, SIHI, SRCO, SVUL
With bullish investor sentiment reaching levels not seen since just before previous market corrections, the rally, which is approaching six months, took a break last week. All of the major indices posted losses, with the Dow falling 102 points, or 1.1%, leaving it up 7.6% for the year. Each of the other indices followed suit, with the Nasdaq declining 10 points, or 0.5%, but still up 28%, the S&P 500 falling nearly 13 points, good for a 1.2% drop but higher for the year by 12.5% and the Russell 2000 falling 1.6%, leaving it up 14.2% on the year.
Has the market rally run out of steam, or is it merely pausing? Investors seemed to generally ignore weak data over the past several months, instead choosing to focus on favorable economic reports that helped to underpin the bullish bias. However, last week the major indices sold off sharply following a batch of better-than-expected data. All told, nine of the ten sectors in the S&P 500 fell, led by a decline of 3.6% in financials. A sharp decline in Chinese stocks (Shanghai Composite Index fell 6.7% on Monday) helped drag world indices lower. Even favorable reports suggesting that the ISM Manufacturing returned to the expansion stage along with better than expected Pending Home Sales were not enough to overcome the weaker sentiment.
Ironically, investors seemed to shrug off a disappointing Employment Report later in the week, as weak Initial Claims and ADP data ahead of Friday’s employment report were largely ignored, and investors brushed off a weak employment report, which showed unemployment had reached 9.7%, a level not seen in nearly 30 years, while downward revisions for nonfarm payrolls in June and July more than offset a slightly better-than-expected August nonfarm payrolls.
While the markets will be closed for Labor Day on Monday, we note that the holiday falls in September, which has historically been the worst-performing month for stocks. There is very little on the economic calendar other than the Federal Reserve’s Beige Book on Wednesday and the weekly Initial Claims data on Thursday to influence investors. With so little data to evaluate, interest may return to the Treasury auctions, where activity will be brisk. On Tuesday, $38 billion in three-year Notes will be offered, Sept. 8, there is a $20 billion 10-year Note offering reopening on Wednesday and a $12 billion 30-year Bond offering reopening on Thursday. A disappointing offering could lead to fears that foreign investors are reevaluating their level of interest in U.S. investments.
There are no market-moving earnings announcements this week, but Texas Instruments (NYSE: TXN) provides a mid-quarter update on Wednesday after the market closes. The economic calendar is similarly light, with the Fed’s Beige Book on Wednesday, along with speeches from Fed executives Fisher and Evans. The Fed’s Lockhart and Kohn speak on Thursday, while Treasury Secretary Geithner testifies before the TARP Oversight Panel the same day.
The conference schedule will be busy this week, despite the holiday. Tuesday, the RBC Capital Markets Transportation Conference begins in Toronto. On Wednesday, the three-day Rodman and Renshaw Annual Global Investment Conference begins in New York. Steel Vault Corporation (OTCBB: SVUL) presents Wednesday at 12:30 pm. Enzo Biocehm (NYSE: ENZ) presents at 2:50 pm on Thursday, while Oramed Pharmaceuticals (OTCBB: ORMP) presents Friday at 10 a.m. along with ImmunoCellular Therapeutics (OTCBB: IMUC) at 2 pm. interCLICK, Inc. (OTCBB: ICLK) presents at 9:10 am on Friday, followed by Sinohub (NYSE AMEX: SIHI) at 3:40 pm that day. There is a Cleantech Forum in Boston on Wednesday. Barclays Capital holds a Back-To-School Conference in Boston and a CEO Energy/Global Power Conference in New York the same day. Credit Suisse Group hosts its Automotive & Transportation Conference in New York on Wednesday. Thomas Weisel Partners hosts a three-day Healthcare Conference in Boston beginning Wednesday. Keefe, Bruyette & Woods holds a two-day Insurance Conference starting Wednesday. Kaufman Brothers holds its 12th Annual Investor Conference in New York on Wednesday, while Jefferies & Co. holds a Shipping & Offshore Services Conference the same day. Robert W. Baird & Co., Inc. also holds a Health Care Conference that day in New York. Citi has its 16th Annual Global Technology Conference with many of the large-cap technology companies presenting on Wednesday. Goldman Sachs holds a Retailing Conference in New York on Wednesday. Deutsche Bank Global Emerging Markets has a One-on-One Conference Wednesday in New York. BMO Capital Markets holds a North American Real Estate Conference in Chicago on Wednesday. Bank of America Securities holds a two-day Media, Communications & Entertainment Conference in Marina Del Ray, California. On Friday, Sidoti & Company holds its Eighth Annual West Coast Emerging Growth Institutional Investor Forum on Friday in San Francisco.
Life sciences company Enzo Biochem (NYSE: ENZ) filed its form 10-Q for the period ended April, 2009 late Friday. The filing could remove concerns that may have kept the stock from moving higher after the company reported Q3 results in mid-July. With a market cap of approximately $200 million, which included more than $55 million in cash as of its last filing, the company appears well positioned to continue the growth at Enzo Life Sciences and the turnaround at Enzo Clinical Labs. The stock could receive a lift on Tuesday from the filing. Shares rose 5% on Friday ahead of the filing, ending the week at $5.46.
CEL-SCI Corporation (NYSE AMEX: CVM), a developer of vaccines for the prevention and treatment of infectious diseases and a late-stage oncology company, announced last week the elimination of Series K convertible notes. The notes, which had an initial principal value of $8.3 million, were issued in August 2006, and were convertible into common stock. The news reflects the significant improvement the company has made in its balance sheet, as the company has recently raised more than $10 million in capital, as well as investors focus on CVM’s platform technology and its potential to address swine influenza. Shares ended the week at $0.67 down 4 cents.
Volume Alert: Shares of stem cell company Neuralstem, Inc. (AMEX: CUR) jumped 3.5% on Friday on more than two times average volume. The company recently said it was focusing its near-term international efforts on commencing a clinical trial for stroke in Taiwan in the first half of 2010, with spinal cord injury trials in China and India commencing thereafter in 2010. It also continues to work with the U.S. Food & Drug Administration to refine the protocol for its Investigational New Drug Application for ALS. Shares ended the week at $1.14, up 4 cents.
Volume Alert: Shares of life sciences company Forbes Medi-Tech Inc. (NASDAQ: FMTI) jumped 28% on Friday on more than four times average volume. The company recently announced that it had extended its supply and licensing contract with Pharmavite LLC until mid 2010 for the continued sale of Reducol, plant sterol blend, which has undergone clinical trials in various matrices and has been shown to lower “LDL” cholesterol levels safely and naturally.
interCLICK, Inc. (OTCBB: ICLK), a rapidly growing ad network, said last week that it had increased its credit facility with Crestmark Commercial Capital Lending LLC from $5.5 million to $7.0 million. As part of the amendment to the credit facility, Crestmark also agreed to reduce the monthly servicing fee the company was previously paying from 0.575% to 0.375%, which translates to a 300 basis point reduction in the company’s effective annualized cost of capital. This represents the third time this year that the company has increased the size of its revolver to accommodate its growth. Recently, ICLK raised its full-year revenue forecast to exceed $44 million, an increase of at least 96% compared to 2008. Shares ended the week at $1.70, down 10 cents.
New 52-week high: Shares of ImmunoCellular Therapeutics, Ltd. (OTCBB: IMUC), a clinical-stage biotechnology company that is developing immune based therapies for the treatment of brain and other cancers, surged to a new 52-week high continuing their sizzling performance which has seen the stock more than double over the past 10 days. Shares ended the week at $1.01, up 11 cents.
Storage solutions provider iceWEB (OTCBB: IWEB) said last week that Murphy Analytics, an equity research group, had initiated coverage of the company. In the report entitled “IWEB Targeting Significant Opportunities in Cloud Computing and Data Storage,” Murphy notes that “With the divestiture of the IceWEB Solutions Group subsidiary, a reseller of low-margin software and hardware products, IWEB is positioned to focus on data storage solutions and hosted software applications. IWEB in its last quarter reported, reported, according to the research provider: significantly higher margins at over 50% versus 12.2% for the prior year’s quarter; the acquisition of over 30 new clients; a decline in selling / general / administrative expense from $2.4 million to $1 million; a decline of approx. $6 million in both current liabilities and total debt from 9/30/08. Shares ended the week at $0.09, down 1 cent.
MabCure, Inc. (OTCBB: MBCI), a biotechnology company using its proprietary technology to create highly specific monoclonal antibodies (MAbs) for the early detection of cancer, said last week that it had been featured in the August edition of Biotechnology Focus, Canada’s oldest and most successful magazine serving the Canadian life science industry. The piece titled “Tumour-Specific Markers: The Holy Grail of Cancer Diagnostics†illustrates the advantage of MabCure’s pipeline of cancer specific antibodies compared to some current cancer diagnostics such as prostate-specific antigens (PSA) for prostate cancer, CA-125 for ovarian malignancies, which suffer from a lack of specificity and sensitivity. MabCure’s (MAbs) are being developed against difficult-to-pinpoint tumor-specific antigens. In the article MBCI’s CEO noted that while more than 90% of cancers are curable if caught early, the challenge of early detection lies in the lack of clearly identified disease markers. Shares ended the week at $1.11, up 1 cent on heavy volume.
OmniComm Systems, Inc. (OTC Bulletin Board: OMCM), a leader in integrated electronic data capture solutions for clinical trials said last week that three additional clinical research organizations (CRO) have joined its rapidly expanding partnership program, the CRO Preferred Program. The partnership allows CROs in the program to offer their clients OMCM’s TrialMaster, for clinical trials. The CRO Preferred Program’s benefits include fixed pricing with no hidden fees, complete sales and marketing support from OmniComm, a dedicated hosted environment and comprehensive training and support for TrialMaster. Shares ended the week unchanged at $0.24.
Sparta Commercial Services, Inc. (OTC.BB: SRCO), a provider of consumer financing and leasing for powersports products, said last week approximately $4.2 million of notes and accrued interest held by the company’s existing stockholders had been converted into shares of common stock. As a result of these conversions, Sparta shareholders’ equity increased by over $4.2 million. Additionally, holders of approximately $1.8 million in notes and accrued interest have agreed to convert their notes and accrued interest into shares of common stock thereby increasing shareholders’ equity by an additional $1.8 million for a potential total increase in shareholder equity of over $6 million. Shares rose 1 cent for the week to close at $0.069.
Shares of Advanced Cell Technology (OTC: ACTC) surged 20% on Friday, perhaps in anticipation of the company’s call on Tuesday, where it will addresses questions that shareholders raised in connection with its proxy vote, scheduled for Thursday. Shares ended the week at $0.158, up 2 cents.
On the Wires: ONE Holdings, Corp. (OTCBB: ONEZ), an investment company owning a majority equity interest in a biotechnology company located in the Asia Pacific region, named current interim President Marius Silvasan as its new CEO and Vice Chairman of the Board.
SPECIAL SITUATION:
Oramed Pharmaceuticals, Inc. (OTCBB: ORMP) $0.59
One of the biggest medical challenges and opportunities today is to develop a solution for the problems presented by diabetes. Today, for millions ofdiabetics, needle sticks have become a way of life. The opportunity to deliver insulin orally has been attempted by many companies, while many are aware of some of the high-profile failures, few may be familiar with the work being done by a small biotechnology company based in Israel. Oramed Pharmaceuticals, through its lead compound an oral insulin capsule, ORMD 0801, has a promising capsule in development that it believes has the potential to succeed where so many have failed, delivering insulin orally.
Established in 2006, ORMD 0801 is the product of a technology platform based upon more than 25 years of research from leading scientists at Jerusalem’s Hadassah Medical Center. ORMD 0801 has already completed both Phase I and Phase IIa studies in Israel, which showed that the capsule was safe and well-tolerated, with no adverse events discovered during the two studies. The company expects to complete a Phase IIb trial in South Africa, which would likely be a larger study, and to file an Investigational New Drug (IND) application in the United States, which would allow it to begin clinical activities here.
How does the company’s technology work? After a person swallows the capsule, insulin travels from the gastrointestinal tract via the portal vein into the bloodstream. Oramed has conducted numerous studies in animals that have confirmed the feasibility of lower blood glucose levels using its capsule. The technology has been receiving growing recognition from the scientific and academic communities. Last year, Professor Avram Hershko of the Technion, who won the 2004 Nobel Prize in Chemistry, joined the company’s Scientific Advisory Board. Recently, it received the 2009 Frost & Sullivan European Oral Drug Delivery Technology Innovation Award, which recognizes companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service and strategic product development. In August of this year, Oramed was awarded a government grant amounting to a total net amount of NIS 3.1 million ($828,000), from the Office of the Chief Scientist (OCS) at the Ministry of Industry, Trade and Labor of Israel.
At this point, one might ask why so many have spent so much trying to develop a novel approach to treating diabetes. The answer is quite simple. According to the American Diabetes Association, in 2007 more than $27 billion was spent on the direct treatment of diabetes. Perhaps even more alarming is the rate of growth of the disease. By 2025, according to data from the International Diabetes Foundation, more than 380 million people are expected to be diagnosed with the disease. At the same time that the incidence of disease is soaring, compliance rates for injection have been declining. With an oral delivery system, compliance rates would likely increase, and allow millions to be able to better control their diabetes. The potential for a company that can find an alternative way to deliver insulin to the method currently available could be substantial.
Oramed, in addition to its advanced diabetes program, is currently in a Phase Ia clinical trial for rectal delivery of insulin (ORMD 0802). In a proof of concept study in eight healthy volunteers, rapid insulin absorption was demonstrated and reactive glucose lowering effect. There were no adverse events.
The company also has an oral GLP1-analog that is currently in Phase I clinical trials Despite the large market opportunity and promising technology, the company still has a relatively nominal $33 million valuation, which is much less than some of the other companies in the sector such as Generex Biotechnology ($115 million) and MannKind (more than $800 million). Shares have performed well this year, with the stock up 51% so far, including rallying 13% on Friday on more than three times average volume. With a potential IND filing in the U.S. expected later this year, and a promising way to orally deliver insulin, Oramed Pharmaceuticals could continue to gain investor interest.