Companies featured in this edition of the newsletter: ACCP, CBAI, CICS, CUR, CVM, DKAM, EMDH, ESYM, ICLK, IWEB, OMCM, SRCO
Markets hit fresh highs for ’09 this week on modest gains across all of the major indices despite profit taking from the two week rally which has seen the S&P 500 increase by 11%. All told, the Dow gained 0.9% on the week to close at 9171, up 78 points, bringing its year-to-date gain to 4.5%. The NASDAQ managed to post a 0.6% gain, closing at 1965, up 25.5% on the year, while the S&P 500 and Russell 2000 finished up 0.8% and 1.5% respectively, bringing their yearly gains to 9.3% and 11.5%.
Earnings were once again the subject of investors’ collective attention, but despite being generally positive, failed to spur the type of buying that has characterized the past two weeks as there were fewer bellwether names with market moving potential releasing results. Buyers met with profit taking from the previous two-week run up which led to markets trading mostly sideways on the week, with the exception of Thursday which saw triple digit gains in the Dow despite the lack of any significant market driving announcements. Financials led the way with a 4.4% gain on the week while Utilities were the laggard, losing 2.0%.
Economic news on the week was mixed and had a muted result on the week’s trading activity. The highlight of the week with regards to economic developments was the advanced second quarter GDP reading, which came in at a better than expected decline of 1.0% versus expectation for a drop of 1.5%, suggesting that the economy is contracting at a slower rate than forecast. Housing data was mostly positive on the week as well, as New Home Sales managed to beat expectations and the S&P/Case-Shiller Home Price Index also declined less precipitously than forecast. However, these positive developments were offset by disappointing Consumer Confidence figures for July and mixed Durable Goods Orders for June, leaving the exact state of overall recovery open to interpretation.
What should investors look for this week? Earnings will once again be in focus, but to less of a degree as the majority of market driving names have already reported. Investors are likely to keep a close eye on unemployment data for July which is due out Friday morning.
Earnings season begins to wind down this week, but on Monday morning, expect reports from Loews Corp (NYSE: L), Marathon Oil (NYSE: MMP) and Tyson Foods (NYSE: TSN). On Tuesday before the bell, Archer-Daniels (NYSE: ADM), CVS Caremark (NYSE: CVS), while Kraft Foods (NYSE: KFT), News Corp (NYSE: NWS) and Whole Foods (NASDAQ: WFMI) are expected to release after the close. On Wednesday, Procter & Gamble (NYSE: PG) reports before the open, with Allstate (NYSE: ALL) Cisco Systems (NASDAQ: CSCO), Prudential (NYSE: PRU), and Sunoco (NYSE: SUN) to release after the close. Thursday morning look for releases from Comcast (NASDAQ: CMCSA), DirecTV (NYSE: DTV), Sirius XM Radio (NASDAQ: SIRI), Thomson Reuters (NYSE: TRI), and Wendy’s (NYSE: WEN) followed by American International (NYSE: AIG) and CBS Corp. (NYSE: CBS) after the close.
Economic reports for the week begin with Construction Spending for June and ISM Index for July due out together on Monday morning at 10:00am, with Auto and Truck Sales for July to be released at 2:00pm that afternoon. On Tuesday, Personal Income and Spending for June will be released at 8:30am, followed by Pending Home Sales for June at 10:00am. On Wednesday, look for ADP Employment Change figures at 8:15am, followed by Factory Orders for June and ISM Services for July at 10:00am; Weekly Crude Inventories follow at 10:30am. Weekly Initial Jobless Claims will be released Thursday at 8:30am, while Average Workweek, Hourly Earnings, Nonfarm Payrolls and the Unemployment Rate, all for July, will be released together at 8:30am Friday. Consumer Credit for June rounds out the week at 2:00pm.
Conference schedules for the week will be light once again as earnings will dominate most calendars, but BMO Capital Markets will host their 2009 Focus on Healthcare Conference beginning on Tuesday in New York.
Volume Alert: Shares of CEL-SCI Corporation (AMEX: CVM), a late stage cancer immunotherapy company and vaccine developer, surged 17% on three times average volume, following a report last week by BioMedReports, a news portal covering the biomedical and financial sectors. The report focused on the H1N1 swine flu pandemic and concluded that CVM is positioned to help combat the virus after diligently preparing for the worst case scenario with promising results. The article focused on the company’s preclinical studies which have demonstrated that vaccines utilizing the company’s proprietary L.E.A.P.S. (Ligand Epitope Antigen Presentation System) technology can potentially induce protection against illnesses such as the swine influenza, including potential mutations which the virus might undergo as we continue to close in on the traditional flu season. Shares gained seven cents on the week to close at $0.50.
Volume Alert: Shares of Access Pharmaceuticals, Inc. (OTCBB: ACCP), an emerging biopharmaceutical company that develops and commercializes propriety products for the treatment and supportive care of cancer patients, jumped 11% on almost three times average volume last week, following the announcement that its European partner, SpePharm, has commenced commercial launch of MuGuard, Access’ proprietary formulation for management of oral mucositis, a painful side effect of radiation therapies. The news comes on the heels of recent commercial launches in the UK, Germany, Italy and Greece, with plans to launch in France, Spain and the Benelux countries within the next 12 months. Access also announced that it is currently evaluating its options for commercialization of MuGuard in North America, where demand for the product is greater than previously estimated. The company has retained the services of Frank Jacobucci, formerly President & CEO of Milestone Biosciences, who will assist with ongoing reimbursement, manufacturing and commercial launch activities at Access, while discussions with potential licensee and co-promotion partners is ongoing. Shares gained forty five cents on the week to close at $4.30.
Earnings Preview: interCLICK, Inc. (OTCBB: ICLK), a rapidly growing ad network, is scheduled to announce second quarter financial results for the period ended June 30, 2009 on Thursday after the market closes. Shares have more than doubled since late-May, helped by the company raising full-year guidance for revenue to exceed $40 million, which would be an 80% increase from the year-earlier period. The company also recently raised Q2 expectations, saying that it expects revenue to exceed $10.5 million, an increase of at least 124% compared to the year-earlier period and 25% sequentially. ICLK previously said it expected quarterly revenue to exceed $9.5 million. For the 2008 second quarter for the period ended June 30, 2008, interCLICK had revenue of $4.7 million. The company also announced last week that it had launched an important update to its ad serving platform, increasing scalability and effectiveness of its behavioral platform. The latest platform upgrade centers on reporting and delivery tools that improve the predictability data and inventory requirements. The goal of the upgrade is to provide advertising clients with improved transparency regarding exactly where advertising dollars are being most effectively utilized, which is designed to further increase ROI across the company’s network. Shares remained unchanged at $1.90 on the week.
Cord Blood America, Inc. (OTCBB: CBAI), an umbilical cord blood stem cell preservation company focused on bringing the life saving potential of stem cells to families nationwide and internationally, said in an interview of its CEO last week that the company’s recent acquisition of a new stem cell laboratory would reduce its cost of storing stem cells and allow it to begin a research and development program and to seek government and other grants. Cord Blood recently announced it is opening a state-of-the-art laboratory, one of the largest in the U.S., for the storage of multiple stem cell products, including adipose tissue, peripheral blood stem cells and umbilical cord blood stem cells. Shares remained unchanged at less than a penny on the week.
Volume Alert: Shares of beverage distributor Drinks Americas (OTCBB: DKAM) jumped 15% on over twice average volume last week perhaps driven by interest in the company’s Kid Rock American Badass Beer. DKAM had previously indicated that it expects the launch to be immensely successful due to its association with Kid Rock, a popular Midwestern musician; the company has focused their initial roll outs on Michigan markets where he grew up, with successive launches in coming months in other markets nationwide. Shares gained two cents on the week to close at $0.15.
Emerging Media Holdings (OTCBB: EMDH), a company that operates television broadcasting and infrastructure companies in Moldova and Romania, issued guidance for its fiscal year ended December 31, 2009 last week. EMDH said it expects full year revenue to be between $20 million and $25 million, with EBITDA, a non-GAAP measure, of between $5 million and $6 million. The earnings are expected to come from the recent acquisition of a 60% interest in Genesis International, a leading Eastern European infrastructure company whose results are expected to be consolidated in the third quarter of ’09 and a 25% increase in earnings from its media operations. Shares lost ten cents on the week to close just above $0.40.
IceWeb (OTCBB: IWEB), a storage technology company specializing in Geographic Information Systems (GIS) that provides services to bureaucratic and corporate organizations, announced last week that it has entered into a definitive agreement under which the company has secured a $3 million investment available for drawdown through issuance of Series C preferred stock. IWEB believes that the investment will provide adequate funding to finance the company’s operations, research & development and sales efforts until it is able to reach sustainable profitability. In other news last week the company announced that it has seen increased demand for its Iplicity 2.0 software from both commercial clients and governmental agencies. The company feels that its upgraded platform provides features and functionality well beyond that which is currently offered by competitors and expects that the enhanced software will be extremely popular as clients recognize the significant value and superior performance offered by the newest version. Shares lost just under half a cent on the week to close at $0.066
OmniComm (OTCBB: OMCM), a leader in integrated electronic data capture (EDC) solutions for clinical trials, announced last week that it has been selected by a Midwestern contract research organization (CRO) to provide eClinical solutions in connection with two of the CRO’s Phase IV studies covering approximately 27 sites and more than 700 subjects. The company attributes the recent increase in demand for its services to the recent acquisition of eResearch Technology’s data capture unit, which has greatly expanded the breadth of service offerings that the company provides to clients of all sizes in all phases of clinical development. Shares lost a penny on the week to close at $0.16.
Sparta Commercial Services (OTCBB: SRCO), a nationwide financial services company dedicated exclusively to the powersports industry, announced last week that it has entered into a definitive agreement under which it has secured up to a $5 million investment which can be accessed through issuance of Series B preferred stock. In addition to securing financing, the company also converted its short term notes into equity in a move designed to strengthen its balance sheet and meet the criteria necessary to begin initial drawdown on its $25 million revolving credit facility. Management believes that this credit facility, in combination with the recent $5 million financing, will be sufficient to dramatically grow its powersport leasing and installment loan activities. Shares remained unchanged at $0.08 on the week despite active trading.
EcoSystem Corp. (OTCBB: ESYM), a company innovating industrial-scale applications of bioreactor technology that are designed to resolve compelling ecological challenges while producing value added carbon neutral products, announced last week that it has executed agreements for the sale of EcoSystem preferred stock and warrants to five investment funds for $76 million. Funding is expected to occur prior to August 5, 2009; the proceeds will be held in a restricted EcoSystem account and will be available for use according to the use of proceeds schedule and other conditions specified in the agreements. The company plans to use the funds to acquire distressed ethanol production facilities, to acquire other strategically-compatible assets, and to develop and integrate EcoSystems’ Cellulosic Corn technologies into EcoSystem’s planned ethanol production facilities. ESYM plans to achieve an annualized renewable fuel production rate of 500 million gallons within the next three years. Shares ended the week below a penny.
Carbonics Capital Corporation (OTCBB: CICS), a company that provides applied engineering and technology transfer services based on clean technology and process innovations that enhance manufacturing efficiencies, improve resource utilization and minimize waste, announced last week that the company has entered into an exclusive license with GreenShift Corporation (OTCBB: GERS) for use of its algae bioreactor technologies in municipal and industrial applications excluding ethanol production. GreenShift’s patented and patent-pending bioreactor technologies rely on thermophillic cyanobacteria to consume carbon dioxide emissions and to produce carbon-neutral products in addition to having the potential to reduce the costs and technical barriers to managing the flow resources into, through and out of the bioreactor in a compact and cost-efficient way as compared to other algae bioreactor technologies. The company’s wholly owned subsidiary Sustainable Systems, Inc., was recently awarded a $375,000 grant from the Montana Department of Commerce Research and Commercialization Technology program and plan on pursuing additional funding to apply towards further commercialization of the newly acquired technology. Shares closed the week under one cent.
SPECIAL SITUATIONS:
Neuralstem, Inc. (AMEX: CUR) $1.16
The allure of stem cells as a potential therapeutic option are the seemingly limitless possibilities; imagine one day being able to return function to someone who is paralyzed, or the victim of a devastating stroke and you begin to see the potential for applications that Neuralstem, a Maryland-based biotherapeutics company is exploring. Neuralstem is using a patented process to grow neural stem cells of the human brain and spinal cord in commercial quantities. The company’s focus is on incurable neurodegenerative conditions that are typically associated with severely debilitating side effects such as paralysis, muscular atrophy and even death. CUR’s focus is on commercialization of its Human Neural Stem Cell technology through optimizing delivery of its neural stem cell therapies to patients. It expects to demonstrate this therapy in a Phase I clinical trial for amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease) later this year. Few stem cell companies are currently in the clinic, which could generate significant interest in the company’s platform.
Neuralstem’s lead product candidate is a spinal cord stem cell line which has shown encouraging results in animal models, extending the lives of rats with ALS and reversing paralysis in animals with ischemic spastic paraplegia. The company filed an IND in December of ’08 with the FDA and is currently addressing various technical issues with the agency concerning the novel surgical techniques and devices required to deliver this first in human therapy. Expectations are that a Phase I trial of the company’s spinal cord cells in patients with ALS, a debilitating condition in which degeneration of motor neurons leads to a loss of voluntary motor control, will commence sometime in the latter half of 2009. In addition to ALS, Neuralstem will be testing its spinal cord cells as therapies for Huntington’s disease and traumatic spinal cord injuries. The company’s technology has been extensively studied through collaborations with major research centers including the University of California at San Diego and Johns Hopkins, in addition to the previously described Phase I clinical trial which is scheduled to occur under the guidance of world renowned ALS researchers at Emory University in Atlanta.
Aside from its proprietary neural stem cells, what differentiates Neuralstem from many of its competitors is its intended launch in foreign markets, in jurisdictions such as Aisa, which could facilitate a more rapid commercialization of the company’s therapies. The company has formed partnerships in Taiwan with China Medical University Hospital for clinical trials to treat Stroke and in several Asian countries through a commercialization agreement with CJ CheilJedang Corp, one of South Korea’s largest conglomerates. Under the terms of the arrangement, CJ CheilJedang purchased an option to negotiate for an exclusive license to the company’s products which could result in exclusive rights in Korea, Indonesia, the Phillipines, Malaysia, Singapore and Vietnam. Partnerships have also been formed in Germany with the Albert-Ludwigs Universitat Freiburg for a Huntington’s trial, in addition to the recent addition of former US Senator and Ambassador to China, James Sasser to the company’s Advisory Board which could increase the company’s development and commercialization efforts in China.
Neuralstem’s unique portfolio of therapies supported by favorable preclinical animal data that demonstrate the safety and efficacy of the cells for treatments to reverse certain types of paralysis, and its commercialization strategy focused on exploiting international opportunities providing more tolerant clinical pathways provide two reasons why the company is poised for growth as markets continue to rally. Despite this, CUR’s stock is currently trading just above its 52- week low as it has begun to rebound from its March bottom along with the broader market; with the FDA’s IND concerns currently being addressed, the next logical catalyst for the stock would be the announcement of Phase I trials which the company has indicated that it expects to begin in the second half of 2009, making this an intriguing time to consider the stock, as investors could see opportunities for gains similar to those of other stem cell stocks we have covered such as Advanced Cell, Cord Blood Partners and Pluristem.
