04/29/2007
VOLUME 297
Companies featured in the current edition of the newsletter: ACCP, ADSX, AVGOE, CGXP, CVM, CYTR, EEEI, GNBT, GSHF, IMMG, IRBO, ISON, LANW, MBIF, MBND, NTRN, PBIO, PCLI, USAT, VOII, VQPH
Solid first quarter results continued to drive the market higher sending the Dow Jones to close above 13,000 last week for the first time. With earnings strength coming from all sectors of the market, the Dow was able to gain 158 points to close the week at 13,120, raising its year-to-date gain to 5.2%. The Nasdaq rose 30 points increasing its annual gain to 5.8%. The S&P added 9 points lifting total returns to 5.3% for the year. Small cap stocks failed to participate in last week’s rally, as the Russell inched up less than 1 point, although it is up 5.3% for the year.
Disappointing economic data released last week took a backseat to strong earnings from the likes of Microsoft, Pepsico, and Colgate-Palmolive and had little effect on dampening investor enthusiasm. Consumer confidence came in below expectations at 104.0 and existing home sales fell 8.4% in March, the largest amount in almost 20 years. Gross domestic product grew by its lowest level in four years, further highlighting worries that consumer spending is on the decline. Not all the news on the economic front was bad as weekly initial claims suggested labor conditions remain healthy, with demand for durable good rising 3.4%, easily topping 2.5% that was previously anticipated. As data continues to come in mixed, there seems to be no clear catalyst for the Fed to lower rates anytime soon.
What should investors look to next week? The first-quarter earnings season continues with a flurry of releases as Procter & Gamble (NYSE: PG) releases results on Tuesday morning followed by YUM! Brands (NYSE: YUM) later that evening. Barrick Gold (NYSE: ABX), Devon Energy (NYSE: DVN) and General Motors (NYSE: GM) announce earnings on Wednesday morning with JDS Uniphase (NASDAQ: JDSU) and VeriSign (NASDAQ: VRSN) reporting earnings after the close. Thursday evening Nabors Industries NYSE: NBR) and QLogic (NASDAQ: QLGC) disclose results. Intel (NASDAQ: INTC) hosts analysts on Thursday.
On the economic front, Personal Income and Spending for the month of March along with Core PCE Inflation will be reported before the bell on Monday, followed shortly afterwards by the April Chicago PMI at 9:45 a.m. and March Construction Spending at 10:00 a.m. Tuesday morning, the widely followed April ISM Index will be released at 10:00 a.m. along with March Pending Home Sales. Detroit will release April Auto and Truck sales later in the day. Shortly after the opening bell on Wednesday, March Factory Orders and Weekly Crude Inventories will be reported. Prior to the opening on Thursday, Weekly Jobless Claims and Q1 Preliminary Productivity numbers will be released followed by April ISM Services at 10:00 a.m. On Friday morning, the Department of Labor will release its Employment Report for the month of April, the most timely and broad indicator of economic activity released each month. April Hourly Earnings and Average Workweek data will be released along with April Nonfarm Payrolls and Unemployment Rate.
The conference schedule picks up this week with Credit Suisse Group hosting its three-day 15th Annual Offshore Technology Conference starting Monday in Houston. Lehman Brothers holds its two-day Retail Seminar beginning Tuesday in New York. The two-day Merrill Lynch Tech Gathering Conference starts Tuesday in New York. Deutsche Bank hosts its two-day 32nd Annual Health Care Conference in Washington D.C. starting Wednesday. Goldman Sachs sponsors its Second Annual Alternative Energy Conference in New York on Wednesday. Jefferies & Co. holds a similar event in New York on Wednesday. Electro Energy is scheduled to present at the 3rd Annual Jefferies Clean Technology Conference in New York on Wednesday at 3:50 p.m. Also starting on Wednesday is the three-day Morgan Stanley Global Healthcare Unplugged Conference in Miami.
CEL-SCI Corporation (AMEX: CVM), a developer of new immune system based treatments for cancer and infectious diseases, announced last week the issuance of U.S. Patent 7,199,216, titled “Peptide constructs for treating autoimmune and related diseases.” The patent covers the company’ breakthrough T-cell modulation platform technology called “AdapT,” which stands for “Antigen Directed Apoptosis”. This technology can be used to treat a number of major diseases including autoimmune disease, asthma, allergy and transplant rejection. AdapT technology targets only disease causing T-cells, while keeping the rest of the immune response intact, and should limit or even eliminate the unwanted side effects of the currently available immunosuppressant drugs. The company also announced that two of its key scientists have published an important article in the April issue of The Scientist, a leading scientific publication. Drs. Zimmerman and Talor of CEL-SCI, along with Dr. Rosenthal, Professor of Microbiology and Immunology at Northeastern Ohio Universities College of Medicine, propose several new approaches to boost vaccine development and R&D for vaccines. CEL-SCI’s CEL-1000 product, which is being tested as a potential adjuvant to enhance the effectiveness of vaccines was developed by Dr. Zimmerman, while Dr. Talor is the developer of the Company’s lead product Multikine, which is cleared to enter a global Phase III clinical trial in advanced primary head and neck cancer patients in the U.S. and Canada. The article is titled “he Vaccine Conundrum.” The stock closed the week at $0.89, up 10 cents.
USA Technologies, Inc. (NASDAQ: USAT), a developer of cashless vending and energy management products, continues the impressive roll-out of its e-Port G6 technology after the company reported last week that six of America’s most prominent vending companies are installing e-Port cashless payment technology on their vending machines to accept MasterCard PayPass cards and devices. These machines are part of the deployment of 5,000 PayPass- and cashless- enabled vending machines announced late last year by USA Technologies and MasterCard. USA Technologies’ wireless activated e-Port G6 allows vending machine customers to use either their traditional magnetic-stripe credit cards or new contactless cards such as MasterCard PayPass to make purchases, and studies show that about 50% of consumers will not purchase from vending machines when the “use correct change” light is highlighted. By overcoming such inconvenience, USA Technologies is well positioned to take its place in the $46 billion vending industry. Shares remained unchanged for the week to close at $11.80.
Volume Alert: Shares of Multiband Corporation (NASDAQ: MBND), a leading provider of video, data, and voice systems and services to multiple dwelling units, traded over 6.4 times average volume after reporting it entered into an agreement to sell 911 Ohio-based video subscribers to DirecTech MDU, Inc., a Cincinnati-based subsidiary of DirecTech Holdings, Co., Inc., for $683,000. The agreement reaffirms management’s commitment to its recently announced initiative to reallocate capital to areas the company feels will generate maximum returns for shareholders. Last month, Multiband announced the approximately $1.6 million sale of some of its California based customers to Consolidated Smart Broadband Systems, based in Los Angeles. In both agreements, the companies have agreed to retain Multiband Subscriber Services to provide on-going subscriber management support, and Multiband expects to receive additional income in the future, based upon the earnings generated from the video subscribers. The company also said in a regulatory filing that it signed a nonbinding letter of intent with MDU Communications International, Inc. (MDU) regarding the sale of certain subscribers and associated assets from Multiband to MDU and the simultaneous provisioning by MDU from Multiband of certain on-going Multiband supplied subscriber management services. The transactions reflect the company’s recent decision to sell its subscriber base while maintaining the servicing rights to the subscribers, a much higher margin business, in a move that is expected to significantly improve the company’s operating results. Shares gained 6 cents for the week to close at $0.47.
CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical research and development company, announced that the RNA interference (RNAi) delivery technology exclusively licensed to its majority-owned subsidiary, RXi Pharmaceuticals Corporation, has been published in the April 2007 issue of peer-reviewed scientific journal ACS Chemical Biology in an article entitled, “Design and Creation of New Nanomaterials for Therapeutic RNAi.” Such coverage indicates the interest that RNAi therapeutics is receiving from the scientific community as it holds tremendous promise as cures for diseases caused by proteins that cannot be targeted by conventional drugs. Shares fell 28 cents to close the week at $4.23.
Drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT) achieved a significant milestone last week towards the commercialization of its flagship oral insulin spray Generex Oral-lyn. The company entered into an exclusive licensing and distribution agreement with Leosons General Trading Company, a leading distributor of North American products in the Middle East, for the commercialization of Generex Oral-lyn and distribution of its Glucose RapidSpray, in 15 Middle Eastern countries, including Saudi Arabia and the United Arab Emirates (UAE), lucrative markets for the sale of diabetes products. The UAE alone has the second highest rate of diabetes in the world, affecting 70% of residents. Pertaining to the Generex Oral-lyn portion, in lieu of Generex receiving an upfront license fee, Leosons will bear all costs associated with the procurement of governmental approvals for the sale of the product, including any clinical and regulatory costs. Leosons will also be responsible for all costs and implementation plans for the education and training of patients and physicians in respect of Generex’s diabetes treatments in that region. This collaboration enables Generex to benefit from Leosons’ extensive distribution network in the region where all requisite documents for approval must be filed by the fall of 2007. Separately, the company made three poster presentations at the 2nd International Congress on “Prediabetes” and the Metabolic Syndrome: Epidemiology, Management and Prevention of Diabetes and Cardiovascular Disease in Barcelona, Spain last week. Shares gained 1 cent to close at $1.62 for the week.
Ceragenix Pharmaceuticals, Inc. (OTCBB: CGXP), a biopharmaceutical company focused on infectious disease and dermatology, reported positive results from its post-clearance marketing study comparing EpiCeram’s efficacy to that of Cutivate cream, a mid-strength topical steroid in the treatment of moderate-to-severe atopic dermatitis (AD). The randomized controlled study was conducted at five centers, evaluating a total of 113 patients in two groups of children aged 6 months to 18 years, demonstrating that EpiCeram is comparable to Cutivate in treating the symptoms of AD after a 28 day treatment regimen, without the risks associated with long-term use of topical steroids or immunosuppressants. The strong data could pave the way for the company to enter into a licensing deal with a pharmaceutical partner. Ceragenix also announced that it has begun enrolling patients in a multicenter pediatric clinical study designed to assess the efficacy of EpiCeram compared to Elidel, the leading topical immunosuppressant prescribed for AD. The randomized, double blind study will consist of 50 to 100 children between the ages of 2 and 18 years, for a four-week period. The company expects to complete the study and announce results in the fourth quarter 2007. EpiCeram has the potential to become the foundation of a new model in the treatment of this common childhood skin disorder, which affects over 15 million Americans. Lastly, the company announced that two of its Ceragenin compounds were featured in a research report in the April issue of the Journal of Antimicrobial Agents and Chemotherapy. Such coverage by this peer-reviewed official Journal of the American Society of Microbiology is an important milestone as Ceragenix continues to focus on obtaining recognition for its technology in the scientific community. The publication is entitled “Antimicrobial Activities of Ceragenins Against Clinical Isolates of Resistant Staphylococcus Aureus”, and highlights the need for the development of new antimicrobial compounds to combat the rising incidence of strains of Staphylococcus Aureusthat has developed antibiotic resistance to all penicillins including methicillin. It was concluded in the article that the potent in vitro activity of Ceragenix’s CSA-8 and CSA-13 antimicrobials are promising and may have important therapeutic implications for infections against such strains. Shares remained unchanged for the week at $2.00.
Volume Alert: Shares of Pressure BioSciences Inc. (NASDAQ: PBIO), a life sciences company engaged in the development and commercialization of pressure cycling technology, traded approximately seven times average daily volume last week as the stock continued its upward climb toward its 52-week high. The launch of its main product this month, the PCT Sample Preparation System (PCT SPS), followed by its anticipated international launch in 2008, seem to have generated new interest in PBIO shares. Shares gained 69 cents for the week to close at $5.00.
Access Pharmaceuticals, Inc.(OTCBB: ACCP), an emerging biopharmaceutical company that develops and commercializes propriety products for the treatment and supportive care of cancer patients, reported last week that it has expanded the number of clinical trial sites for its on-going Phase II trial of ProLindac to 11, up from two initial sites when the trial was commenced last year. ProLindac, a novel DACH platinum prodrug, has been shown to be active in a wide variety of solid tumors in both preclinical models and in human trials. ProLindac’s unique molecular design could potentially eliminate some of the toxic neurological side effects seen in the currently marketed DACH platinum, Oxaliplatin, where at least five times more DACH platinum could be administered to patients with ProLindac than Oxaliplatin before the onset of toxicity. The larger number of clinical trial sites will help the company draw trial enrolment from a larger potential patient population. Oxaliplatin currently has sales of over $2 billion, giving shareholders of Access Pharmaceuticals reason to expect substantial gains in share price as ProLindac comes closer to marketability. Additionally, Access Pharmaceuticals announced that holders of $4 million of its 7.0% Convertible Promissory Notes and $6 million of its 7.5% Convertible Notes have agreed to extend the maturity dates of the notes from April 28, 2007, to June 12, 2007 and from April 27, 2007 to June 11, 2007, respectively. Shares fell 96 cents for the week to close at $4.78.
VeriChip Corporation, a majority-owned subsidiary of Applied Digital (NASDAQ: ADSX), a leading provider of identification and security technology, said that it will issue its first quarter 2007 financial results for the period ended March 31, 2007, on Thursday before market. That same day, the company will hold a conference call to discuss the results. Recently, VeriChip raised its revenue estimates for this period to $7.1 million from $6.9 million. Strength in the quarter was a result of solid sales of its infant protection and wander prevention products. ADSX also announced that it had completed its re-incorporation into the state of Delaware in a move that is likely to increase the company’s flexibility to pursue strategic transactions. Shares fell 12 cents for the week to close at $1.40.
Volume Alert: Shares of Avicena Group, Inc. (OTCBB: AVGOE), a biotechnology company focused on diseases of the central nervous system, traded roughly 36 times average volume, after the company announced that its leading Huntington’s disease drug candidate, HD-02, was selected as one of the “100 Great Investigational Drugs of 2007” by the pharmaceutical magazine R&D Directions. The list was based on a drug’s potential to address a major medical need in a growing therapeutic area. A Phase II study showed that HD-02 reduced the Huntington’s disease marker, which some researchers have linked to reduce brain injury, and was shown to slow the rate of disease progression. Avicena plans to initiate a Phase III trial with HD-02 early 2008. Additionally, the company continues to expand its valuable intellectual property portfolio as two composition of matter patent applications were filed with the United States Patent and Trademark Office last week. The first, for Amyotrophic Lateral Sclerosis (ALS, or Lou Gehrig’s disease), and the second, for Parkinson’s disease, a progressive neurodegenerative disease. The patents broadly cover pharmaceutical formulations based on creatine derivatives alone or in combination with an anti-inflammatory compound for the treatment of these degenerative diseases. Such continuous efforts by management to protect its drug candidates under development creates a large value-added for shareholders. Shares ended the week up 1 cent to close at $5.51.
Neutron Enterprises, Inc. (OTCBB: NTRN), a developer of digital media solutions, announced last week the launch of the alpha version of its innovative stock market competition site www.wallstreetsurvivor.com. Contestants are currently able to test their stock-picking skills against other contestants for cash and other prizes in the only game that provides updates based upon real-time stock prices. A beta version, including enhanced features, is expected to be released in late May, after the conclusion of the alpha contest, and is anticipating of the launch of its first $1 million competition in the Fall. Additionally, Rory Olson, Neutron’s Chairman and Chief Executive Officer terminated his 10b5-1 Sales Plan effective immediately in a show of confidence in the future performance of Neutron’s common stock. Rule 10b5-1 allows corporate insiders to establish prearranged written plans to buy or sell a specified number of shares of company stock over a predetermined period of time. Shares gained 14 cents for the week to close at $1.70.
VioQuest Pharmaceuticals Inc. (OTCBB: VQPH), a biopharmaceutical company focused on acquiring, developing and commercializing targeted cancer compounds, reported last week that it will proceed with Phase II trials later this year with its direct Akt inhibitor VQD-002. VQD-002 is a novel direct inhibitor of activation of overexpressed and or hyperactivated Akt, a serine- threonine kinase that is found in resistant and refractory tumors as well as in aggressive hematologic malignancies. Phase I/IIa clinical trials are currently ongoing at the MD Anderson Cancer Center, Houston, TX, and at the H. Lee Moffitt Cancer Center, Tampa, FL., and are expected to complete phase I enrollment in June 2007, with phase IIa expansion in each trial starting immediately thereafter. With the VQD-002 market opportunity representing $800 million, positive initial data from the Phase I trials has reinforced the company’s enthusiasm to initiate Phase II trials as soon as possible. Shares fell 1 cent for the week to close at $0.54.
VoIP, Inc. (OTCBB: VOII), a leading provider of Voice over Internet Protocol (VoIP) communications solutions for service providers, resellers and consumers, updated investors of recent developments and provide outlook for 2007 last week. The company expects sales to reach over $33 million for 2007 with gross profits reaching $10 million and EBITDA totaling $1 million. This guidance is based on increased minutes and traffic traveling across the company’s VoiceOne network. The company has also significantly improved its balance sheet, although still faces supply from several of the transactions that have restructured previous indebtedness. Despite the news, shares fell 3 cents to close the week at $0.16.
GreenShift Corporation (OTCBB: GSHF), a company devoted to facilitating the efficient use of natural resources, said last week that the company is currently re-evaluating the structure of the GreenShift – GS CleanTech – GS Carbon reorganization, with an eye toward maximizing shareholder value. The company plans to hold a shareholder conference call shortly after disclosing the revised structure, as a forum for shareholder questions. Additionally, GS EnviroServices Corporation, which is majority-owned by GS CleanTech, announced the acquisition of the Remedial Construction Group of Vertex Environmental Services, Inc. by its wholly owned subsidiary, Enviro-Safe Corporation. GS EnviroServices said it expects the acquisition to increase its revenues in this business sector by 60-70% in fiscal year 2007. Shares remained unchanged for the week to close at $0.05.
Volume Alert: IR BioSciences Holdings, Inc. (OTCBB: IRBO), a development stage biotechnology company, traded over six times average volume last week after announcing the appointment of Robert J. Hariri, M.D., Ph.D. to its Board of Directors. Dr. Hariri is the Chief Executive Officer of Celgene Cellular Therapeutics, a division of Celgene Corp., and will bring his considerable financial, as well as medical and scientific experience to IR BioSciences. Shares rose 3 cents for the week to close at $0.19.
Language Access Network (OTC: LANW), a leader in video interpretation services, last week announced the signing of a contract with Pitt County Memorial Hospital in Greenville, NC to utilize its video interpretation service known as MARTTI (My Accessible Real-Time Trusted Interpreter). Pitt County Memorial is the flagship hospital for University Health Systems of Eastern Carolina, providing care to over 1.2 million patients last year. The MARTTI service will be available free to patients in the hospital’s Emergency Department 24 hours a day, 365 days a year. The company recently said it expects to place 22 units by the end of the second quarter 2007, with 40 more systems being placed over the next few months. Shares rose 14 cents to close the week at $0.90.
TitleMatch Entertainment Group, a subsidiary of Protocall Technologies Incorporated (OTCBB: PCLI), a leading provider of DVD on-demand systems for retailers and etailers, last week announced a strategic partnership with Primera Technology, Inc., to integrate Primera DVD duplicators in TitleMatch DVD On-Demand services. The TitleMatch DVD On-Demand service enables retailers to burn video content directly in stores and at website distribution centers at the time orders are placed, through on-line browsers or multi-media touch-screen display terminals, and are produced by store personnel in minutes. TitleMatch will use Primera’s entry-level duplicators and will target retail locations including convenience stores, drug store chains, grocery chains and highway travel centers that have large numbers of stores, and whose unit sales of DVDs range from one to 10 per day, allowing retailers to benefit from having a virtual inventory of DVD titles. Shares fell 4 cents to close the week at $0.10.
On the Wires: Isonics Corporation (NASDAQ: ISON) received notification last week that it was approved to retain its listing on Nasdaq Stock Market after correcting deficiencies that would have otherwise resulted in the delisting of trading from that marketplace. Electro Energy, Inc. (NASDAQ: EEEI) presented a review of Nickel Battery Systems used on U.S. Space missions at the 25th Annual Space Power Workshop held in Los Angeles last week.
SPECIAL SITUATIONS:
MBI Financial Inc. (OTCBB: MBIF) $0.40
Mortgage brokers provide numerous benefits during the process of bringing a borrower and creditor together to obtain a mortgage loan. As the market for mortgages continues to experience increased competitiveness, the role of a mortgage banker has significant advantages over a mortgage broker, an opportunity that MBI Financial has identified. MBI has been acquiring mortgage brokers throughout the country and turning them into mortgage bankers, increasing their profitability. The company in the process of consolidating regional mortgage brokerage companies into its wholly owned subsidiary and mortgage banking operation, MBI Mortgage, Inc. Its strategy is to expand the acquired mortgage brokerage firms by setting up and receiving mortgage brokers’ loans into its mortgage banking operation and to also grow these businesses with proven marketing programs, better and faster loan approvals, and the introduction of new and expanded loan programs. The company believes that it can access untapped revenue potential within the mortgage origination process by creating significant cross selling opportunities and introducing a variety of financial services products at different levels of the mortgage origination and funding chain.
Although there has been much concern regarding the weakening housing sector, MBI Financial actually benefits from such an environment, as it positions itself to be able to purchase such mortgage brokerage firms who are affected by such rates, at more favorable terms. When making such acquisitions, MBIF recognizes the importance of individual firms keeping their independence in their local markets, while providing them with the necessary infrastructure at the national level to help process administrative and business development needs. Such increased operating efficiencies boost margins and grow market share while providing a necessary service to the public.
While competitors in this industry choose to under-serve the largest minority group in the country, the Hispanic community, MBIF is focused on providing mortgage services to this community that stands at over 40 million strong. The hispanic population now represents over 13 percent of the total U.S., making corporate strategies that target the rising affluent, second-generation Hispanics an essential to securing growth and remaining competitive. Furthermore, the buying power of Hispanics is estimated to reach $1 trillion by 2010.
Currently, MBI Financial’s affiliated firms are located in Texas where plans of expanding into California, Florida, Illinois, and the Northeastern United States are presently underway. The company has the capacity to fund over $100 million in mortgage loans. Its portfolio should increase as implementation of the company’s acquisition strategy continues. With a market capitalization of approximately $5.9 million and revenues for the most recent quarter alone ended December 31st 2006 totaling $2.7 million, investors should stay tuned as such top-line growth of 125% could be a sign of things to come in the future.