Companies featured in this edition of the newsletter: ACTC, AEN, ENZ, ESYM, FMTI, HYTM, ITUI, PLKH, PSTI, SVUL, SWYV, XCR
For the fourth consecutive week, markets managed to finish in positive territory reflecting a collective optimism that the economy will stabilize later this year as forecasted by several prominent Fed governors. All the major indices finished trading in positive territory, with the Dow gaining 214 on the week to close at 8017, up 3.1% reducing its YTD loss to 8.6%. The Nasdaq managed to find its way into positive territory on the year, gaining 5% on the week to close at 1621, up 2.8% on the year. The S&P 500 and Russell 2000 finished up 3.3% and 6.3% respectively, paring their YTD losses to 6.7% and 8.7%.
Things started out on a pessimistic note on Monday, as the US government’s auto task force threatened to withhold bailout funds to force out General Motors’ CEO Rick Wagoner. Auto woes continued to send stocks lower Monday as it was announced that the government would infuse Chrysler with enough funding to continue operations for 30 days, but would allow it to fail if they could not reach an agreement with Italian automaker Fiat. If the two companies are able to reach some sort of alliance agreement, the government has indicated that it will provide up to $6 billion in additional financing to Chrysler.
The growing sentiment regarding economic recovery was strong enough to temper the uncertainty surrounding automakers and some less than encouraging unemployment data suggesting that while the overall economy may be improving, job markets still have some ground to gain. Despite the uncertainty, investors clung to the positive developments on the week, including news that the manufacturing sector is contracting at a slower rate than expected as evidenced by the ISM Manufacturing Index which came in at 36.3 in March, slightly above the 36.0 consensus estimates. Pending home sales also managed to defy expectations, showing growth of 2.1% month over month in February beating the widely held expectation for no change.
Developments from the G20 summit served to stoke further buying later in the week, as markets saw their best day on Thursday with all ten major sectors of the S&P closing higher following the day’s action. News that the summit had agreed to double financing for the IMF to nearly $500 billion was met enthusiastically by investors worldwide, as overseas markets also managed to post significant gains following the announcement.
What should investors look for this week? The earnings calendar will be light again, as equity and bond markets will be closed for Good Friday, but look for reports from Alcoa (NYSE: AA) and retailer Bed Bath & Beyond (NASDAQ: BBBY) Tuesday after the close followed by Genentech (NYSE: DNA) Thursday after the bell.
Economic reports for the week begin with February consumer credit figures due out at 2:00pm on Tuesday, followed on Wednesday morning by February wholesale inventories at 10:00am and weekly crude inventories at 10:30 am. Import and export prices for March will be released together at 8:30 am Thursday along with weekly initial jobless claims and February trade balance figures for March. The Treasury budget for March will be released Friday afternoon at 2:00 pm.
Conference schedules for the week begin on Monday with the two day Pritchard Capital Partners Denver Bus Tour. The two day Hart Energy Unconventional Gas Conference begins on Tuesday in Fort Worth, as does the Goodyear Tire shareholders meeting which is being held in Akron, Ohio. T Rowe Price will hold its annual shareholders meeting in Owings Mills, Maryland on Wednesday, as will Daimler Auto Group, which will hold its annual meeting in Detroit. Goldman Sachs will host its Leveraged Finance Healthcare conference on Wednesday in New York. FOMC minutes from the March 17-18 meeting will be released Wednesday.
Enzo Biochem (NYSE: ENZ), a biotechnology company specializing in gene identification and genetic and immune regulation technologies for diagnostic and therapeutic applications and laboratory services, announced that its subsidiary Enzo Clinical Labs, has been selected as a regional provider of medical laboratory services for Horizon Blue Cross Blue Shield of New Jersey. Horizon Blue Cross is one of the top regional health insurers in the tri-state service area, and will serve to enhance Enzo’s strategic plan of broadening both their geographic reach as well as their test menu. In other news last week, Enzo was featured in an article highlighting the “100 Great Investigational Drugs” in the March 2009 edition of R&D Directions, a magazine providing extensive coverage of pharmaceutical product development and insight into successful R&D strategies. The article highlighted Enzo’s Alequel product targeting Crohn’s disease as showing particular promise in a major growing therapeutic area of unmet medical need while targeting disease pathways through a distinctly innovative mechanism of action. Enzo is currently analyzing data from a recent Phase IIb study of Alequel. Shares rose 35 cents last week to close at $4.48.
Forbes Medi-Tech Inc. (NASDAQ: FMTI), a life sciences company focused on evidence-based nutritional solutions, released results for the fiscal year ended December 31, 2008 last week. Forbes generated revenues of $7.84 million resulting from direct sales of Reducol and sales resulting from the Forbes-Fayrefield joint venture offering finished products containing Reducol. Forbes posted a net loss of $7,653,000 ($1.57 per share) for the ’08 fiscal year, compared to $11,683,000 ($2.43 per share) loss sustained during ’07. The loss in ’08 can be attributed in part to significant reorganization and restructuring non-cash costs associated with the company’s decision to divest its pharmaceutical research and development operations and focus exclusively on its revenue generating nutraceutical business. The company expects that these measures designed to reduce costs associated with non-revenue generating operations will result in significantly higher profit margins and will serve to attract either additional funding or an M&A transaction which the company sees as being integral to their ability to continue operations. Shares fell 2 cents on the week to close at $0.15.
Healthcare services company Hythiam, Inc. (NASDAQ: HYTM) announced results for its fourth quarter and fiscal year ended December 31, 2008. The company reported revenue of $8.6 million, which included $779,000 in revenue from Hythiam’s healthcare services business and $7.8 million in revenue from CompCare’s operations during Q4 ’08. CompCare was sold by the company during the first quarter. During the comparable period a year ago, the company reported consolidated revenues of $11.8 million, which included $2.0 million from Hythiam and $9.8 million for CompCare. The $1.2 million decrease in revenue is primarily due to the company’s decision to streamline operations by cutting operating costs to focus on managed care opportunities. Net loss for the 2008 fourth quarter was $19.3 million, or $0.35 per share, versus a net loss of $8.6 million, or $0.17 per share, in the fourth quarter of 2007. For the fiscal year ended December 31, 2008, revenue was $41.2 million, which include $6.1 million in revenue from Hythiam’s healthcare services operations and $35.2 million in revenue from CompCare’s behavioral health managed care operations. In the comparable 2007 period, consolidated revenue was $44.0 million, which included $7.7 million and $36.3 million for Hythiam and CompCare, respectively. During FY ’08, Hythiam reported a $50.4 million, or $0.92 per share, compared to a net loss of $45.5 million, or $0.99 per share, in 2007. The company continues to funnel resources towards attracting a managed care deal, as it recently sold their CompCare operations in order to focus on signing a deal with a large third party payor. In other news last week, Hythiam announced that its subsidiary, Catasys, presented jointly with Ford Motor Company at the 4th Annual Behavioral Risk in the Workplace Conference held on March 18-19, in Palm Springs, California. The presentation focused on the problems associated with substance abusers in the workplace, including the increased prevalence of absence and tardiness, and the significantly higher rates of on the job accidents suffered by people demonstrating these tendencies. The presentation highlighted the staggering costs incurred by employers as a result of substance dependant employees, and demonstrated the significant savings available to employers by reducing these risky behaviors with substance abuse treatment programs such as Catasys. Shares gained two cents on the week to close at $0.36.
Pluristem Therapeutics (NASDAQ: PSTI), a company engaged in developing regenerative therapies from stem cells derived from the placenta, announced last week that its President and CEO, Zami Aberman, has been invited by the Equity Forum in Stuttgart, Germany to present updates on the company’s corporate development in Germany and its Phase I clinical trials using the company’s placental-derived stem cell product, PLX-PAD. Mr. Aberman will also discuss arrangements with two German hospitals for the upcoming Critical Limb Ischemia clinical trials. The presentation is scheduled to take place on April 29th. Shares lost nine cents on the week to close at $1.24.
Advanced Cell Technologies (OTC: ACTC), a company engaged in the development of regenerative therapies utilizing stem cells, announced last week that it has entered into a licensing agreement with its Korean joint venture partner CHA Biotech. Under the terms of the agreement, Advanced Cell will license its retinal pigment epithelium (RPE) technology for treatment of diseases of the eye to CHA for development and commercialization exclusively in Korea. ACTC is eligible to receive up to $1.9 million in fees, contingent upon the companies achieving certain milestones, including the filing of an IND with the US FDA by ACTC which the company expects to complete during the second half of ’09. ACTC received an upfront fee as per the terms of the licensing agreement and expects to receive the remainder of the fees over the next 12 months. CHA will be solely responsible for all fees associated with RPE clinical trials in Korea. This latest licensing agreement marks an ongoing collaborative relationship between the two which has already generated significant clinical progress in the field of hemangioblast research; the companies hope for similarly productive results from this latest RPE venture which the companies expect should further development of regenerative therapies for diseases of the eye. The deal represents another way the company has raised non-dilutive capital through licensing its technology to be used in one of its non-core markets. Shares lost half a cent on the week to close at $0.105
Adeona Pharmaceuticals (AMEX: AEN), a specialty pharmaceutical company developing innovative late-stage drug candidates for the treatment of autoimmune and central nervous system diseases, reported results from its fourth quarter and year ended December 12, 2008. Among the highlights was a 68% decrease in cash used in operations during Q4 ’08, and a 60% reduction over the ’08 fiscal year, resulting in $5.8 million cash in hand at the end of the period. For the quarter ended December 31, 2008, the company posted a net loss of $915,150, or $0.04 per share as compared to a net loss applicable to common shareholders of $3,159,553 or $0.23 per share for the comparable period in the previous year. For the 12 months ended December 31, the company reported a net loss of $7,205,158, or $0.35 per share, compared to a net loss applicable to common shareholders of $22,302,155, or $1.27 per share, for the comparable period in 2007, representing a decrease of $15,096,997. AEN managed to decrease research and development costs by $1,684,156 for the year, mostly attributable to decreases in salaries and payroll taxes, stock based compensation, and payments related to the development of licensed clinical drug candidates. Adeona managed to decrease operating costs by $2.2 million or 71% since they implemented company-wide cost reduction measures in March of ’08. Shares gained two cents on the week to close at $0.17.
Medical device developer Xcorporeal (AMEX: XCR) announced highlights for fiscal 2008 last week, including the unveiling of a new prototype of its XCR-6 home dialysis machine which is expected to be the smallest, lightest and easiest to use machine on the market. XCR plans to pursue additional sources of funding in an attempt to sustain operations and hopes that as markets continue to right themselves, they will be able to acquire the capital necessary to continue development of their portfolio of potentially life enhancing technologies. Shares lost 17 cents on the week to close at $0.25.
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, has engaged the services of entomologist Ralph Williams, PhD. Dr. Williams will serve as a consultant and will assist the company’s engineering team on designing environmental controls to optimize soldier fly breeding behavior. Dr. Williams, who has over 30 years of extension work focused in the area of arthropods and their contribution to public health and veterinary importance, will also provide guidance and direction to ensure EcoSystem bioreactor soldier fly colonies are healthy and genetically superior, thus ensuring maximum production of oils to be used in production of biofuel. Shares remained unchanged at less than a penny on the week.
Prolink Holdings Corp. (OTCBB: PLKH), a provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced that La Contenta Golf Club in Valley Springs, California now features the company’s GameStar GPS system and will utilize ProLink’s digital out of home media power via its exclusive national advertising program. La Contenta is a challenging Northern California course designed by Richard Bigler, opened for business in 1974, that has recently begun major renovations to modernize the facilities and will further enhance the value offered to its customers by featuring the Prolink system. Shares lost three cents on the week to close at $0.05.
i2Telecom International, Inc. (OTCBB: ITUI), a developer of award-winning patented and innovative high-quality mobile applications and services, released results for the twelve month period ended December 31, 2008. The company reported a decrease in revenue to $629,825 compared with $865,151 in 2007, due to the shift to a higher percentage of recurring service revenues and a new product line. ITUI sold a piece of its intellectual property for $6.5 million during the period, which helped bring its gross receipts total to $7,129,825. Net loss for 2008 totaled approximately $2.9 million, or ($0.01) per share, versus a net loss of approximately $9 million, or ($0.07) per share, in 2007. The decrease in net loss is primarily attributable to the intellectual property sale which provided a net gain of $5,193,620. The company managed to significantly reduce its net loss compared to the previous fiscal year despite the overall contractions characterizing world economies during the period, suggesting that they will be well positioned to achieve profitability as markets continue to stabilize. Shares lost a penny on the week to close at $0.05.
Steel Vault (OTCBB: SVUL) an emerging provider of identity security products and services, posted its top ten tips for keeping personal information safe during tax season on its website last week. Tax season is a particularly busy time for identity theft due to the prevalent use of Social Security numbers in tax documents which provides thieves with ample opportunities to abscond with this important personal identification number. Steel Vault provides these tips free of charge on their website in hopes of preventing consumers from being taken advantage of while filing tax returns. Shares remained unchanged on the week at $0.39.
Diversified holding company, Seaway Valley Capital Corporation (OTCBB: SWYV), announced that its wholly owned subsidiary, Sackets Harbor Brewing Co., has signed a wholesale distribution agreement with Republic National Distribution Co. to distribute its products throughout the state of Florida. Republic and its affiliates have a distribution network spanning twenty states primarily in the South and Midwest, and will initially distribute Sackets’s award winning War of 1812 Amber Ale. Relationships with prestigious retailers such as Total Wine & More, ABC Fine Wine and Spirits, and Publix Super Markets, makes Republic National a sought after craft beer distributor in Southern markets and positions Sackets well to capitalize on the growing demand for specialty craft beers in affluent markets throughout Florida. Shares remained unchanged at less than a penny on the week.