Companies featured in the current edition of the newsletter: ACCP, CVM, GNBT, ITUI, MWAV, PCFG, PLKH, PSTI, SKYI
Trouble in the financial sector was the story of the week yet again as fears of greater than anticipated recessionary pressures affecting Europe helped stoke concerns about our own banking system, leading to precipitous declines in all of the major indices on the week. All told, the Dow ended down 484 points, losing 6.2% on the week to close at 7365, a new five year low, bringing its YTD loss to 16.1%. The Nasdaq fared no better, posting a 6.1% loss to end the week at 1441, down 8.6% on the year. The S&P 500 and Russell 2000 lost 6.9% and 8.3% respectively, bringing their YTD losses to 14.7% and 17.7%.
How ugly has the stock market been? On Friday, 667 New York Stock Exchange- traded issues made new lows compared to 16 new highs. The results on the Nasdaq were just as dismal, as there were 452 lows and just 9 new highs. There was no place to hide. Even five Dow Jones Industrial components trade below $10. One market pundit noted that before this year, the S&P 500 had only logged a year-to-date loss of 10% or more in a January or February three times (1933, 1939 and 2008). In 1933 the year’s low came in February, with a loss near 20%; in the other two cases stocks dropped dramatically further during the balance of the year.
The holiday-shortened week began sharply lower on Tuesday, with domestic banks following European banks lower following a Moody’s report that the recession in emerging European economies will be more severe than elsewhere, which is likely to pressure Western European parent companies with potentially global ramifications. Additional pressure on the market was applied in the form of a dismal Empire Manufacturing Survey which showed a steep drop to -34.7 in February, down from -22.2 in the previous month; well below the -23.8 consensus estimate. Even the announcement of details surrounding President Obama’s mortgage relief plan Wednesday morning failed to move markets into positive territory, as they foundered and managed to trade mostly sideways during midweek.
Friday saw another drubbing of the financial sector, fed by fears of bank nationalization which lead to shares of Bank of America and Citigroup losing 35.6% and 35.9% respectively at their intraday lows. While an announcement from the White House reiterating the government’s support for a privately held banking industry late Friday was met with enthusiasm, the damage had been done. Inflation reports helped fan the flames as well on Friday, as core PPI showed a 0.4% month/month increase in January, and core CPI showed a 0.2% month/month increase.
What should investors look for this week? Keep watch for Fed Chairman Bernanke’s semi-annual monetary policy report on Tuesday which has significant market moving potential. Earnings reports for the week begin with Campbell Soup (NYSE: CPB) reporting before the bell Monday. On Tuesday, look for Daimler (NYSE: DAI), HJ Heinz (NYSE: HNZ), Macy’s (NYSE: M) Office Depot (NYSE: ODP) and Pacific Gas & Electric (NYSE: PCG), with First Solar (NASDAQ: FSLR) reporting after the bell. On Wednesday morning, Garmin (NASDAQ: GRMN) is scheduled to report. Cablevision (NYSE: CVC) is expected to report Thursday morning, along with General Motors (NYSE: GM), MGM Mirage (NYSE: MGM), Safeway (NYSE: SWY), Sears Holdings and US Cellular (NYSE: USM). AIG (NYSE: AIG) reports after the bell Thursday, as does Dell (NASDAQ: DELL), Gap Inc. (NYSE: GPS), Kohls (NYSE: KSS), and Novell (NASDAQ: NOVL).
Economic reports begin with the S&P Case-Schiller Home Price Index for December due out at 9 a.m. Tuesday morning, along with February Consumer Confidence figures and Bernanke’s Monetary Policy Report, both due out at 10:00 a.m. On Wednesday expect January Existing Home Sales at 10:00 a.m. followed by Weekly Crude Inventories at 10:35 a.m. Thursday morning, look for Durable Goods Orders for January, due out at 8:30 a.m. with weekly initial jobless claims, followed by January New Home Sales at 10:00 a.m. Preliminary Q4 GDP and Chain Deflator figures will be released at 8:30 a.m. Friday morning, followed by Chicago PMI and Revised Michigan Sentiment Index, both for February, due out at 10:00 a.m.
Conferences for the week begin with the three day BMO Capital Markets Global Metals & Mining Conference in Hollywood, FL. Also beginning on Monday is the Credit Suisse Group Global Services Conferences which will run until Wednesday in Phoenix. Merrill Lynch will hold its two day Insurance Investor Conference in New York on Tuesday, with Microsoft providing a strategic update available via webcast the same day. On Wednesday, the two day CanaccordAdams Sustainability Conference begins in Deer Valley, Utah, as does the three day Goldman Sachs Symposium being held in Las Vegas, and the Goldman Sachs Technology and Internet Conference which is being held in San Francisco. The three day Jefferies & Co. Internet & Media Conference also begins Wednesday in New York. Noteworthy events for the week conclude with the JP Morgan Investor Day at the company’s headquarters in New York on Thursday.
Access Pharmaceuticals, Inc. (OTCBB: ACCP), an emerging biopharmaceutical company that develops and commercializes propriety products for the treatment and supportive care of cancer patients, entered into an agreement last week with a major Korean pharmaceutical company estimated to be worth in excess of $10 million. Access entered into a definitive licensing agreement under which JCOM Ltd, a subsidiary of DONG-A Pharmaceuticals, the Korean leader in the field, will manufacture, develop and commercialize Access’ proprietary products ProLindac and MuGard for the Republic of Korea. ProLindac is Access’ novel DACH platinum prodrug currently in Phase 2 clinical studies which has been shown to be active in a wide variety of solid tumors in both preclinical models and in human trials. MuGard is used for the management of oral mucositis, a debilitating side effect of many anticancer chemotherapy and radiation treatments, and has already received marketing allowance from US and European regulatory authorities. Under the terms of the agreement, JCOM will pay Access an upfront fee and subsequent milestone payments along with a double digit royalty upon commercialization of ProLindac and MuGard. Additionally, JCOM has committed to fund and execute a Phase II trial for Prolindac in an indication to be determined at a later date by the two companies. The commitment marks the third major Phase II study of the drug funded by outside partners, and has provided Access with robust data far beyond what the company would have been capable of generating on its own. Shares gained thirteen cents on the week to close at $1.10.
Volume Alert: Shares of CEL-SCI Corporation (AMEX: CVM), a company engaged in research and development of drugs and vaccines used in the treatment of cancer, surged 40% Friday on 3 times average volume, following the release of a letter to shareholders reviewing highlights from 2008 and providing operational objectives for the coming year. Among the 2008 highlights were the signing of a Multikine licensing agreement with Teva Pharmaceuticals, one of the top 20 pharma companies in the world, and extension of the Multikine agreement with Orient EuroPharma of Taiwan- both companies also agreed to participate in and pay for part of the Multikine Phase III trial. In addition to the licensing agreements surrounding Multikine, the drug was named one of the 10 future blockbuster drugs by MedAdNews, who expect the group to eventually gain FDA approval and break the billion-dollar annual sales mark. The company also took delivery of its new manufacturing facility which will supply Multikine for the upcoming Phase III clinical trials. 2008 also saw some promising results from their new rheumatoid arthritis vaccine which suggested that the drug is comparable to Enbrel, a leading treatment for RA. In response to the worldwide downturn, the company has reduced their expenditures and expanded discussions with various pharmaceutical companies regarding world-wide Multikine partnership which should help to significantly defray costs associated with the upcoming Phase III trial. In addition to partnership agreements involving Multikine, CVM is also in discussions to contract out their manufacturing facility while it is not being used to produce Multikine. The company believes that as a cancer company ready to start a pivotal phase III clinical trial with a completely novel and non-toxic cancer therapy, they are well positioned for licensing and joint venture arrangements. Shares lost a penny on the week to close at $0.21.
i2Telecom International, Inc. (OTCBB: ITUI), a developer of award-winning patented and innovative high-quality mobile applications and services, increased its presence on the PGA Tour last week, announcing that Tom Pernice Jr. a 26-year veteran and two-time winner on the PGA Tour, entered into a world-wide endorsement agreement with i2Telecom International. The announcement comes on the heels of news that Fred Couples, former Masters champion and 2009 President’s Cup captain will also be endorsing ITUI’s services on Tour this year. These two high profile endorsements should serve to increase awareness of the company’s products, further enhancing their position as a leading developer of VoIP services worldwide. Shares lost two cents on the week to close at $0.08.
Drug delivery company Generex Biotechnology (NASDAQ: GNBT) announced that it has received a $500,000 purchase order from The Saudi Import Company-Banaja, a pharmaceutical products distributor in the Kingdom of Saudi Arabia. The purchase order placed by Banaja consists of quantities of the Company’s confectionary products, including Glucose RapidSpray, GluocBreak, and BaBoom EnergySpray, amongst other consumer health-related products packaged exclusively for Generex MENA, the company’s Middle Eastern operating subsidiary. The newly formed partnership between Generex and Banaja- one of the largest pharmaceutical and consumer drug distributors in the Kingdom of Saudi Arabia- has significant implications for Generex as they continue to expand their Middle Eastern operations. In other news last week, the company announced the launch of their new diet spray, Crave-NX 7-Day Diet Aid Spray, an on-the-go companion to curb and control junk food cravings and help support healthy weight loss. Crave-NX’s orange-flavored formulation, sprayed and administered into the mouth, is scientifically formulated to quickly curb cravings throughout the day, and is designed to help dieters to achieve and maintain a healthier lifestyle by reducing impulse snacking. Shares lost 12 cents on the week to close at $0.22.
Green St. Energy (OTCBB: MWAV), a company developing a portfolio of renewable wind energy assets, continues to develop its wind farm operations in the Tehachapi, California area, as the company announced in a regulatory filing last week that it has entered into an option to purchase additional land in Tehachapi. Under the terms of the agreement, the company obtained a three-year option to purchase 4,840 acres of unimproved property in the Tehachapi region in exchange for a three year $16 million convertible debenture. The agreement follows the prior acquisition of a 160 acre parcel of land in the area which was given a power capacity factor rating of “Excellent” by a leading global energy assessment firm, suggesting that the acreage will provide especially favorable wind shear to be used to generate electricity. Green St. plans to move aggressively towards obtaining the necessary permits to allow wind energy production on its newly acquired acreage and expects resistance to be at a minimum due to a favorable legislative environment and the existing infrastructure of transmission lines in the region, in addition to the increased awareness amongst investors regarding the need for alternative energy sources which should serve to increase access to financing. Shares lost nineteen cents on the week to close at $0.45.
Prolink Holdings Corp. (OTCBB: PLKH), the world’s leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced several new courses that have installed the ProLink Solutions GPS system. The Willow Glen, Oak Glen and Pine Glen courses at Sycuan Resort (El Cajon, Calif.) now feature the ProLink Solutions GPS system. Sycuan has been rated the favorite golf destination of San Diego County residents many times and received a rating of “10” from the San Diego Union-Tribune. Prolink also continues to expand its overseas profile, as Dehesa Montenmedio Golf and Country Club (Vejer de la Frontera, Cadiz, Spain) has also recently been equipped with the system. Opened in 1996, Montenmedio is considered one of Europe’s must-play courses, and regularly hosts professional events, including 2008 European Tour Qualifying School. Customers continue to be impressed with not only the system’s ability to enhance the overall golf experience by providing pinpoint yardages and course specific tips from local pros, but its ability to generate substantial additional revenues for courses through its innovative on-course advertising network which allows advertisers to reach otherwise difficult to target affluent individuals in a non-obtrusive way. Shares remained unchanged at $0.11 on the week.
Skye International (OTCBB: SKYI), a company developing and marketing a suite of tankless water heating solutions, released a letter to shareholders last week providing updates on the company’s operations over the past year and highlighting their goals for the coming fiscal year as the company continues to transition from development stage to actively engaging in sales and revenue generation. The letter provided updates regarding the company’s FORTIS line of electric tankless water heaters, which is currently in full scale commercial production, as well as the successful commercialization and pending production of the Heatwave and Paradigm lines of point-of-use heaters which are expected to enter production during the second quarter of ’09. The company’s line was recently introduced at the International Builder’s Show in Las Vegas to rave reviews. Skye has recently begun selling their products exclusively through the wholesale channel to plumbing and home supply warehouses such as Ferguson, Moore Supply and Winnelson. The letter highlighted the company’s success in raising capital in ’08 and their hopes for a continued ability to successfully procure working capital despite the difficult environment in which they are operating in order to fund growth and further expansion of their product line. Further plans for the future include obtaining a listing on a higher exchange, and continued efforts to raise awareness levels within the investment community regarding the company’s potentially revolutionary technologies which the company feels will further enhance shareholder value. Shares gained five cents on the week to close at $0.38.
Volume Alert: Shares of mining and exploration company Pacific Gold Corp. (OTCBB: PCFG) rocketed 50% in the closing minutes of trading Friday on more than 3 times average volume, following an announcement late in the day that its directors had approved the issuance of shares representing approximately 20% of its ownership interest in its wholly-owned subsidiary, Oregon Gold, Inc. to the shareholders of Pacific Gold through distribution of a stock dividend. Shareholders of record on March 2, 2009 will receive approximately one share of Oregon Gold for each one hundred shares of Pacific Gold Corp. that they hold on the record date. Oregon Gold owns the Bear Bench claims and Defiance mine, located in south-western Oregon. Shares ended trading at $0.0069, up 47% on the week.
SPECIAL SITUATIONS:
Pluristem Therapeutics (NASDAQ: PSTI) $1.06
With the inauguration of President Obama and a renewed focus on further developing cutting edge scientific research, many stem cell companies have been reaping the benefits and posting significant gains in stock prices despite the overall funk characterizing markets of late. One such company whose stock has risen considerably since the new year is Pluristem Therapeutics, a biotech company focused on the research and development of therapeutic products using mesenchymal stem cells (MSCs) from the placenta for the treatment of degenerative, ischemic and autoimmune diseases. Despite the attention which stem cell companies have received of late, shares of Pluristem still appear to be well under the radar, perhaps due to their pioneering focus on use of placental cells, which has caused them to disappear from the radar of many biotech investors despite the fact that the technology, which they have been quietly developing, may be a particularly promising source for obtaining commercially viable, therapeutically functional stem cell treatments.
The commercial viability demonstrated by Pluristem’s technology can be attributed to their proprietary Plurix 3D Bioreactor, which was developed as a result of many years of refinement by leaders of Israel’s world-class research centers to closely mimic the actual environment within the bone marrow where these cells are produced, enabling the creation of unprecedented amounts of these difficult to obtain cells and creating a significant competitive advantage over their peers working with MSCs. This innovative system abandons the standard, two-dimensional cell culture techniques in favor of a three-dimensional stromal cell culture that creates an artificial physiological environment, giving MSCs the ability to grow free of exogenous biological and pharmacological products which are required to expand cell cultures in the more typical two-dimensional process, thus allowing cell replication which more closely resembles natural processes. This eliminates the risk of genetic instability and allows safer expansions of stem cells without the inclusion of artificial barbiturates. In addition to being able to produce more of these cells, PSTI has demonstrated abilities to expand these cells an unprecedented 10,000 times compared to their nearest competitor who has been able to do so 100-200 times- they are able to produce cells that closely resemble their naturally occurring counterparts in their early stages- before specialization occurs, enabling them to be differentiated into various types of tissue such as muscle, bone, cartilage, fat, tendon, etc, allowing for a wide range of therapeutic applications.
Pluristem’s focus on the therapeutic value behind obtaining MSCs from the placenta have been supported by academic and biotech research that has shown increased interest in MSCs due to their ability to form various cell types, as well as their availability in quantities appropriate for clinical applications, making them good candidates for use in tissue repair, a main focus of PSTI’s pipeline. In addition, the placenta is an especially attractive source of these cells, since MSCs here are in contact with two hosts, the mother and the baby, suggesting lower immunogenicity so as not to cause the mother’s rejection of the baby’s cells, which should translate into higher acceptance when these cells are implanted into patients, leading to a better tolerated treatment capable of repairing tissue on the scale necessary to make a therapeutic impact on patients.
Pluristem has two lead programs using MSCs in advanced preclinical development with a combined market potential of up to $6 billion. Academic studies also support its products’ potential to address further indications such as stroke, Parkinson’s disease, multiple sclerosis, Crohn’s disease and musculoskeletal disorders, which represent a combined market opportunity of almost $22 billion. The company is successfully exploring some of these indications in early-stage pre-clinical studies.
The company’s lead candidate, PLX-PAD is being investigated for peripheral artery disease (PAD), a condition in which plaque builds up in the wall of arteries in the pelvis and legs (atherosclerosis), leading to the obstruction of normal blood flow or arterial narrowing ultimately leading to chronic limb ischemia (CLI) which can result in amputation of limbs. PAD affects some 20 million people in the US, Europe and Japan with an estimated market at around $4 billion. In pre-clinical trials with ischemic mice PLX-PAD delivered very encouraging data. It was able to restore blood flow to the affected limbs of mice and significantly increase the number of new capillaries supplying the ischemic area, suggesting that the product can trigger angiogenesis. Results showed a significant increase in limb functionality 21 days after treatment and a significant decline of oxidative stress and endothelial inflammation. Based on these promising results, Pluristem filed the pre-IND application to the German Clinical Trials Regulatory Agency Paul Ehrlich Institute and the US Centre for Biologics Evaluation and Research (division of FDA), which have now been approved.
With a promising proprietary technology focusing on an area whose merits are substantially supported by numerous studies, Pluristem appears well positioned to capitalize on the government’s renewed commitment to advancing our understanding of regenerative therapies. While their focus on obtaining MSCs from the placenta have caused them to fly under the radar largely, the merits of their technology cannot be ignored, especially in the face of proposed government funding which is expected to greatly benefit the stem cell industry. Add to this expected government infusion the fact that PSTI’s closest competitors in the space have market caps in the neighborhood of $80 million despite not having as well developed of a technological portfolio, and investors should begin to get a picture of the potentially undervalued opportunity which Pluristem presents. By focusing on an extremely commercially viable technology for producing stem cells that should be considerably better tolerated than their competitors’, PSTI presents investors with an opportunity to own a piece of a largely overlooked company with an innovative business model in a red hot market at a significant value.
