Companies featured in this edition of the newsletter: ACCP, ACTC, CBAI, CVM, DKAM, FMTI, IMUC, ITUI
It was a relatively quiet week on Wall St. as markets searched for direction in the absence of major catalysts, ending up modestly higher at the close of Friday’s session. The Dow managed to post a 0.4% gain on the week, closing up 36 points at 8799, finally breaking into positive territory on the year with a gain of 0.3%. The Nasdaq closed up 0.5%, finishing at 1858, up 17.9% on the year, while the S&P 500 managed to post a gain of 0.7% on the week, up 4.8% on the year. The Russell 2000 was the lone laggard on the week, losing 0.7% to pare its yearly gains to 5.5%.
Positive news from Texas Instruments helped nudge the technology sector higher early in the week, as the chip maker raised guidance following increases in demand for its products. TXN now expects revenue of between $2.3 and $2.5 billion, up from $2.3 billion consensus, with EPS expected to be between $0.14 and $0.22 per share, versus the $0.10 expectation. The increased guidance helped bolster the chip sector on the week, with the Semiconductor Index rising 1.5%. In other corporate news, it was announced last week that 10 of the 19 largest US banks, including JP Morgan and Goldman Sachs will be allowed to repay $68 billion in TARP funds as early as this week.
Economic news on the week was mostly positive, as initial jobless claims fell 24,000, beating expectations, but continuing claims remained on the rise, illustrating persisting weakness in the labor market. May retail sales increased by 0.5%, but were in line with expectations, while the Fed’s Beige Book indicated that there are signs that the economic decline is slowing.
What should investors look for this week? Earnings reports pick up a bit; expect reports from Best Buy (NYSE: BBY) Tuesday before the bell, Fed EX (NYSE: FDX) Wednesday before the bell, Carnival Cruise Lines (NYSE: CCL) before the open on Thursday, and Research in Motion (NASDAQ: RIMM) after the bell the same day.
Economic reports for the week begin with the NY Empire Manufacturing Index for June due out at 8:30am Monday, followed at 9:00am by Net Long-Term TIC Flows for April. On Tuesday, look for Housing Starts, Building Permits, PPI and Core PPI, all for May, released together at 8:30am, followed by Capacity Utilization and Industrial Production for May at 9:15am. Wednesday, look for Core CPI and CPI for May, along with Q1 Current Account Balances at 8:30am, followed by Weekly Crude Inventories at 10:30am. The week finishes up on Thursday with Weekly Initial Jobless Claims at 8:30am followed by Leading Indicators for May and Philadelphia Fed minutes for June at 10:00am.
Conference schedules slow down this week, but look for the two-day Barclays Capital Leveraged Finance Consumer Conference beginning on Tuesday in New York. The two-day Jefferies & Co. Healthcare Conference begins Wednesday in New York.
Forbes Medi-Tech Inc. (NASDAQ: FMTI), a life sciences company focused on evidence-based nutritional solutions, announced last week that it has extended its supply and licensing contract with Pharmavite LLC until mid 2010 for the continued sale of Reducol, the branded cholesterol lowering ingredient in one of Pharmavite’s leading line of dietary supplements, Nature Made CholestOff and CholestOff Complete. Pharmavite has an exclusive license for distribution and sales in Food, Drug and Mass Merchandiser outlets. The Nature Made CholestOff product line has seen significant growth since its inception in 2001, and has been able to establish a strong position within the dietary supplement market. Shares gained four cents on the week to close at $0.41.
CEL-SCI Corporation (AMEX: CVM), a company engaged in research and development of drugs and vaccines, announced last week that it is expanding the pre-clinical testing of its flu vaccine utilizing its proprietary L.E.A.P.S. technology (Ligand Epitope Antigen Presentation System) to determine its efficacy against the more dangerous and virulent virus strains that may arise during the upcoming winter flu season. CVM has begun preclinical evaluation of a new formulation of its L.E.A.P.S. vaccine designed to allow targeting of mutated versions of H1N1 and other influenza viruses. CEL-SCI’s L.E.A.P.S. flu vaccine contains epitopes known to be associated with immune protection against influenza in animal models, and has already been shown to provide protection from viral diseases without causing an immune response associated with the deadly “cytokine-storm” seen in many of the victims of influenza. CVM’s collaborators at the University of Hawaii have already presented data demonstrating that vaccines utilizing its L.E.A.P.S. vaccine technology with specificity for particular Mycobacterium tuberculosis (TB) antigens can elicit immune responses that would be protective against tuberculosis and have the potential to treat swine and other H1N1 influenzas. This latest announcement of the company’s intention to work on solutions for mutations in the H1N1 virus could prove to be an important development as we enter the traditional winter flu season where the virus is expected to mutate into a more virulent strain which could have significant implications on world health should forecasts be accurate. Shares gained a penny from the previous week’s close to end at $0.44.
Access Pharmaceuticals, Inc. (OTCBB: ACCP), an emerging biopharmaceutical company that develops and commercializes propriety products for the treatment and supportive care of cancer patients, received issue notifications from the United States Patent and Trademark Office last week that two US patents relating to MuGard, the company’s approved oral rinse product for the management of mucositis have been granted. MuGard is a novel, ready-to-use mucoadhesive oral wound rinse for the management of oral mucositis, a debilitating side effect of many anticancer treatments; the product has been launched in Germany, Italy, UK, Greece and the Nordic countries by its European commercial partner, SpePharm. Shares lost two cents on the week to close at $2.23.
Volume Alert: Shares of Advanced Cell Technology, Inc. (OTC: ACTC) a developer of stem cell-based treatments, rallied 12% on Friday on more than twice average volume after the company announced, in conjunction with its collaborators at the Casey Eye Institute at the Oregon Health & Science University, safety and efficacy data pertaining to its human embryonic stem cell (hESC)-derived retinal pigment epithelium (RPE) produced under manufacturing conditions suitable for human clinical trials. The study, which will be published in the print version of the prestigious journal Stem Cells, investigated the long term effects of implanting hESC derived cells into mice with retinal degeneration and Stargardt disease, two common conditions found in humans. Results demonstrated that the transplanted cells survived for a prolonged period of time (over 220 days) and did not incite any tumor growth or other adverse side effects. Furthermore, the subject with Stargardt disease showed almost full return to normal functionality as a result of the implantation, while neither group demonstrated any long term tumor growth, suggesting encouraging levels of tolerability and efficacy. The positive results garnered from this latest study should pave the way for an IND filing with the FDA to begin human clinical trials which the company expects to complete within the next 3 to 4 months. Shares gained less than a penny on the week to close at just under $0.17.
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, announced last week that it has begun due diligence investigating the possibility of expanding sales operations in the European Union, and specifically, Italy and Belgium. The company has preexisting operations in Greece through Bourkas & Co., an international partner that has been working with CBAI since 2006 and has also established operations in Germany. CBAI believes that this is an opportune time to begin penetrating European markets and plans on intensifying its sales efforts in the region to capitalize on what it sees as optimal fiscal conditions to begin expansion efforts. Shares remained unchanged at less than a penny on the week.
On the Wires: i2 Telecom (OTCBB: ITUI) appointed Frederick Mapp, a 40 year veteran with experience in the areas of information technology systems, applications, infrastructure support, customer support and consulting services, to its Board of Directors. Mr. Mapp’s resume includes senior executive-level positions with companies such as InfoSpan, American Express and IBM as well as the position of Chief Information Officer for Advanced Micro Devices (AMD) and Honeywell. This latest addition should prove to improve ITUI’s strategic position considerably, as Mr. Mapp has extensive experience developing and defining IT objectives and strategic plans and in the implementation of the necessary technology.
SPECIAL SITUATIONS:
ImmunoCellular Therapies (OTCBB: IMUC) $0.36
The recent inundation of investors flooding back into equity markets has seen many sectors boasting sizable gains in the past few months. Small cap biotech companies that were largely abandoned as investors scrambled for cover on the way to the bottom have recently seen an especially strong resurgence of interest from investors as they shake off their defensive postures and once again begin to look to the future. The abundance of companies with significant long term growth potential available at a sharp discount relative to their pre-crash levels makes small cap biotechs such as ImmunoCellular Therapeutics -which, since reaching its all time lows in mid February of this year, has seen its stock rebound by 140% in less than four months- tantalizing prospective investments.
IMUC is a clinical-stage company focused on developing new therapeutics to fight cancer using the immune system, with emphasis on developing a therapeutic vaccine targeting cancer stem cells for multiple indications. The company;s product pipeline includes peptide based vaccines to target cancer stem cells, cellular immunotherapies to target cancer associated antigens, and monoclonal antibodies to diagnose and treat several different cancers. Their main disease focus using immunotherapy technologies is to treat glioblastoma, the most common and malignant form of brain cancer, but these therapies may also be applicable to multiple other cancers such as pancreatic, colon and breast cancers due to presence of similar epitopes on these malignant cells. IMUC’s antibodies are designed to treat small cell lung cancer, pancreatic cancer, multiple myeloma and ovarian cancer.
The company has recently announced significantly positive clinical advancements in the area of brain cancer treatment, as they recently presented data at a meeting of the American Society of Clinical Oncology, regarding testing conducted to evaluate the safety and tolerability of its ICT-107 vaccine, a patient-specific, dendritic cell-based vaccine candidate for treatment of glioblastoma. The data presented demonstrated that ICT-107 has the potential to significantly extend patients’ survival prognosis (median progression free survival time of 6.9 months vs. 14.2 months with ICT-107) while demonstrating a mild side effect profile, suggesting efficacy and tolerability which would make it a good candidate for treatment of glioblastoma once FDA approval has been granted.
Despite these promising results, the company feels that its resources are best allocated to pursuing ICT-121, the company’s lead product candidate, which is a cancer stem cell vaccine that consists of a peptide to stimulate Cytotoxic T-Lymphocyte (CTL) response to CD-133, which is generally overexpressed in cancer stem cells. It is designed as an off-the-shelf vaccine which may be applicable to multiple types of cancers overexpressing CD-133. IMUC believes that its resources are best directed towards ICT-121, despite having positive clinical data behind ICT-107, due to the fact that 121 targets cancer stem cells, which are the mother cells of the malignant growths that in turn differentiate to become various types of cancerous growths; by targeting these cancer stem cells there is a better chance of developing one vaccine that could be used universally on all types of cancers.
IMUC signed an agreement with Maryland based Formatech, Inc. in March of this year, which will allow access to important technology related to off-the-shelf formulations and enable the development of a formulation for ICT-121 that allows for long-term stability of the vaccine as well as suitability for intradermal injection. The vaccine will be evaluated in a Phase I clinical study for glioblastoma which, subject to FDA clearance, will commence early next year. An Investigational New Drug (IND) application is expected to be filed in Q3 of this year which would allow the Phase I trials to begin and could serve as a significant catalyst for the stock.
In addition to an encouraging clinical portfolio, IMUC also has an unusually strong balance sheet for a development stage company, boasting over $3 million in liquid assets at the end of 2008. Their strong cash position should alleviate the pressure normally exhibited on small companies operating in the cash intensive clinical biotech space, and should allow them to seek out suitable partners or licensees to help defray the costs of advancing the company’s clinical programs. With a strong portfolio of vaccine candidates aimed at eradicating one of the most lethal, indiscriminate killers known to man that is operating in an industry which has seen a remarkable turn-around in a very short period of time, ImmunoCellular Therapeutics appears well positioned to capitalize on investors’ renewed focus on long term, growth oriented opportunities.
Drinks Americas Holdings (OTCBB: DKAM) $0.15
In keeping with the theme of battered sectors on the verge of recovery, Drinks Americas Holdings (DKAM ) represents an interesting play on one of the hardest hit sectors of the economy which now seems on the verge of a rebound according to recent economic data. DKAM is a classic consumer retail play involving some big household names that has been severely beaten down with the fall in consumer spending characterizing the past year’s precipitous declines. Recent economic data indicates that consumer spending is on the rebound which suggests that companies operating in the consumer retail space may be in for a corresponding jump in their beaten down stock prices, making Drinks Americas Holdings, a company that develops, owns, markets, and internationally distributes alcoholic and non-alcoholic premium beverages associated with renowned iconic celebrities, an investment opportunity worth taking a closer look at.
DKAM’s business model is fairly simple; take quality beverages and market them by partnering with iconic celebrities. The premium drinks become part of the Icon’s lifestyle, public relations and media awareness drive trial and global brand franchises are created. Drinks will launch an American-made beer with Kid Rock this year and a cognac and tequila with Interscope and Dr. Dre following its success with products with Willie Nelson, Donald Trump and Paul Newman. The company’s product line includes Donald Trump’s award-winning Trump Super Premium Vodka, Trump Premium Flavored Vodkas, Willie Nelson’s six-year Old Whiskey River Bourbon, and Paul Newman’s Own Lightly Sparkling Fruit Juice Drinks and Flavored Waters. In addition to these, the company has recently announced a joint venture with Universal Music’s Interscope Geffen A&M Records to develop and market iconic beverage products, with plans to market a selection of premium cognacs and a tequila. The release of the highly anticipated Kid Rock Beer is this summer. In addition to these Iconic brands , DKAM also owns Rheingold beer and several award winning premium alcohol brands are in its line. Earlier this year DKAM purchased Olifant Vodka which due to its economy pricing has gotten off to a fast volume start. DKAM is partnering with Snoop Dog’s summer concert tour, the Olifant Vodka Blazed & Confused Concert Tour which will appear and be marketed in 22 US cities throughout the summer in large scale venues. The Olifant DKAM 22 city tour will feature Snoop Dog, Slightly Stoopid, Mickey Avalon and Stephen Marley. The company recently announced Olifant sales were off to a strong start driven by preconcert orders with one of its largest sales months ever shipping 7,000 cases in one month.
In addition to a strong product line with solid brand recognition, the company has been able to make significant gains overseas, recently signing a contract calling for orders for $7 million in Israel and has begun production for the order with a recently announced payment by the distributor, with talk of other international distribution partnerships in the works to bolster their strong domestic performance. Along with increasing their international penetration, DKAM has also recently been able to extend their credit line, greatly improving the company’s ability to maintain inventories, increase production, and insure that their award-winning products quickly reach the market. The stock is currently trading around fifteen cents; just above its 52-week low, thanks in large part to the exodus of investors from retail plays spurred by falling consumer demand leading up to, and as a result of the recession. With the jumps in consumer spending and confidence numbers that have been seen in recent weeks, it is highly likely that companies such as DKAM which are dependent on discretionary spending will see a corresponding increase in their stock prices, and with nowhere to go but up, it appears that this under the radar retail play is primed for a jump in the right direction.