Companies featured in this edition of the newsletter: ACCP, CVM, ENZ, ICLK, SVUL
Markets extended their gains yet again this week, as the momentum garnered from the strong finish to the prior week, coupled with strength in overseas markets and some surprisingly positive economic data to spur aggressive buying on Monday, led to solid gains in all of the major indices. All told, the Dow finished up 3.1%, gaining 262 points to close at 8763 on the week, nearly regaining its early ’09 losses but ending up -0.2% on the year. The Nasdaq once again outperformed, gaining 4.2% on the week to close at 1849, up 17.3% on the year. The S&P 500 and Russell 2000 finished up 2.3% and 5.7% respectively on the week, bringing their year-to-date gains to 4.1% and 6.2%.
Investors returned from the weekend ready to buy stocks on Monday, sending markets sharply higher as strength in overseas markets aided by stronger than expected PMI manufacturing data and unexpectedly positive US Construction Spending (0.8% month over month in April vs. the consensus -1.5%) combined to stoke bullish sentiment, sending the S&P 500 up 2.6% to new highs on the year. The rally was led by a 5.7% gain in the Industrial sector, with Technology again putting in a strong showing at 4.3% and Consumer Discretionary at 4.0%. Even the news that iconic American institution General Motors was headed for bankruptcy was met with optimism, as investors rationalized that concessions made by GM bondholders over the weekend would allow a more competitive company to emerge from the ashes of bankruptcy.
Economic news on the week was positive as a whole, with several leading indicators besting consensus estimates. Personal Income increased 0.5% in April, beating forecasts for a decline of 0.2%, while Personal Spending also managed to narrowly beat estimates, coming in at -0.1% vs. expectations for -0.2%. There was also some good news from the housing market, as Pending Home Sales showed a much larger than expected gain of 6.7% in April. The labor market also managed to provide a few bright spots, as Weekly Continuing Jobless Claims dropped for the first time in 20 weeks and Nonfarm Payrolls declined less precipitously than expected, at -345,000, well below the -520,000 consensus estimate. While certainly good news, job losses are expected to remain significant in coming months, as evidenced by the larger than expected increase in the Unemployment Rate which is now at 9.4%, and the larger than expected drop in Average Weekly Hours.
What should investors look for this week? Catalysts remain few and far between as there are no major earnings releases and the majority of notable leading indicators have been released for the month, but there will be a number of companies with market moving potential presenting at industry conferences this week.
Economic reports for the week begin with Wholesale Inventories for April due out at 10:00am Tuesday. Trade Balance data for April will be released at 8:30 a.m. Wednesday followed by weekly crude inventories at 10:30 a.m. and the Treasury Budget for May released with the Fed’s Beige Book at 2:00 p.m. that same day. On Thursday, look for May Retail Sales and weekly initial jobless claims at 8:30am followed by Business Inventories for April at 10:00 a.m. The week finishes up on Friday with May Import and Export Prices released together at 8:30 a.m., with Preliminary Michigan Sentiment for June due out at 9:55am.
Conference schedules will be full again this week, with most of the action taking place in New York. Things begin there on Monday with the three-day UBS Technology and Service Conference, followed by the Credit Suisse Convergence Conference on Tuesday, being held in Dana Point, California. Also, Noble Financial will hold its Fifth Annual Equity Conference in Hollywood, Florida beginning Monday for two days. interCLICK (OTCBB: ICLK) scheduled to present on Monday at 12:45 p.m. Tuesday will be a busy day, as the Needham & Co. Internet and Digital Media Conference, the Gabelli & Co. Smallcap Healthcare Conference, the two day Piper Jaffray Consumer Conference, the two day Goldman Sachs Global Healthcare Conference, the Credit Suisse Group Annual Retail Round-Up, and the Morgan Stanley Shipping & Commodities Conference, all begin in New York that day. The week wraps up with the Needham & Co. Biotech & Medical Technology Conference and the Bank of America and Merrill Lynch Global Transportation Conference both beginning on Wednesday in New York. RBC holds a Technology, Media and & Communications Conference on Wednesday in San Francisco. interCLICK will present on Wednesday at 4 p.m.
Volume alert: Shares of CEL-SCI Corporation (AMEX: CVM), a company engaged in research and development of drugs and vaccines, soared 77% on Friday on more than 30 times average volume, and rose 129% on the week, the presentation of data that suggested that its vaccine may be a candidate for treatment of the H1N1, as well as other virulent influenzas. Cel-Sci’s collaborators at the University of Hawaii presented data at the American Society for Microbiology’s conference in Philadelphia demonstrating that vaccines utilizing the company’s L.E.A.P.S. (Ligand Epitope Antigen Presentation System) technology can elicit immune responses that would be protective against tuberculosis and have the potential to treat swine and other influenzas. The data presented showed that blood cells from immunized mice produced gamma interferon in response to the vaccine, while the blood cells from mice in various control groups did not. Gamma interferon, a cytokine that helps regulate the body’s immune response, is considered to be a good indicator of protection against TB and other diseases, but too many of the disease fighting cytokines is thought to be a leading cause of death related to the H1N1 virus. Cel-Sci’s L.E.A.P.S. technology is well positioned to become a vaccine candidate for combating H1N1 and other similar viruses due to the fact that it elicits an increased response in gamma interferon without causing a corresponding increase in the prevalence of destructive cytokines associated with fatalities. While the gains for the stock were outsized, they are still relatively small compared to other small-cap issues that have been identified as potential investments based upon the swine flu. Shares of Hemispherx rose as much as 632% as concerns have soared surrounding swine flu, while Generex Biotechnology rallied 338%. Vaccine developer Shares of Novavax rallied as much as 233%. Shares gained 35 cents on the week to close at $0.62.
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, presented promising Phase II data on Alequel at Digestive Disease Week, the largest international gathering of academic researchers and practicing physicians in gastrointestinal medicine. The data demonstrated that Alequel may be effective for the treatment of moderate-to-severe Crohn’s disease, a debilitating inflammatory disease of the GI tract that affects approximately 500,000 people in the United States and at least that many in the rest of the world. The drug is designed to harness the patient’s own immune system to alleviate symptoms of Crohn’ disease, reducing the patient’ dependence on systemic immunosuppressant drugs that often have undesirable side effects. The company believes that the data could enhance its ability to license the drug for further development. Shares gained $1.23 on the week to close at $5.45.
Access Pharmaceuticals, Inc. (OTCBB: ACCP), an emerging biopharmaceutical company that develops and commercializes propriety products for the treatment and supportive care of cancer patients, provided updates on two of the company’ clinical programs last week. The first of which, ProLindac, is a novel DACH platinum drug that has shown to be active in many solid tumor types in human clinical studies, and has demonstrated positive safety and efficacy results in its Phase 2 monotherapy clinical study in late-stage, heavily pretreated ovarian cancer patients. The recent Phase 2 study explored three different dose levels and two dosing regimens of ProLindac as a monotherapy treatment for advanced ovarian cancer, and found that Prolindac achieved meaningful disease stabilization in 42% of all patients, and 66% of all patients in the higher dose groups. The second update discussed new preclinical data for Thiarabine, which was found to cure tumors in mice with colorectal cancer 66% of the time when used in combination with clofarabine. The study showed that Thiarabine was more effective than clofarabine as a standalone treatment, but when used in combination, the two were significantly more effective than either was as a stand alone treatment. Additionally, the combined agents demonstrated efficacy at low dose ranges, indicating a potential for effective treatment with a reduced side effect profile. Shares gained 41 cents on the week to close at $2.25.
interCLICK (OTCBB: ICLK) the fastest growing advertising network in the US according to comScore, increased its full year earnings forecast for the second time in as many quarters last week. The company now expects revenue to be over $40 million, which would represent an increase of at least 80% compared to 2008 revenue of $22.4 million. Previous estimates put revenue at $36 million for 2009, but this latest revision reflects strong demand from advertisers shifting budget towards ROI centric marketing solutions. Gross margin is expected to be at or above the first quarter 2009 level of 47%. Shares gained 6 cents on the week to close at $1.30.
Steel Vault (OTCBB: SVUL) an emerging provider of identity security products and services, announced last week that it has completed a $500,000 convertible debt financing. The company issued a $500,000 convertible promissory note and common stock warrants to purchase up to 333,334 shares of Steel Vault’ common stock at $0.30 per share to VeriChip Corporation. The two-year note is callable on or after June 4, 2010, at the lender’s lection and accrues interest at a rate of 12% per year, payable on the first anniversary of the note and quarterly thereafter. In other news last week, the company announced that its NationalCreditReport.com subsidiary grew its subscriber base by 36% month over month from 7,520 active subscribers at the end of April 2009, to 10,205 active subscribers at the end of May. The 10,000 subscriber milestone was achieved with limited marketing efforts, but subscriber generation is expected to grow rapidly as the company announced the week prior that it has entered into a marketing agreement with Akamai Technologies, Inc, an online cooperative that compiles databases of shopping and purchase data from over 500 Internet sites that provides highly targeted advertising campaigns which should serve to significantly enhance the company’ customer acquisition efforts. Shares lost eleven cents on the week to close at $0.24.