It was a volatile week of trading, with the stock market down 1.6% at its low and up 3.1% at its high. The main driver was credit and liquidity issues. In the end, the Dow Jones Industrial Average posted a loss of 57 points, adding to its year to date loss, which is now 9.9%. The Nasdaq was unchanged for the week, which stopped the bleeding of consecutive weekly losses. It is still down 16.6% year-to-date. The S&P 500 posted a slight loss of 5 points, bringing its year to date loss to 12.3%. The Russell 2000 slipped 3 points for the week, bringing its year to date loss to 13.5%.
The week started on a down note, as there were a number of negative items regarding financial institutions. Weighing on stocks was a Wall Street Journal report that indicated the FBI is investigating Countrywide and up to 15 other subprime lenders for securities fraud. Fitch Ratings took negative action on eight banks. The next day credit concerns subsided as stocks posted their largest one day percent gain since 2003 on news of a coordinated central bank effort to improve liquidity. The Federal Reserve announced a new Term Securities Lending Facility. The Fed will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days, rather than overnight. However, the week ended on a sour note, after the stock market got clipped on news that Bear Stearns will receive emergency funding from JPMorgan Chase and the Federal Reserve Bank of New York. Shares declined 47% on Friday, and sent the financial ETF down nearly 3%. Rumors had it that J.C. Flowers and JP Morgan were evaluating over the weekend whether to acquire all or a part of the firm. Since Bear Stearns is primarily a trading house, it is unlikely that traders would be willing to take counter-party risk on the firm, which could effectively drive it into bankruptcy.
What should investors look for in the upcoming week? First, is that the market will be closed on Good Friday, with options expiring Thursday as a result. Earnings announcements will be light for the week, starting with an announcement from Conseco (NYSE: CNO) before the bell on Monday. Tuesday will feature announcements from Gamestop (NYSE: GME), Goldman Sachs (NYSE: GS), and Lehman Brothers (NYSE: LEH) coming before the bell, followed by an announcement from Darden Restaurants (NYSE: DRI) after close. AES Corp. (NYSE: AES), General Mills (NYSE: GIS), Morgan Stanley (NYSE: MS), Ross Stores (NYSE: RS), Nike (NYSE: NKE), and Dillard’s (NYSE: DDS) will all announce their earnings on Wednesday. Announcements from Barnes & Noble (NYSE: BKS), Bear Stearns (NYSE: BSC), Carnival (NYSE: CCL), FedEx (NYSE: FDX), Williams-Sonoma (NYSE: WSM), Computer Sciences (NYSE: CSC), and Synnex (NYSE: SNX) will conclude the week on Thursday.
The economic calendar will start Monday with March NY Empire State Index, January Net Foreign Purchases, February Industrial Production, and February Capacity Utilization. February Housing Starts and February Building Permits will be released on Tuesday before the opening bell, with a great deal of focus being centered on the FOMC policy statement coming later that day. Expectations are for a rate cut of at least 50 basis points, with many anticipating a 75 basis point reduction. Wednesday morning Weekly Crude Inventories will be reported. Thursday prior to the opening, Weekly Jobless Claims will be announced and February Leading Indicators will be released shortly after the opening. To close out the week will be the midmorning Philadelphia Fed Index announcement.
The Citigroup Small and Mid Cap Emerging Growth conference in Las Vegas will begin a week of conferences on Monday. Tuesday will feature the four day Cowen and Company Health Care Conference in Boston, two day Financial Times FT Global Outsourcing and Offshoring New York Conference, and Lehman Brothers’ Eleventh Annual Global Healthcare Conference in Atlanta. Bear Stearns’ 2008 Global Oil & Gas Conference in New York and the BB&T Capital Markets Manufacturing & Materials Conference in New York will take place Wednesday.
Volume Alert: Shares of Xcorporeal (AMEX: XCR), which is developing a wearable artificial kidney, surged 52.7% last week on more than eight times average volume, making it the leading percentage gainer on the American Stock Exchange, helped by favorable media coverage from influential BusinessWeek columnist Gene Marcial. In a story that hit newsstands this weekend, he noted that “[the stock] is catching the eye of some investors. “The new, smaller version [of the battery-powered, wearable dialysis machine] could be more effective than conventional types that require daily or thrice-weekly treatments in hospitals,” says Marc Cummins of Prime Capital, which has acquired 6.7%, or 1 million shares. Xcorporeal also makes portable machines for home or hospital use. “The portables will have great impact on patients suffering from kidney failure,” says Cummins. He expects the stock to soar once the Food & Drug Administration O.K.’s the portables for home use.” Cummins, a director of the company, has been actively purchasing the stock in the open market. Despite the rise in price last week, the stock trades for far less than the $7 per share price XCR raised approximately $29 million at fifteen months ago. Shares ended the week at $3.85, up $1.33.
RXi Pharmaceuticals, Inc., a subsidiary of CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical research and development company, finally went public last week, giving investors another option in the RNAi section. Alnylam Pharmaceuticals had been the only pure-play RNAi company still trading publicly in the United States. Shares of RXi doubled last week from the stock price disclosed in CYTR’s prospectus offering the shares, yet surprisingly the move in the stock did not help CytRx, despite the fact that CYTR owns nearly half of RXi. In fact, CytRx today trades for approximately the value of its ownership stake in RXi, and the company’s cash, giving virtually no value to its molecular chaperone technology or clinical programs. While the company’s lead program in ALS is currently on clinical hold (Phase IIb trial), the program had been previously placed on a hold by the FDA which was subsequently lifted. The stock dropped $0.26 for the week, to close at $1.27.
Enzo Biochem, Inc. (NYSE: ENZ), a leading biotechnology company specializing in gene identification and genetic and immune regulation technologies for diagnostic and therapeutic applications, announced results for the fiscal second quarter and six months ended January 31, 2008. Total revenue for the fiscal second quarter increased 72%, to $18.2 million, compared with $10.6 million in the corresponding year ago period, with first half revenue rising 79%, to $37.7 million, from $21.0 million a year ago. The gains reflected higher gross profit for the quarter, up 48%, to $9.0 million, and for the six months, which rose to $18.9 million, from $12.5 million a year ago. The company’s finances remain strong. As of January 31, 2008, working capital totaled $109.4 million, including cash and cash equivalents of $98.6 million. The results beat the analyst’s bottom-line estimate by a penny. Enzo also announced that that it closed on the previously announced acquisition of 10P’s BVBA, a privately owned distributor of life science research products, with offices in Belgium serving the Benelux countries. This acquisition provides Enzo Life Sciences with local, directly owned presence from which to market its growing line of life sciences reagents and systems. The stock dropped by $0.54 for the week, to close at $8.07.
Shares of drug delivery company Generex Biotechnology Corporation (NASDAQ: GNBT), remained under pressure last week as a result of the fallout from Eli Lilly & Co. terminating its agreement with Alkermes for the development of an inhaled insulin product. Investors sold off all of the stocks in the sector, seemingly ignoring the fact that GNBT delivers insulin through the oral cavity, with no deposit in the lung, which is where all of the safety issues have been reported. In fact, a recent report from Rodman & Renshaw, in reiterating its $6 price target on the stock, noted that “We believe this news is positive for Generex as they enhance Oral-lyn’s opportunity as a safe, more tolerable, non-injectable insulin for the treatment of patients with diabetes.” GNBT also announced that it had finalized the protocol for Metcontrol, the company’s proprietary Metformin chewing gum product, and will be proceeding with applications to regulatory agencies for approval of the protocol for a clinical study. The protocol is an Open-Label Crossover Study comparing Generex’s Metformin chewing gum and immediate release tablets in healthy volunteers. Metformin is a generic drug used to regulate blood glucose levels by reducing liver glucose production and improving insulin sensitivity by the cells. The goal of the Metformin gum development is to provide an alternative method of drug delivery that will improve both safety profiles and therapeutic compliance. The company also announced that canisters of Generex Oral-lyn, the company’s proprietary oral insulin spray product, have been labeled and packaged for Phase III clinical trial sites in the United States, Canada and Ukraine. Both placebo and active canisters are ready to be shipped to the clinical sites which will permit the initiation of the pivotal study. The stock fell by $0.07 for the week, to close at $1.02.
Earnings Preview: Hythiam Inc. (NASDAQ: HYTM), a healthcare services management company that offers solutions for patients suffering from alcoholism and substance dependencies, is scheduled to report financial results for its fourth quarter and fiscal year ended December 31, 2007 on Monday, March 17, 2008, after the market closes. For the 2007 third quarter, the company reported revenue of $12.0 million, which include a record $2.3 million in revenue from Hythiam’s healthcare services business and $9.7 million in revenue from CompCare’s operations, compared to Hythiam’s revenue of $1.1 million in the third quarter of 2006. However, more than financial results, which could benefit from exposure the PROMETA protocols received on 60 Minutes, investors will focus on what the company says about its prospects for landing a managed care deal, and what it has done to lower its operating expenses. Last week, Community Bridges announced the completion of a pilot program to assess the Prometa Treatment Program as a comparison to their standard ASAM medical detoxification protocol for Medicaid-eligible adults seeking treatment for Methamphetamine abuse. The group receiving Prometa demonstrated a higher rate of retention in detox over those receiving the ASAM standard of care treatment, and a reduction in cravings over the 16 week Intensive Outpatient Therapy period. Retention in treatment and reduced cravings are important to participant success in aftercare, which can lead to improving a participant’s chances for long-term recovery. Shares fell by $0.05, to finish the week at $2.71.
Telkonet, Inc., (AMEX: TKO), the leading provider of innovative, centrally managed solutions for integrated energy management, networking, building automation and proactive support services, has created a groundbreaking energy efficiency program utilizing Wisconsin’s Focus on Energy Program Incentives to reduce energy consumption and carbon emissions within the state of Wisconsin. Focus on Energy is one of the country’s premier public benefits energy efficiency and renewable energy programs, which has already saved business customers more than $100 million annually. The Telkonet SmartEnergy advanced occupancy-driven in-room energy management solution provides hospitality industry customers with discounted energy management and energy efficiency products and installation under the program. The program’s implementation is expected to yield significant energy cost savings for the state’s hospitality industry, reducing power consumption by millions of kilowatt-hours per year. The company also announced the availability of the new Telkonet SS1107 Energy Management Controller, representing significant advances in versatility, interoperability with other equipment, and overall performance. The powerful new Telkonet SS1107 controller incorporates key design innovations, including compatibility with a wide range of Packaged Terminal Air Conditioner equipment and third party sensors, for maximum installation flexibility. The stock dropped by $0.03, to close the week at $0.69.
Advanced Cell Technology, Inc. (OTCBB: ACTC), biotechnology company that engages in the development and commercialization of human stem cell technology in the field of regenerative medicine , said last week that it had signed a clinical trial agreement with Chandler Regional Medical Center and Mercy Gilbert Medical Center, members of Catholic Healthcare West, the nation’s eighth largest healthcare system, to become ACT’s first clinical trial sites for the Phase II myoblast study. In addition, CHW has received Institutional Review Board approval for the clinical trial, which is expected to begin soon. ACT’s myoblast program is an autologous adult stem cell therapy for the treatment of heart disease that has successfully completed four Phase I clinical trials and received clearance from the Food and Drug Administration to begin Phase II trials. The stock dropped a penny for the week, to close at $0.16.
Avicena Group, Inc. (OTCBB: AVGO), a late stage biotechnology company that develops central nervous system therapeutics for neurodegenerative diseases, announced that it met with the Food and Drug Administration and will proceed with a Phase III trial of its lead drug candidate, HD-02, for the treatment of Huntington’s disease, pending final analysis of completed animal toxicology studies. This Phase III study will evaluate whether HD-02 can slow the progression of Huntington’s disease, and pending positive results, may provide a much needed treatment option to Huntington’s patients. Shares fell by $0.06, to finish the week at $0.18.
Ceragenix Pharmaceuticals, Inc. (OTCBB: CGXP), a biopharmaceutical and medical device company focused on infectious disease and dermatology, announced that it had completed the patient visit phase of its previously announced clinical trial to assess the safety and efficacy of EpiCeram relative to Elidel in treating the symptoms associated with eczema such as itch and redness as measured by the EASI scoring system. Elidel is the leading immunosuppressant topical therapy for the short-term treatment of atopic dermatitis. The study results are currently undergoing statistical analysis and the company expects to receive the final study report during the second quarter of 2008 at which time it will announce the results. The stock remained unchanged at $0.95 for the week.
Collexis Holdings, Inc. (OTCBB: CLXS), a leading developer of high definition search and knowledge discovery software, announced it had been recognized in the March 2008 issue of KMWorld as one of the 100 Companies that Matter in Knowledge Management. The company also announced website enhancements to BioMedExperts.com, the first online social network of its kind that promotes global collaborative medical research and development. Collexis launched BioMedExperts.com in January 2008 to facilitate collaboration and increase biomedical research among health care and life sciences professionals. Shares fell by $0.03, to finish the week at $0.33.
Cordia Corporation (OTCBB: CORG), a global communications service provider of traditional CLEC and Voice over Internet Protocol technologies said that its wholly-owned subsidiary, CordiaIP Corp., has signed a letter of intent to acquire the six companies comprising the TSI Group, a distributor of prepaid telecommunications services. In addition, Cordia will enter into an investment agreement to acquire a minority interest in Wholetel, Inc., a startup company affiliated with TSI that operates a turnkey products and services delivery system for retailers and consumers. Terms of the transactions were not disclosed. TSI distributes prepaid telecommunications products and services through over 7,000 retail locations and has approximately $46 million in annual revenues. Acquisition, once completed, is expected to nearly double Cordia’s annual revenues to approximately $100 million, add a full range of prepaid products and services to Cordia’s existing services portfolio and create a large new sales channel for Cordia’s CLEC, VoIP, and Magellan Services. Shares rose by $0.03 for the week, to close at $0.59.
CityView Corporation Limited (OTCBB: CTVWF), an exploration and development company, received an update from the Aurum geologists contracted to oversee the JORC compliant drilling program at the Longonjo Project in Angola. The first of twenty four planned shallow exploration drill holes has been completed at Cassenha Hill in the Catabola target area, Huambo Province, Angola. The target area has been explored historically and is known for its shear zone hosted copper-gold mineralization. Previous exploration was undertaken on the prospect between 1946 and 1960 and included surface trenching and the development of four exploratory underground Adits. The first 30m drilled consisted of metasediments with chlorite, sericite and magnetite alteration. A second shallow exploration hole shall commence on the same structure and is designed to test the continuity of the mineralized structure down dip with similar positive results expected. The stock fell by a penny, to finish the week at $0.15.
Halcyon Jets Holdings, Inc. (OTCBB: HJHO), a premier broker of private aviation services, announced it will begin offering a DreamSpa package for those who want to relax and receive the ultimate pampering at 30,000 feet while they travel aboard a private jet charter. DreamSpa recipients, like all Halcyon clients, will be assigned their own certified Private Aviation Specialist and personal concierge to assist with the travel, dining and entertainment needs of even the most discerning traveler, including arranging those little extras that will make any getaway that much more comforting. The stock remained unchanged at $0.40 for the week.
IAS Energy, Inc. (OTCBB: IASCA), an oil and gas exploration company seeking to establish new business, announced that the company has exercised its second option and now owns a 40% interest in Power Telecom Limited. IAS has an option to purchase up to a 100% interest in the private Hong Kong company, which owns www.video1314.com, a rapidly growing Chinese Internet portal. The stock fell by 2 cents for the week, to close at $0.28.
Linux Gold Corp. (OTCBB: LNXGF), a company involved in exploration of mineral properties, announced that its joint venture partner Teryl Resources Corp. is currently arranging a drill program on the Fish Creek claims in Alaska to test several gold geophysical anomalies and placer targets. Teryl is anticipating an exploration program this year on the Gil joint venture subject to an approved budget. The Fish Creek claims are joint ventured with Linux Gold Corp. wherein Teryl can earn a 50% interest by expending $500,000. Linux Gold Corp. can back-in for a 25% interest in the Fish Creek property after the expenditures of $500,000 are made by Teryl Resources Corp. The stock rose by one cent for the week, to close at $0.20.
MSTI Holdings, Inc. (OTCBB: MSHI), a carrier class communications technology company specializing in providing true quad-play services to residential, hospitality and commercial properties, announced that its wholly-owned subsidiary, Microwave Satellite Technologies, Inc., has launched Quad-Play services at its first project in San Francisco, a strategic market for MST’s West Coast growth. MST now offers Quad-Play and NuConcierge solutions to residents of One Rincon Hill, currently the tallest residential building west of the Mississippi River. This property, with its sophisticated residents, offers the ideal venue for the company’s launch into this new market. The stock remained unchanged at $0.40 for the week.
Pressure BioSciences, Inc. (NASDAQ: PBIO), a life sciences company that engages in the research, development, and commercialization of sample preparation system, announced that total revenue for 2007 was $645,870 compared to $210,289 for 2006. Revenue from the sale of PCT products and services was $399,787 for the year as compared to $210,289 for the prior year. This increase in revenue from PCT products and services was primarily the result of the number of installations of the company’s PCT Sample Preparation Systems. As of December 31, 2007, the company had cash and cash equivalents of approximately $5.4 million, as compared to approximately $5.3 million on December 31, 2006. The company also announced that it has moved its corporate offices to 14 Norfolk Avenue in South Easton, Massachusetts. This move was necessary to accommodate the company’s transition from an early-stage, research and development company to a fully commercial operation. The company now has approximately 5,500 square feet, with sufficient office, conference, engineering lab, and storage space to allow it to better develop its infrastructure to support PCT product commercialization. Shares rose by $0.30, to finish the week at $4.40.
ProLink Solutions, a wholly-owned subsidiary of ProLink Holdings Corp. (OTCBB: PLKH) and the world’s leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced that Crystal Springs Golf Course now features the ProLink Solutions GPS system used at many of the world’s most famous golf courses. The company also announced that Indian Creek Golf Club and Arizona Golf Resort will feature the ProLink Solutions GPS as well. Top-notch golf facilities llike Creek Golf Club, Crystal Springs Golf Course, and the Arizona Golf Resort trust ProLink to deliver the best in technology and service, while boosting revenue through a number of different functions. The stock rose by $0.02 for the week, to close at $0.47.
On the Wires: Pressure BioSciences, Inc. announced that Matthew B. Potter has joined PBI’s senior executive management team as Vice President of Sales.