Companies featured in the current edition of the newsletter: CHIP, CVM, DKAM, ENZ, HYTM,NXOI, ICLK, IWEB, SIHI, SVUL
Stocks came roaring back last week, snapping their losing streak as investors anxiously await third quarter earnings season which is set to begin this week. All told, the Dow gained 377 points to close at 9864, up 4% on the week and 12.4% on the year. The Nasdaq gained 4.5% to close at 2139, extending its gains to 35.7% on the year, while the S&P 500 and Russell 2000 posted gains of 4.5% and 6.0% respectively, bringing their yearly gains to 18.6% and 23.1%.
While there were little in the way of significant developments on the week, there were some positive signs that gave investors all the excuse that they needed to buy into the weakness of the past few weeks. Alcoa managed to kick off earnings season with a bang, reporting better than expected results and predicting improved demand for aluminum in the second half of 2009. Further support came from better than expected sales figures, as opposed to cost cutting which had allowed many companies to beat estimates during the second quarter.
Despite the absence of market driving economic reports, Tuesday’s decision by the Reserve Bank of Australia to raise its key lending rate by 25 basis points was interpreted as another sign of global recovery and helped to further stoke bullish enthusiasm. Following the week’s activity, nine of the ten sectors of the S&P 500 finished in positive territory, led by Energy, up 7.5% and Financials, up 6.7%.
What should investors look for this week? Earnings Season begins in earnest on Tuesday morning with results expected from Johnson & Johnson, with chipmaker Intel reporting after the close, followed on Wednesday by Abbott Labs and JP Morgan before the bell. Thursday will be a busy day as Citigroup, Goldman Sachs, Nokia, Safeway and Southwest Air all report before the bell. Advanced Micro, Google and IBM report after the close. Bank of America and General Electric wrap things up Friday morning.
Economic releases for the week begin on Wednesday with Import and Export Prices for September, released along with Retail Sales, also for September, at 8:30am, followed at 10:00am by Business Inventories for August and FOMC Minutes from the September meeting at 2:00pm. On Thursday, look for weekly initial jobless claims, continuing claims, and CPI/Core CPI for September due out together at 8:30am. The October Philadelphia Fed Index is due out at 10:00am that same day along with weekly crude inventories at 2:00pm. The week finishes up on Friday with Net-Long Term TIC Flows for August at 9:00am, Capacity Utilization and Industrial Production for September at 9:15am, and Preliminary Michigan Sentiment for October at 9:55am.
Conference schedules for the week will be light, but Sinohub (AMEX: SIHI) will present at the three-day Roth Capital Partners China Conference beginning on Monday in Miami Beach.
Enzo Biochem (NYSE: ENZ), a leading vertically integrated biotechnology company engaged in the research, development, manufacture and licensing and marketing of innovative health care products, technologies and services based on molecular and cellular techniques, announced last week that it has added a new apoptosis detection kit for monitoring chromatin condensation to its rapidly expanding CELLestial product line for live cell analysis. Enzo showcased the capabilities of the new assay in a scientific poster presentation at the prestigious 8thCell Death Conference which was held at the Cold Spring Harbor Laboratory in Cold Spring Harbor, N.Y last week. The Nuclear-ID Green Chromatin Condensation Kit is a major breakthrough for the rapid screening of agents that induce apoptotic cell death, which is potentially useful in identifying compounds for the treatment of diseases such as cancer. Potential applications for live-cell studies using the kit include monitoring the stages of chromatin condensation, rapid testing of compounds that induce apoptosis, and as a quick test to determine the health status of cells grown in culture. Shares gained forty six cents on the week to close at $7.34
Verichip Corporation (NASDAQ: CHIP), a provider of radio frequency identification systems for healthcare and patient-related needs, which recently announced its intention to acquire identity security provider Steel Vault to form PositiveID Corp, a provider of identification technologies and tools for consumers and businesses, announced last week that it has selected Raytheon Microelectronics Espa to produce its radio frequency identification (RFID) implantable microchips, including its existing VeriChip microchip for patient identification, its new 8 millimeter microchip for use in Medical Components, Inc.’s vascular access medical devices, and its glucose-sensing RFID microchip currently under development with RECEPTORS, LLC. In related news last week, the company also announced that it has received an exclusive license to two RECEPTORS’ Patents related to the development of the aforementioned in vivo glucose-sensing RFID microchip that could potentially negate the need for diabetics to draw blood samples multiple times each day to read their blood glucose levels. CHIP believes that patients implanted with the glucose-sensing microchip, if successfully developed, could get a rapid reading of their blood sugar with a simple wave of a handheld scanner. The company was also featured last week in a special segment of the Glenn Beck show on Fox News dedicated to the H1N1 virus. The show featured VeriChip, its Health Link personal health record and its H1N1 virus triage detection system currently being developed with partner RECEPTORS LLC, as part of the show. Shares lost thirty three cents on the week to close at $2.11.
CEL-SCI Corporation (NYSE AMEX: CVM), a developer of vaccines for the prevention and treatment of infectious diseases and a late-stage oncology company, released a letter to shareholders last week highlighting the company’s progress in developing a treatment for the H1N1 swine flu virus. The letter also provided an overview of the disease as explained by one of the company’s outside collaborators, Ken S. Rosenthal, Ph.D., Professor of Microbiology, Immunology and Biochemistry, Northeastern Ohio Universities Colleges of Medicine and Pharmacology. It went on to describe the impending global Phase III trial of the company’s head and neck cancer drug,Multikine, in association with Teva Pharmaceuticals and Orient EuroPharma, as well as the validation of the company’s new manufacturing facility for contract manufacturing operations located in Baltimore, MD which is also nearing completion. Shares lost twenty five cents on the week to close at $1.41.
SinoHub (AMEX: SIHI) a company providing world-class supply chain management services with transparent information access for participants in the electronic components supply chain in China, announced last week that its Chief Executive Officer, Harry Cochran, will present a company overview at the Roth China Conference at 8:00 a.m. ET on Wednesday, October 14, 2009 at the Fontainebleau Hotel in Miami Beach, Florida. Shares gained twenty five cents on the week to close at $4.00, up 7%.
Drinks Americas Holdings (OTCBB: DKAM), a company that develops, owns, markets, and nationally distributes alcoholic and non-alcoholic premium beverages associated with renowned iconic celebrities, announced last week that it has received $650,000 in new orders to date from distributors for Spirits during its fiscal second quarter for the period ending October 31, 2009.The figure excludes sale of beer from labels such as Kid Rock’s American Badass Beer, and represents a significant improvement over the corresponding year ago period when Spirit sales were $378,000. The company attributes its robust sales to increased access to new credit facilities which have enabled it to rebuild customer inventories and take advantage of the interest in its brands, particularly Olifant Vodka, which after the twenty two city Snoop Dogg Olifant Vodka Summer Concert Series has continued accelerated growth. Management has indicated that it expects to see sustained revenue growth as they continue to rebuild spirit inventories with distributors which were negatively impacted by constricted credit markets in the wake of the financial crisis. Shares lost half a cent on the week to close at $0.085.
interCLICK, Inc. (OTCBB: ICLK) the leading ad network in data and inventory transparency, announced last week that it is the first ad network to join Bizo’s Premier Data Reseller Program. Bizo is a leading B2B audience targeting platform and network, currently reaching over 45 million targeted business people across thousands of sites on the web. The partnership is exclusive to ICLK through 2009 and fully certifies the company to utilize Bizo’s extensive bizographic targeting dataand grants interCLICK’s advertisers access to more robust targeting data as well as improved optimization, ensuring the most efficient results for B2B advertisers. Several major advertisers are already taking advantage of the partnership by layering Bizo data on top of interCLICK’s publisher inventory to efficiently reach a highly targeted audience of business professionals. In other news last week, ICLK announced that it has retained the services of J.H. Cohn, one of the top 15 accounting and business consulting firms in the United States, as its independent accounting firm. The company cited JHC’s combination of national scale, marketing services industry expertise, and track record with fast-growth emerging companies as reasons for selecting the firm. Shares gained fourteen cents on the week to close at $2.16.
IceWeb (OTCBB: IWEB), a provider of storage solutions and on-line cloud computing application services, announced last week that it has completed the first delivery of systems to the GCS Research Adelos Program. The Adelosâ„¢ sensor system is an advanced covert intelligence and surveillance sensor system protecting high value critical infrastructure, monitoring sensitive perimeters, and securing vulnerable borders; it requires hardware to be fully mobile and self sustained, making IWEB’s INLINE Storage solutions a natural fit. The companies have been collaborating on the hardware requirements for the system for over a year and expect that the research performed on this project will position both companies to deliver field proven replications of this innovative configuration more quickly and affordably than any other solution available. Shares remained unchanged at $0.08 on the week.
Next One Interactive (OTCBB: NXOI), an interactive media company specializing in Digital Media with a focus on Travel and Real Estate, had coverage initiated by Venture Research last week. Coverage was initiated with a strong buy rating and a price target of $4.00 on the shares that are currently trading at $1.30. Analysts cited the strong consumer market that the company has chosen to enter -proposing to capitalize on the over 100 million households with access to cable TV-in addition to the heavy advertising activities characteristic of its targeted real estate and travel segments as reasons for the rating; existing deals with Comcast, Time Warner and DirecTV also factored positively into the evaluation. Shares lost fifteen 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 approved November 10, 2009, as the date for its special meeting of stockholders to vote on the merger of Steel Vault and VeriChip Corporation. If the merger is approved, each share of Steel Vault common stock will be converted into the right to receive 0.5 shares of VeriChip common stock which ended the week trading at $2.11. No fractional shares of VeriChip common stock will be issued in connection with the merger; instead, VeriChip will make a cash payment to each Steel Vault stockholder who would otherwise receive a fractional share. Shares gained nine cents on the week to close at $0.89
SPECIAL SITUATIONS:
Hythiam (NASDAQ: HYTM) $0.68
With cost containment at the forefront of the debate among President Obama and Congress, insurance companies are likely to become even more acutely focused on cost containment and return on investments they make in paying for healthcare services. One company that could be well positioned to benefit is Hythiam, as the company’s Catasys Program offers payers the ability to reduce the cost of treating substance abuse, which, when left untreated, can significantly increase the cost of healthcare in the long run. Due to the increased focus on cost reduction, timing could be ideal for companies such as Hythiam to gain adoption for innovative ways to treat substance abuse.
However, it appears that insurance companies are not the only parties focused on reigning in healthcare costs. Last month, the company entered into a three year agreement with Ford Motor Company to provide the Catasys integrated substance dependence solution to Ford’s hourly employees in Michigan enrolled in the National PPO and who meet certain criteria. Eligible employees struggling with alcoholism, stimulant and opiate dependence will be covered under the program, which contains medical interventions including naltrexone, Suboxone and the proprietary PROMETA Treatment Program, and psychosocial and care coaching components across 52 weeks. The company will conduct direct outreach to enroll qualified members, and will also work with UAW-Ford and Ford’s EAP program to ensure the most beneficial treatment pathway for members. Contractual revenues from the agreement are based on a combination of monthly fees for the member population for Catasys, with additional monthly fees for members enrolled into the Catasys program. Operational implementation is expected to begin this quarter.
So what is Catasys? It is an integrated treatment approach, under which Hythiam provides specialized behavioral health management services to health plans, employers and unions through a network of licensed and company managed health care providers designed to address substance dependence as a chronic disease. The program seeks to lower costs and improve member health through the delivery of integrated medical and psychosocial interventions in combination with long term care coaching, including the proprietary Prometa Treatment Program for alcoholism and stimulant dependence. The Prometa Treatment Program, which integrates behavioral, nutritional, and medical components, is also available on a private-pay basis through licensed treatment providers. The Program works through a combination of behavioral modification treatments designed to correct the mental processes responsible for addictive behavior, a proprietary combination of drugs designed to alleviate physical and mental withdrawal symptoms, and a nutritional component which is designed to promote long term health and recovery through introducing lasting changes in the lifestyles of patients.
Empirical support for Prometa’s effectiveness has been demonstrated in a number of studies in recent years. It has been found to promote a significant difference in use for subjects in active withdrawal in a 2009 alcohol study, in addition to the finding that the Program led to significant differences in use and cravings for subjects with a history of withdrawal and a significantly reduced instance of cravings in patients with methamphetamine addictions. Along with its ability to reduce withdrawal and cravings in substance dependant patients, Prometa has also been demonstrated to significantly reduce costs associated with treating these individuals. In a recent third party payor pilot study, Prometa was found to significantly reduce the costs associated with treating substance dependant individuals, decreasing the behavioral health costs of these individuals by as much as 68%, versus a control group who were not treated with Prometa that demonstrated a 57% increase in cost of care. Recently, the results of a double-blind, placebo-controlled study on the impact of the medical component of the PROMETA Treatment Program on alcohol dependent subjects was accepted and published in the Journal of Clinical Psychopharmacology, a leading scholarly publication in psychopharmacology that features articles reporting on clinical trials and studies. The results are the first to be published in a peer-reviewed scientific journal from a double-blind, placebo-controlled study conducted to assess the impact of the PROMETA Treatment Program on alcohol dependence and could bolster the company’s marketing claims.
With a treatment program proven to positively impact the lives of substance dependant individuals while reducing the overall cost of treatment, Hythiam appears well positioned to capitalize on the much publicized trend towards reducing healthcare costs. The company provides investors with a unique opportunity to invest in a company making great strides in improving the overall state of healthcare in the U.S. by effectively treating repeat abusers who require hundreds of millions of dollars a year in medical treatments. The company itself has recently undergone restructuring which has left it in a significantly improved financial position achieved through a reduction in operating costs and the completion of a $7 million registered direct offering that is expected to enable it to more effectively capitalize on the almost $2 billion market that it serves.