Companies featured in this edition of the newsletter: CUR, CVM, ENZ, IMUC, MBCI, ONEZ, PHC, SVUL
Markets finished in positive territory yet again during this holiday shortened week despite the lack of any significant developments on either the corporate or economic fronts. All told, the Dow gained 164 points to close at 9605, up 1.7% on the week and 9.4% on the year. The Nasdaq gained 3.1% on the week, closing at 2080, up 32% on the year, while the S&P 500 and Russell 2000 gained 2.6% and 4.0% respectively on the week, up 15.4% and 18.8% on the year.
It was a slow week on the corporate side, but there were some healthy signals from the technology sector, as Texas Instruments raised its Q3 outlook, guiding for EPS of between $0.37 and $0.41, up from previous forecasts of $0.29-$0.39. Fed Ex also guided higher, citing cost management and better than expected volume in international shipping, leading to an increased forecast calling for EPS of $0.58 versus earlier forecasts of $0.30-$0.45. Buying on the week was broad-based as nine of the ten sectors of the S&P posted gains, with industrials and energy both outperforming.
While there were little in the way of major economic developments on the week, what little news was generally favorable. Continuing claims fell to 6.08 million while weekly jobless claims fell to 526,000, besting consensus estimates expecting 560,000; while the improvements were certainly welcome, the numbers remain at elevated levels which will more than likely result in an increased unemployment rate when it is released later in the month. In other economic news, further support for a recovery was added by way of the Fed’s Beige Book report, which showed that the rate of economic decline is slowing and manufacturing is improving, despite continued weakness in the labor markets, consumer spending and construction.
What should investors look for this week? Earnings releases will be light again, but look for results from Best Buy (NYSE: BBY) before the market on Tuesday, followed by Adobe Systems (NASDAQ: ADBE) after the close that same day while Oracle (NASDAQ: ORCL) reports after the close on Wednesday. The week wraps up on Thursday with FedEx (NYSE: FDX) reporting before the open and Palm (NASDAQ: PALM) reporting after the close.
Economic releases for the week begin on Tuesday with PPI, Core PPI, and Retail Sales, all for August, released along with the Empire Manufacturing Index for September at 8:30am, with Business Inventories for July due out at 10:00am. On Wednesday, CPI and Core CPI for August are due out together at 8:30am, followed by Net Long-term TIC Flows at 9:00am, Capacity Utilization and Industrial Production for August at 9:15am, and weekly crude inventories at 10:30am. The week wraps up on Thursday with Building Permits and Housing Starts for August due out at 8:30am, along with weekly initial jobless claims and continuing claims, followed at 10:00am by minutes from the Philadelphia Fed’s September meeting.
Conference schedules will be full again this week. On Monday, Morgan Stanley hosts its two day Global Healthcare Conference in New York, along with the three day Deutsche Bank Securities Technology Conference and the four day ThinkEquity Growth Conference, both of which will be held in San Francisco. On Tuesday, look for the two day Barclays Capital Global Financial Services Conference in New York, the BMO Capital Markets Media & Telecom Conference in Toronto and the Jefferies & Co. Technology Conference in New York. Also beginning on Tuesday is the JP Morgan Diversified Industries Conference, the three day Goldman Sachs Communacopia Conference, the three day Credit Suisse Group Chemical Conference, and the UBS Global Paper and Forest Products Conference, all being held in New York. The week finishes up with the two day RBC Capital Markets Consumer Conference and the Roth Capital Partners Media/Software Investor Event, both of which are also being held in New York.
Earnings Preview: Behavioral healthcare services provider PHC, Inc. (AMEX: PHC) is scheduled to release fourth quarter and year-end results on Thursday before the market opens. Shares are up 24% since the company said in its third quarter results for the period ended March 30, 2009 that it had returned to operating profitability. The company recently extended its 1 million share stock repurchase program, which was scheduled to expire in June. Total net revenue from continuing operations increased 5.9% to $12.0 million for its fiscal third quarter but could receive a boost in coming quarters from a recently announced agreement in which its Highland Ridge Hospital, located in Salt Lake City, Utah will provide the Veteran’s Administration with eight psychiatric and detoxification beds. The initial term of the contract is nine months, with six-month renewal periods. PHC is guaranteed a minimum of $1.24 million under the initial term. Highland Ridge PHC also has the opportunity to receive additional revenue for providing care for patients beyond the allocated beds on a fee-for-service basis. Investors will likely pay even more attention to what the company says about prospects for CMS certification at its Seven Hills Behavioral Institute that provides adult inpatient and partial hospitalization programs for mental health and substance abuse issues in Henderson, Nevada. CMS Medicare certification would allow it to gain government reimbursement for many of the services it provides and would significantly increase census at the facility. Shares ended the week at $1.49, down 6 cents.
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 had appointed Mohan Chellani, Ph.D., as Vice President of Scientific Affairs at its Enzo Clinical Labs subsidiary. Dr. Chellani was previously a senior manager with Quest Diagnostics, and will oversee all aspects of Enzo Labs’ Molecular Diagnostic strategy and implementation, including serving as a key interface with Enzo Life Sciences, another subsidiary. He has over 15 years experience in the clinical laboratory business, and most recently was Head of Science and Innovation Portfolio Development at Quest. Among his responsibilities were growing Quest’s esoteric testing business, introducing assays and regionalized tests, and directing product development collaborations with academic and industry partners. In other news last week, the company announced that it presented at the Thomas Weisel Partners 2009 Healthcare Conference in Boston last week. The conference brings together top institutional investors with senior management and healthcare industry experts in an environment designed to showcase dynamic emerging companies and investigate critical trends that are driving our economy. Shares gained ten cents on the week to close at $5.56.
New 52-week high: Shares of CEL-SCI Corporation (AMEX: CVM), a developer of vaccines for the prevention and treatment of infectious diseases and a late-stage oncology company, continued their sizzling gains last week as investors continue to be attracted by the company’s potential solutions for infectious disease, and specifically the “swine” flu. During the past three weeks, the stock has gained 60% on more than five times average volume, culminating last week with a new 52-week on heavy volume, as the stock closed at $0.79, up 12 cents.
Volume Alert: Shares of Neuralstem (AMEX: CUR), a company targeting major central nervous system diseases using neural stem cells of the human brain and spinal cord, gained 3.5% last week on over twice average volume last week, following the announcement that it had received notice of allowance from the United States Patent Office for its patent entitled “Transplantation of Human Neural Cells For Treatment Of Neurodegenerative Conditions.” The newly granted patent covers the company’s use of neural stem cells to treat degenerative conditions of the nervous system and is a crucial component of the company’s intellectual property portfolio. It will cover the manufacturing process of future products from all regions of the human central nervous system (brain and spinal cord) through July of 2026. Shares gained four cents on the week to close at $1.18.
ImmunoCellular Therapeutics, Ltd. (OTCBB: IMUC), a clinical-stage biotechnology company that is developing immune based therapies for the treatment of brain and other cancers, announced last week that it has entered into a research and license option agreement regarding its ICT-69 antibody with Roche Group, one of the world’s leading research-focused healthcare groups in the fields of pharmaceuticals and diagnostics. Under the terms of the agreement, IMUC will license to Roche the rights to investigate the potential of ICT-69 in the diagnosis and treatment of multiple myeloma (MM) and ovarian cancer for an upfront payment. Upon completion of the evaluation period, Roche has an option to acquire a commercial license for ICT-69 from IMUC, which would result in total payments due to the company of up to $32 million in the event that all developmental milestones are met. ICT-69 is one of several monoclonal antibodies currently being developed for multiple cancer indications by IMUC; preclinical data have demonstrated the ability of ICT-69 to target antigens specific to human MM cells without binding to healthy tissues, making it a strong potential candidate for therapeutic applications associated with MM as it directly targets malignant cells without corresponding damage to healthy cells. Shares lost a penny on the week to close at $1.00.
MabCure, Inc. (OTCBB: MBCI), a biotechnology company using its proprietary technology to create highly specific monoclonal antibodies (MAbs) for the early detection of cancer, announced last week that it has been featured in the September issue of GEN (Genetic Engineering & Biotechnology News), one of the most widely read biotechnology publications in the world. The article, which was written by MBCI’s CEO, Dr. Amnon Gonenne, describes how tumor-specific antibodies could positively impact diagnosis, imaging, and therapy. It discusses problems associated with diagnosing different types of cancer due to the clinical variety within each specific type of the disease, and examines how cancer-specific antibodies such as the ones which MBCI is developing may help change the molecular diagnosis and treatment of cancer. The article can be found in its entirety on the GEN website. Shares lost five cents on the week to close at $1.05.
ONE Holdings (OTCBB: ONEZ), an investment company owning majority equity interest in core operating assets in Biotechnology located in the Asia Pacific region, announced last week that it has signed a definitive agreement for the acquisition of 99.75% control of Trade Finance Solutions (TFS), a company that provides balance sheet financing solutions for domestic and international credit-worthy customers including accounts receivable, purchase order financing, fulfillment services and factoring or invoice discounting. TFS’s unaudited results for 2008 include sales, operating income and net income of $7 million, $330k and $302k respectively. This acquisition, in conjunction with the recently announced acquisition of Jianou Lvjian FoodsStuff Co. Ltd, which is expected to close prior to the end of the third quarter, increases combined revenue, EBITDA, and Net Income for ONE Holdings to $34 million, $10 million and $8 million respectively based on 2008 results for these companies. In addition to the immediate financial benefits received from the acquisition, ONEZ will benefit strategically by being able to use TFS as an internal financing arm dedicated to fund and facilitate the growth of the company’s core assets in bioengineering and technology. In other news last week, the company announced that its subsidiary Green Planet Bioengineering launched two natural extracts called Resveratrol and 5-HTP. The two new extracts are expected to contribute approximately $1.8 million to the company’s revenue during the third quarter, with $1 million in revenue already achieved since the extracts were launched. Shares gained a penny on the week to close at $1.15.
Volume Alert: Shares of Steel Vault (OTCBB: SVUL), an emerging provider of identity security products and services, surged 48% on over nine times average volume last week, following the announcement that it has been acquired by VeriChip Corp., a provider of radio frequency identification (RFID) systems for healthcare and patient-related needs. The newly formed entity will be called PositiveID Corporation, and will offer identification tools and technologies for consumers and businesses. In conjunction with the merger, VeriChip plans to change its name to PositiveID and continue to trade on the NASDAQ. PositiveID intends to change its ticker symbol to “PSID” upon closing of the transaction which is expected to happen in the fourth quarter of 2009. Under the terms of the agreement, Steel Vault stockholders will receive 0.5 shares of VeriChip common stock for every share of Steel Vault common stock held. The outstanding stock options and warrants of Steel Vault will also be converted at the same ratio. The transaction is currently pending regulatory approval and affirmative votes from shareholders of both companies. Steel Vault believes that the merger will provide value for both companies’ stockholders and enables them to offer customers a broader array of value-added services by putting people in control of their personal health records and financial security, bridging the gap between secure medical records and identity security. Shares gained nine cents on the week to close at $0.43.