Companies featured in this edition of the newsletter: ACTC, CHIP, CUR, CVM, ENZ, IMUC, IWEB, SRCO, SVUL, XSNX
Markets finally snapped their winning streak last week, as weakness in housing markets and durable goods orders led to broad-based declines in all of the major indices. All told, the Dow surrendered 155 points on the week to close at 9665, down 1.6% on the week but up 10.1% on the year. The Nasdaq lost 2.0% on the week to close at 2090, up 32.6% on the year, while the S&P 500 and Russell 2000 posted losses of 2.2% and 3.1% respectively, paring their yearly gains to 15.6% and 19.9%.
Unexpectedly poor data from the housing sector was the big economic story on the week as both new and existing August home sales failed to live up to expectations. New home sales increased modestly to 429,000, falling short of estimates calling for 440,000, while existing home sales missed estimates even more drastically, falling by 2.7% to 5.10 million in August from 5.24 million the month prior, and significantly lower than expectations for 5.35 million. These latest figures coupled with the pending expiration of the first time home buyer tax break, which is expected to be wound down in November, have led many to believe that there is still significant room for improvement in housing markets as increasing unemployment, excess housing inventory and tightening credit standards have created a difficult environment for prospective home buyers. Investors were given further pause later in the week by the news that durable goods orders fell by 2.4%, versus expectations for a gain of 0.4%, most readily attributed to weakness in aircraft and automotive demand resulting from the termination of the cash for clunkers program.
Corporate news was mixed on the week, as shares of Blackberry maker Research in Motion (NASDAQ: RIMM) lost almost 18% following weaker than expected revenue forecasts for Q3 despite reporting in line with expectations for its Q2 numbers. On the more positive side, General Mills (NYSE: GIS) handily beat estimates, reporting EPS of $1.28, significantly better than forecasts calling for EPS of $1.03; the company attributed the better than expected performance to strong consumer demand and raised its full year earnings outlook as a result. Following the week’s action, all ten sectors of the S&P declined, with materials leading the way at 4.8% and financials following with a loss of 3.6%.
What should investors look for this week? Earnings will be slow once again, but look for reports from Walgreen (NYSE: WAG) before the bell on Tuesday, followed after the close the same day by Nike (NYSE: NKE). Pepsi Bottling (NYSE: PBG) reports Wednesday pre-market.
Economic releases for the week begin on Tuesday with Case-Shiller Home Price Index for July and Consumer Confidence figures for September, due out together at 9:00am. On Wednesday, ADP Employment for September will be released at 8:15am, followed by Final Q2 GDP at 8:30am, Chicago PMI for September at 9:45am, and weekly crude inventories at 10:30am. On Thursday morning, expect Personal Income and Spending for August, along with weekly initial jobless claims, and continuing claims at 8:30am. Construction Spending for August, ISM Index for September, and Pending Home Sales for August will be released at 10:00am, followed at 2:00pm by Auto and Truck Sales for September. The week wraps up on Friday with Average Workweek, Hourly Earnings, Nonfarm Payrolls and the Unemployment Rate, all for September, released together at 8:30am, followed by August Factory Orders at 10:00am.
Conference schedules for the week begin on Tuesday with the Maxim Group Conference in New York, followed on Wednesday by the Jefferies Global Clean Technology Conference in London, and the two day Deutsche Bank Securities Leveraged Finance Conference in Scottsdale, AZ. The week wraps up on Thursday with the Thomas Weisel Partners Consumer Conference and the Bank of America Securities Global Real Estate Conference which are both also being held in New York.
Volume Alert: Shares of 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, gained 4.5% on over twice average volume last week, following coverage being initiated by an analyst at brokerage firm Rodman & Renshaw. Coverage was initiated with a Market Outperform/ Speculative Risk rating and a 12 month price target of $14 on the shares which are currently trading below $8, based on a 2015 discounted earnings per share and revenues per share analysis. The analyst cited the “potential to develop in-house as well as acquire cutting-edge molecular diagnostics tests, creating a synergy between the life sciences division and clinical laboratory that offers substantial upside to investors.” The report also cites “Enzo’s promising therapeutic pipeline that has the potential to drive shareholder value including Optiquel for autoimmune uveitis and Alequel for Crohn’s disease.” In other news last week, Enzo announced that it had entered into a Cooperative Research and Development Agreement with the National Eye Institute (NEI), part of the National Institute of Health, to conduct a human clinical trial of Optiquel. Under the terms of the arrangement, Enzo will provide OptiquelÃ¢â€žÂ¢ and fund a portion of the studies, while Robert Nussenblatt, MD, Chief of NEI’s Laboratory of Immunology, will serve as the Principal Investigator on this project. In autoimmune uveitis, the body’s own immune system attacks the uvea of the eye, the portion of the eye that lies between the outermost and innermost layers of the eye; it occurs most frequently in people ages 20 to 50, with estimates that more than 30,000 of the 280,000 people in the United States that are affected by uveitis each year, lose their vision as a result of the condition. Shares gained thirty two cents on the week to close at $7.37.
Verichip Corporation (NASDAQ: CHIP), a provider of radio frequency identification systems for healthcare and patient-related needs, which recently acquired identity security provider Steel Vault to form PositiveID Corp, a provider of identification technologies and tools for consumers and businesses, surged 180% on over twelve times average volume last week, following the announcement that the company has been granted an exclusive license to patents related to its partner RECEPTORS’S proprietary virus triage detection system for the H1N1 swine flu virus. The patents can also be applied to detection systems for other viruses and biological threats such as Methicillin-resistant Staphylococcus aureus (MRSA). The company believes that being granted rights to these patents, which are the cornerstone of the virus detection technology, will be a key factor in the evolution of PositiveID Corp. Shares gained $2.07 on the week to close at $3.22.
Neuralstem (AMEX: CUR), a company targeting major central nervous system diseases using neural stem cells of the human brain and spinal cord, announced last week that its Investigational New Drug (IND) application has been granted approval by the U.S. FDA, and that the company has been given clearance to commence Phase I trials to treat Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig’s disease) with its spinal cord stem cells. Neuralstem is the first company to be given FDA clearance to commence stem cell trials to treat Lou Gehrig’s, a fatal neurodegenerative disease for which currently there is no effective treatment or cure that affects roughly 30,000 people in the U.S., with about 7,000 new diagnoses per year. The trial will study the safety of Neuralstem’s cells and the surgical procedures and devices required for multiple injections of Neuralstem’s cells directly into the grey matter of the spinal cord; the approval represents a significant step toward delivering regenerative medicine directly to damaged neural cells in humans. Shares lost seventeen cents on the week after retreating from a high of $2.95 to close at $1.70.
Volume Alert: Shares of CEL-SCI Corporation (AMEX: CVM), a vaccine developer and late stage cancer immunotherapy company, surged 20% on over three times average volume following the announcement last week that it has retained the services of a full-service Clinical Research Organization (CRO) with an office in the Washington, D.C./Baltimore area to support its conduct of the upcoming clinical trial of its investigational LEAPS-H1N1 treatment. The news comes on the heels of the announcement the week prior that the FDA had approved CEL-SCI to proceed with its first clinical trial to evaluate the effect of its investigational LEAPS-H1N1 treatment on the white blood cells of hospitalized H1N1 patients. The study will involve taking blood from hospitalized, laboratory-confirmed H1N1 patients and activating their cells with the LEAPS-H1N1 investigational therapy in order to assess the cells’ response as the basis for the planned future treatment of this patient population under a next-stage clinical trial protocol. In order to be considered for the next stage of clinical trials, CVM must submit a detailed follow-up regulatory filing with extensive additional data. In order to accomplish this in as expeditious a manner as possible, the company plans to work closely with the FDA to ensure that they complete the steps necessary to gain approval for the next Phase of testing. Shares gained twenty eight cents on the week to close at $1.63.
IceWeb (OTCBB: IWEB), a storage technology company specializing in Geographic Information Systems (GIS) that provides services to bureaucratic and corporate organizations, announced last week that it has been chosen by a Canadian governmental agency to provide MLP Server Appliances for the Integrated Security Unit (ISU) for the 2010 Winter Olympics scheduled to be held in Vancouver. The company expects that this order will expand on the existing installations with the Canadian Agency and allow greater security and communications for the ISU in meeting their critical mission of protecting the 2010 Vancouver Games. In other news last week, IWEB announced that it is participating in the U.S. government’s cloud computing initiative that was discussed in a press conference by the Obama Administration on Tuesday, September 15th. The company has been providing products and services to the government for several years, and plans to participate in the Cloud Computing Initiative very actively, as their Iplicity products are an enabling technology for the adoption of Cloud based Data Storage, one of the key areas of need that this initiative addresses. Management believes that the company’s existing products and services are a natural fit for this new government effort and believe that IWEB can gain a significant amount of new, highly profitable business as a result. Shares gained two cents on the week to close at $0.09.
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 completed humanization, a process designed to increase acceptance of antibodies by host immune systems, for two of its antibodies, ICT-37 and ICT-109. Humanization was completed in collaboration with Antitope, a privately held, UK based biotechnology company providing services in the areas of immunogenicity testing, antibody humanization and protein engineering for the purpose of reducing immunogenicity with therapeutic monoclonal antibodies, and resulted in two novel antibodies targeting CEACAM5 alone and CEACAM5 and CEACAM6, two commonly expressed genes present in malignant cells specific to colon cancer, small cell lung cancer and pancreatic cancer. The company plans to explore partnering opportunities with companies that may be interested in small cell lung, pancreatic and colon cancer targeting opportunities as they continue to seek the fastest path to FDA approval for these potentially revolutionary therapies. Shares lost nine cents on the week to close at $1.13.
Sparta Commercial Services (OTCBB: SRCO), a nationwide financial services company dedicated to the powersports industry, announced last week that as a result of the expansion of its Municipal Lease Product to include several new types of vehicles in addition to police motorcycles, it has received a number of requests from local governmental agencies asking Sparta to finance vehicles such as armored tactical trucks, electric/hybrid passenger busses and police cruisers, as well as other essential equipment used by those municipal agencies. In response to this increased demand, the company is currently examining options that would allow it to finance the expanding needs of its municipal clients, in addition to the previously announced relationship with Armet Armored Vehicles, and ongoing contracting discussions to lease police cruisers to multiple agencies. Shares lost just over a penny to close at $0.056 on the week.
Volume Alert: Shares of Steel Vault (OTCBB: SVUL), an emerging provider of identity security products and services, surged 102% on over ten times average volume last week on the aforementioned news that its acquiring partner VeriChip had been granted patents related to a swine flu diagnostic technology. The company also announced preliminary results for the quarter ending September 30, 2009 and provided an update on its operations last week. The company expects revenue for the period of $550,000 to $650,000, compared to revenue of $343,000 for the quarter ended June 30, 2009, and no revenue for the quarter ended September 30, 2008; the subscriber base at September 30, 2009 is projected to be approximately 14,000. In other news last week, the company announced that it had formed a strategic marketing partnership with OPEN Sports, a leader in sports news and fantasy sports, and FOX Sports to drive subscriber growth for Steel Vault’s services. The partnership is designed to leverage exposure from FOX Sports marketing power to create interest in the company’s online offering, and additionally, players who participate in FOX Fantasy Quick Challenge and Fantasy Live, will receive a free credit report and score from NationalCreditReport.com, which also includes a seven-day free trial to its Safeguard Credit. Shares gained fifty three cents on the week to close at $1.05.
Volume Alert: Shares of XsunX (OTCBB: XSNX), a developer of advanced, thin-film photovoltaic (TFPV) solar cell technologies and manufacturing processes, gained ten percent on almost twice average volume following the announcement last week that it has entered into a Joint Business Agreement with Intevac, Inc. a leading provider of magnetic media deposition equipment to the hard disk drive (HDD) industry. The companies plan to collaborate in the development of techniques and equipment for the production of commercially marketable CIGS (copper indium gallium selenide) thin-film solar cells. They plan to use their cross-industry expertise to develop a new breed of TFPV manufacturing techniques to produce thin-film solar cells, combining Intevac’s unparalleled expertise and years of technological improvements developed for the sophisticated HDD manufacturing industry with XsunX’s experience in the TFPV industry. The two companies are adapting high-rate production tools from the disk drive industry with process knowledge from the CIGS and thin-film industry, which they expect will produce a technology that is cheaper to manufacture than standard silicon cells and more efficient than other TFPV cells currently available. Shares gained just under two cents on the week to close at $0.154
Advanced Cell Technologies (OTC: ACTC), a company engaged in the development of regenerative therapies utilizing stem cells, provided an update on pre-clinical activities in preparation of its first IND filing with the FDA for its retinal pigment epithelium (RPE) cell program for the treatment of various eye diseases. In the next few weeks, the company will be completing the preclinical work necessary for filing the IND. In various preclinical tests using the cells on animal models, no adverse events have occurred, leaving the company optimistic that human embryonic stem cells (hESCs) can serve as a potentially safe and inexhaustible source of RPE for the treatment of a range of macular degenerative diseases . The results will be part of the IND application which Advanced Cell expects to submit to the FDA prior to the end of the year. In other news last week, the company announced that Dr. Robert Lanza, its Chief Scientific Officer, was featured on “Explorations in Science” with Dr. Michio Kaku, an hour long radio program on science, technology, politics, and the environment that is broadcast each week on public radio in New York City (WBAI 99.5 FM), and re-aired in Los Angeles, San Francisco, Tampa, Houston, and stations across the country. The show focuses on Dr. Lanza’s research on cloning, stem cells, and his new book “Biocentrism.” Dr. Lanza is also scheduled to appear on Dr. Kaku’s commercial radio show “Science Fantastic,” a program focusing on the future of science, which airs in 127 cities around the country, making it the largest nationally syndicated science radio show on commercial radio. Shares remained unchanged at $0.13 on the week.