Zacks Small Cap Research Press Releases

LTNC: Initiating Coverage of Labor Smart With a Buy Rating

Fri, 24 May 2013 13:00:00 -0400

By Marla Backer

We initiate coverage of Labor Smart (OTC BB:LTNC) with a Buy rating and $0.80 price target on the shares. Labor Smart is an emerging growth company that serves the on demand labor market, focusing primarily on filling blue-collar staffing positions on a temporary basis. Since launching operations in 2011, Labor Smart has pursued an ambitious expansion strategy. In just two short years, the company has grown its footprint to 14 branches operating in nine states, up from only two in 2011, and annual revenue to an estimated $15.5 million in 2013, up from only $0.16 million in 2011. With a seasoned industry veteran at the helm, a strong operating team, an aggressive growth strategy and the tailwind of favorable sector dynamics, we believe Labor Smart has strong prospects in the on demand staffing industry.

While most of the early growth has been organic through new branch openings, earlier this month the company acquired the operating assets of Qwik Staffing Solutions, a small staffing company based in Florida. Management anticipates that Qwik Staffing Solutions will contribute more than $3.2 million in revenue and roughly $350,000 in EBITDA over the next 12 months. The acquisition gave Labor Smart entry into the Florida market at an attractive price. The metrics imply that Labor Smart paid roughly 1.0X EBITDA. By comparison, competitor True Blue recently acquired MDT, one of the largest on demand staffing companies in the industry, and has indicated that it paid 4.0X EBITDA.

Moreover, we believe Florida is one of the most active markets for on demand labor. According to the Associated Press (AP), Florida, along with Texas, Arizona, California, and Colorado is experiencing a dramatic shortage of labor for the rebounding construction industry because so many workers exited the industry during the recession. AP notes that “many former skilled construction workers have moved on to other fields.” Labor Smart specializes in meeting the staffing needs of companies in the construction sector, among others. The Florida branches can also leverage the base of regional and national customers that have already done business with different Labor Smart branches. For example, the Tampa branch manager can introduce the Tampa branch to a customer that has used Labor Smart services in Chattanooga and leverage that existing corporate relationship.

Reflecting its dramatic footprint expansion, Labor Smart recently reported revenue of $2.5 million for the first quarter ending in March 2013, up 112% from $1.183 million registered in the prior year first quarter. The company also recently announced that it had achieved revenue of $1.0 million for the month of April 2013 versus $0.52 million in April 2012. This represents a 94.6% year-over-year increase and further illustrates, we believe, the momentum that Labor Smart enjoys. Management has provided guidance for 2013 revenues of $15.5 million. Given the growth illustrated in the first quarter of 2013, as well as in April, and the consolidation of Qwik Staffing Solutions, we believe the company can attain or possibly exceed this goal as it drives branch expansion.

We believe branch expansion and corollary customer base expansion are key to driving revenue growth. The company intends to develop a national footprint over the next few years. Its growth strategy is to: 1) expand through new branch openings; 2) boost revenue as branches mature by broadening the range of staffing services they provide, and 3) leverage relationships with large regional or national customers to fill staffing needs across multiple verticals and multiple geographic markets.

While the temporary staffing industry has few barriers to entry, we believe that experience and relationships are crucial to the success of an on demand staffing organization. Labor Smart’s founder and CEO has about 13 years of industry experience, the company’s five district managers have a combined 65 years of operating experience and the company is assembling a strong, seasoned Board of Directors. The industry is highly fragmented. A handful of global players such as Manpower and Kelly Services compete with a few national operators and myriads of small mom and pops. Few compete in the on demand niche in which Labor Smart operates and which is more specialized. Management believes its expanding footprint can provide a competitive advantage that can enable Labor Smart to leverage its marketing efforts and work with customers across several markets.

We believe sector trends are favorable and will enhance Labor Smart’s expansion plans. Historically, the growth of the U.S. staffing industry has outpaced that of the general economy. Over the past 20 years, real GDP has averaged 2.5% per annum growth while the temporary staffing industry has averaged 4.8%. Several factors are likely to fuel continued industry growth, in our view, including the economic recovery and upcoming regulatory changes to the healthcare system. The Affordable Care Act is generally expected to stimulate demand for temporary and on demand staffing because when the initiatives go into effect in 2014, companies that employ more than 50 full-time workers will need to provide healthcare coverage to them or pay penalties of up to $3,000. We also believe that economic uncertainty is likely to drive continued use of on demand staffing.

True Blue and Command Center are true direct competitors to Labor Smart in the on demand segment, in our view, and there are also several other publically traded companies that provide the more traditional temporary staffing services. The shares of many of these companies have enjoyed strong price appreciation year-to-date on the back of economic drivers and the potential impact of the Affordable Care Act. Shares of Kelly Services, Manpower Group, On Assignment and True Blue have appreciated by an average of 25% year-to-date versus +11.3% for the NASDAQ. Conversely, LTNC shares have declined 15%. Labor Smart is in the early stage of development and has yet to convert rapid revenue growth into net profits. However, we believe the company’s footprint and revenue expansion and potential uplisting down the road could be catalysts for the shares. Moreover, as it executes its expansion plans, we expect Labor Smart to benefit from the same exogenous drivers that are helping the overall industry. Our $0.80 price target equates to EV / projected 2014 revenue of 0.5X, which is in-line with True Blue.

In our view, risks include that: the company is highly dependent on founder and CEO Ryan Schadel, is under capitalized, could expand too rapidly, competition could increase, customers could shift towards hiring permanent employees instead of using temporary workers and economic factors could constrain industry growth.

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DUMA: 3D seismic data of Galveston Bay available to Duma.

Fri, 24 May 2013 07:00:00 -0400

By Ian Gilson, PhD, CFA

New 3D seismic date on the Galveston Bay area, presumably covering the Trinity, Fishers Reef and Redfish Reef fields, is now available to Duma Energy (OTC BB:DUMA). This data may show other, deeper, oil reserves in the northern part of Galveston Bay and the 18,000 acres owned by the company. Potential oil deposits may be high pressure (requiring no pumping) and contain more oil than those currently being worked. Duma is focused on evaluating the data and no decision to drill has been made.

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NWBO: Great Progress Made to Advance DCVax-L and DCVax-Direct

Thu, 23 May 2013 07:00:00 -0400

By Grant Zeng, CFA

NWBO Reports First Quarter of 2013 Financials

On May 16, Northwest Biotherapeutics (Nasdaq-small:NWBO) filed its 10-Q for the first quarter of 2013.

There was no revenue for the first quarter of 2013.

Research and development expense was $11.6 million for the three months ended March 31, 2013 compared to $3.6 million for the three months ended March 31, 2012. The increase was primarily attributable to the DCVax-Direct manufacturing and product development work, and the preparation costs for the launch of two clinical trial programs, in the US and UK, as well as expansion of the ongoing Phase III trial in the US, and increased manufacturing of DCVax®-L for the Phase III trial.

General and administrative expense included $1 million of cash expenses, and $1.5 million of non-cash charges (i.e. amortization of previously issued stock based compensation and restricted stock and warrants issued for services), for a combined total of $2.5 million for the three months ended March 31, 2013 compared to $2.2 million for the three months ended March 31, 2012. The slight increase in general and administrative expenses from the prior period is as a result of $0.9 million related to the issuance of restricted stock and warrants for public relations and investor relation services, offset by a $0.4 million decrease in stock based compensation expense.

Net loss was $ 14.4 million or $0.54 per share for the three months ended March 31, 2013 compared to a net loss of $10.2 million or $0.51 per share for the three months ended March 31, 2012.

At March 31, 2013, cash and cash equivalents totaled $0.4 million.

In April 2013, the Company entered into an agreement with one healthcare-dedicated institutional investor for a registered direct placement of $10.0 million of common stock at the closing market price of $3.90 per share. The number of shares of common stock issued was 2,564,103. The Company issued to the investor warrants exercisable for 1,025,641 shares of common stock. The Company also issued to the placement agent warrants exercisable for 128,205 shares of common stock. Net proceeds to the Company amounted to $9.2 million after deducting deal related costs. The warrants have an exercise price of $4.29 per share and are exercisable beginning six months after closing, with a term of five years.

Phase III DCVax-L For Brain Cancer Is Going Well

This Phase III trial of DCVax-L is for newly diagnosed Glioblastoma multiforme (GBM), the most common and most lethal form of brain cancer. The trial is well under way in the US, with 46 active sites at present, and is expected to enroll an aggregate total of 312 patients in the US and Europe.

On May 16, 2013, NWBO announced that Phase III clinical trial with DCVax®-L for brain cancer has been initiated at King's College Hospital in the UK. This is one of the first late-stage clinical trials in Europe with active immune therapies. Three other sites in the UK are also preparing to open.

NWBO has also been working on preparations for the clinical trial in Germany. On July 25, 2012, NWBO announced that manufacturing certification has been received from the German regulatory authorities for the clinical trial in Germany, which is the first step towards implementation of the Phase III trial in Germany. NBWO submitted the application to the German regulatory authority (the Paul Ehrlich Institute, or PEI) for approval of the Phase III trial. As of March 31, 2013, 24 clinical centers are in varying stages of preparations as trial sites in Germany. Also, in October, 2012, ten major hospital centers across Germany, including the key opinion leaders in brain cancer, all applied to the German healthcare system for reimbursement of DCVax-L for brain cancer. In addition, medical centers in other European countries have requested to be added to the trial.

Results Expected in 2013 for DCVax®-Direct Phase I/II Trial For Solid Tumors

In parallel with these developments in the Phase III DCVax-L brain cancer program, NWBO has been making arrangements to launch its DCVax-Direct program.

In November, 2012, NWBO entered into a Letter of Intent for a collaboration with Sarah Cannon Research Institute, which specializes in oncology and has a network of more than 700 physicians in the US and UK who see more than 75,000 new cancer patients per year.

The trial is expected to be launched in the second quarter 2013. Target patients for inclusion in the trial include patients with melanoma, pancreatic cancer, liver cancer and liver metastases from colon or other cancers. As is standard with this type of trial, the DCVax-Direct trial will not be blinded, and the results will be visible as the trial proceeds over the course of 2013.

The primary objectives of this two-part trial are to evaluate safety, dose levels and efficacy. The Part 1 stage of the trial involves dose escalation and confirmation. The Part 2 stage of the trial will focus on efficacy. The primary measure of efficacy will be regression (i.e., shrinkage or elimination) of the inoperable tumors.

This endpoint of tumor regression is a particularly important one clinically: once tumors are established, if they cannot be surgically removed, it is very difficult to stop their growth and their spread. This endpoint is also important from a regulatory standpoint: it is the endpoint used most frequently for FDA-granted accelerated approval. Further, this endpoint is a rapid one: typically, if tumor regression is going to occur, it is anticipated to be seen within a few months after treatment – far sooner than other clinical trial endpoints such as progression free survival (PFS) or overall survival (OS).

Colon cancer is the second leading cause of cancer deaths (after lung cancer), exceeding even deaths from breast cancer or prostate cancers. DCVax®-Direct offers an important potential new treatment option for colon cancer patients whose cancer has spread and is no longer operable. DCVax®-Direct is specifically designed to treat inoperable cancers in various tissues through direct injection into the tumors. It can be injected into any number of tumors, and virtually any location in the body (with imaging guidance for interior tissues).

Through over 10 years of research and development, NWBO has developed a unique DCVax-Direct technology with potential for any solid tumors. DCVax-Direct uses the DCVax platform to activate DCs in a manner suitable for direct injection into solid tumors. DCVax-Direct is designed to treat cancer patients whose tumor tissue is not available as their tumors are considered to be inoperable. The patient’s dendritic cells are activated, but without addition of cancer antigens. The cells adhere to the plastic culture surface, which results in activation.

In multiple pre-clinical studies of various cancers in animals, direct injection of DCVax-Direct into some of the tumors in each animal resulted in complete clearance of all tumors in 80% to 100% of all of the animals in the various studies – both the tumors that were injected and the tumors that were not injected, indicating a systemic immune response. Further, the tumors were cleared relatively rapidly: within weeks after the DCVax-Direct injections. Equally as important, sixty days after the tumors were cleared from the animals in these pre-clinical studies, the animals were re-injected with the same tumor cells that readily established tumors at the outset of the studies. This time, tumors failed to establish, indicating immune memory.

Current treatments for solid tumors typically involve cytotoxic therapy aimed at killing tumor cells. Such treatments include radiation therapy, chemotherapy, or other cell killing treatments such as cryotherapy. These treatments can still be used along with DCVax-Direct as they can potentially prepare the tumor tissue for the injection of DCVax-Direct. The ability to still use conventional cytotoxic agents along with DCVax-Direct will enable DCVax-Direct to be adopted in the market without requiring any change of existing clinical practice if so desired.

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OptimizeRx's SampleMD Revolutionizing Prescription Drug Sampling

Wed, 22 May 2013 17:00:00 -0400

Initiating Coverage Of Amarantus - Credibility vs. Perception

Wed, 22 May 2013 10:30:00 -0400

By Jason Napodano, CFA

Today, I am initiating coverage of Amarantus BioScience Holdings, Inc. (OTC:AMBS) with a 'Neutral' rating and $0.25 price target. Yes, a 'Neutral' rating. Neutral based primarily on the risk inherent in investing in any stock trading at this low in price. Neutral despite what I see as a story that is meaningfully undervalued based on my review of the science around the company's two core assets, the therapeutic agent MANF and the Alzheimer's diagnostic kit LymPro. Neutral despite a management that has worked tirelessly over the past several months to clean up the balance sheet, remove debt, bring in and validated new assets, expand the executive talent, settle all outstanding lawsuits, shoulder accountability, and put the company on a path for creating significant shareholder value. And neutral despite a price target of $0.25 that clearly points to massive upside in the shares.

...A Little Credibility Goes A Long Way...

It is clear to me that there is significant opportunity in the shares, and the current price of $0.04 – a market capitalization of around $16 million – vastly under-appreciates this potential. I originally became attracted to the story because of MANF for Parkinson’s disease, but now believe orphan indications around ischemic brain damage present more meaningful and near-term upside to the story. Likewise, I believe that LymPro could be a game-changing in the Alzheimer’s diagnostic market.

But I am fully aware that investors will be skeptical of Amarantus based purely on the price of the shares. A $0.04 stock surely has no credibility? This is presumed by almost all investors, including myself. To confirm the preconceived notion, I sat down in January 2013 with CEO, Gerald E. Commissiong, face-to-face. I exited the meeting less presumptuous, more curious; I began digging.

Over the next five months I saw several instances that proved to me, this was a credible CEO and a credible company. For example,

- The company has been highly active at investor conferences, including OneMedForum (January 2013), Biotech Showcase (January 2013), BioCEO (February 2013), TBI (February 2013), C4CT (March 2013), BioBusiness Forum (April 2013), and the Marcum MicroCap Conference (May 2013). Most of these presentation have been achieved on the company's new website.

- The company has expanded is Board of Directors, and Board of Advisors. In April 2013, the company hired a newDirector of Investor Relations, and even hosted its first business update conference call with analysts and investors.

These are little things, individually insignificant because they are normal things publicly traded companies do. But for a $0.04 stock, they become altogether meaningful by showing that management is not hiding from investors or analysts. They are open and have made efforts to be accessible. I can attest to that. From an investor relations standpoint, this is not what one would expect from a $0.04 stock.

From a science standpoint, I think both MANF and LymPro have credibility. For example,

- The company has gone to great efforts (at expense) to validate the science behind both MANF and LymPro. Scientific credibility starts with presenting statistically significant data in validated models of target diseases. It involvespublishing the data in peer-reviewed and respected medical journals, and backing up that data with follow-on publications.

- The company has made available online a White Paper reviewing all the sponsored and independent literature on MANF (including opposing opinions). In my experience as a professional stock analyst for the past 16 years, companies trying to hide data from investors do not publish thorough scientific reviews for all to see. This is not a management that is afraid of the science or hoping to trick investors by data-mining, sub-populations, narrow indications, or fancy assays. They are confident that what they have with MANF is real, is big, and are not afraid to outline an aggressive pathforward to realize its value.

- The company has provided a similar thorough open access White Paper analysis of LymPro. I have looked at LymPro myself, and like what I see. It's a potential game-changer in my view, and the timeline for generating revenues from LymPro is nearer than most investors think. The development strategy for LymPro is aggressive. Management hopes to announced a well-known and respected partner GLP lab to conduct the CLIA validation work on LymPro in the next few weeks.

Amarantus has done an admirable job over the past several months in telling its scientific story. Most of the time when investors question a company on its science, management will dance around trade secrets, intellectual property protection, or point to ambiguous literature as validation for ill defined paths forward. On the contrary, Amarantus has embraced the concept of full disclosure on par with or superior to many well known and respected biotech companies. Similar to the company's attendance at conference and in communicating with investors, this is not something one would expect from a $0.04 stock.

...A Little Cash Goes Even Further...

From a management credibility standpoint and from a scientific validation standpoint, Amarantus does not look like a $0.04 stock. From balance sheet and capital structure standpoint, it surely does. As of May 13, 2013, the company had a whopping 385.0 million shares outstanding. As of March 31, 2013, the company held only $0.240 million in cash on the books. In January 2013, the company secured a commitment for $1.4 million in cash. The final tranche payment was made in April 2013. Despite this, the company does not have enough funds to push MANF or LymPro forward without raising significant cash in the next few weeks or months. We note the company is not currently in default on any loans or debt.

What investors should watch for over the next few weeks or months is simple - Can Amarantus secure quality capital to push MANF and LymPro forward without massively dilutive or toxic financings? Can management, who as far as we have seen has done everything right they can over the past six months, get the cash they need to tie this entire story together and send the shares higher?

Conclusion

I think MANF is a potential blockbuster for the treatment of Parkinson's disease, traumatic brain injury, or other ischemic disorders. Notice I said "I think" and "potential" - it's still too early to make bold fist pounding predictions. However, I encourage investors to read the White Paper on MANF and read my article that reviews all the available scientific literature. Then make your own decision.

Next, read the White Paper on LymPro. See if you agree with why I think it could be so significant for the diagnostic market and the treatment of Alzheimer's disease. Again, I'm not pounding the table here or force-feeding overly bullish hyperbole. The science is all there available for investors to delve deep. One thing I will note, look for the announcement of a GLP lab partner to do the CLIA work on LymPro coming soon. If Amarantus can attract a big and highly respected name - a major player in the diagnostic market - I think that will validate the opportunity.

If you like what you read, next familiarize yourself with how I arrive at a valuation of $0.25 per share for the entire company in the 27-page Zacks report. Start checking off the boxes, and then make a decision based on all that available information whether or not Amarantus is worth $0.04 per share. The logical question investors may ask is, "If you think it is worth $0.25, why not rate it a 'Buy'?" Quiet simply, what I think the stock is worth and where the market will bid the shares are two different things. Yes, I think Amarantus is worth $0.25 based on my knowledge of biotechnology and financial modeling. The target is objective. That's what my models say, so that's what I put on the report. It's all there for anyone to read.

The 'Neutral' rating takes into consideration the risk, the need for cash, and the fact that most investors will remain skeptical of the story. It's perception. The rating is subjective. But I conclude with this, be on the look-out for a meaningful and quality financing that could spark the start of a change in perception which leads to a re-valuation of the shares. Having enough cash to move this story forward, eliminating the final hurdle what keeps the shares at $0.04, is the inflection point in my view.

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Immunovaccine is on Track to Advance Clinical Programs

Wed, 22 May 2013 07:00:00 -0400

By Grant Zeng, CFA

Immunovaccine Reports Financial Results for First Quarter of 2013

On May 16, 2013, Immunovaccine Inc. (TSXV:IMV.V) announced its financial and operational results for the quarter ended March 31, 2013.

There was no revenue for the first quarter of Q1 2013 ended March 31, 2013.

Total R&D expenses for the first quarter of 2013 were $839,000, less government loans and assistance of $41,000 and investment tax credits of $70,000. This represented a $181,000 increase of net R&D expenses over the three months ended March 31, 2012.

G&A expenses were $614,000 for 1Q13 compared to $567,000 for the three months ended March 31, 2012, an overall increase of $47,000. Total business development expenses of $221,000 in Q1 Fiscal 2013 represented a decrease of $24,000 compared to the three months ended March 31, 2012.

Net loss for 1Q13 was $1.6 million, increased from a loss of $1.4 million during the quarter ended March 31, 2012. This relates mainly to a $308,000 decrease in government loans and assistance.

At March 31, 2013, Immunovaccine had cash and cash equivalents of $2.5 million and working capital of $2.1 million as compared to $2.0 million in cash and $2.1 million in working capital at December 31, 2012.

As of March 31, 2013, the number of issued and outstanding common shares was 68,412,996. On March 31, 2013, the number of stock options outstanding was 5,229,650 and the number of outstanding warrants was 3,732,550.

While we think the financial results releasing is a non-event for Immunovaccine, we are glad to see that Immunovaccine is making progress in its clinical programs.

Balance Sheet Boosted By New Financing

On March 5, 2013, Immunovaccine closed a private placement of its securities, raising gross proceeds of $1,603,880. Under terms of the financing, a total of 4,860,244 common shares were sold at a price of $0.33 per share.

Net proceeds from the financing will be used to fund preclinical research and development efforts in the areas of infectious diseases, including respiratory syncytial virus (RSV), malaria and anthrax. These ongoing efforts will support Immunovaccine’s Phase I clinical trials for these infectious diseases programs. The proceeds will also support preparatory work to advance IMV's clinical stage oncology program, DPX-Survivac, into Phase II development, as well as ongoing efforts to establish alliances, collaborations and strategic transactions with parties including government entities, academic medical centers and other companies in order to secure additional financing to advance its current clinical programs and to expand its pipeline of strategic assets.

As of March 31, 2013, IMV had cash and cash equivalents of $2.5 million. Immunovaccine will continue to use a combination of strategic partnerships, non-dilutive financing and equity to support its development programs and in turn drive value creation.

Positive Results Reported for DPX-Survivac in Phase I Ovarian Cancer Study

On January 7, 2013, Immunovaccine Inc. (TSX-V: IMV) reported positive results from a Phase I clinical study of the Company’s cancer vaccine, DPX-Survivac, for the treatment of ovarian cancer.

As a reminder, Immunovaccine initiated a Phase I clinical trial of DPX-Survivac and vaccinated the first patient in December 2011. The Phase I clinical trial is being conducted in eight clinical sites in the US and Canada. The Phase I is an open label clinical trial designed to evaluate sequentially the safety of two DPX-Survivac dosing regimens (0.5 ml and 0.1 ml) in approximately 15 patients. The goal of the Phase I clinical trial is to establish the safety and immune activity of DPX-Survivac in patients with advanced ovarian cancer.

Under the study protocol, these patients each received a total of three DPX-Survivac vaccinations three weeks apart with a total of 18 ovarian cancer patients completing all three vaccinations. A lead-in cohort of three patients received DPX-Survivac alone to confirm the safety of the vaccine as a monotherapy. Two additional cohorts of six patients each received a low dose or a high dose of DPX-Survivac in combination with a low dose of cyclophosphamide. The trial’s primary objective was to evaluate the safety of the vaccine and in combination with cyclophosphamide. A secondary endpoint was the evaluation of the immune response produced by the vaccine therapy.

IMV intends to use DPX-Survivac alone or in combination with low dose oral cyclophosphamide as a first line maintenance therapy following standard surgery/ radiation/ chemotherapy. The therapeutic cancer vaccine is intended to stimulate an immune response to attack the circulating cancer cells that remain in a patient’s body after surgery and radiation/chemotherapy. This treatment approach has the potential to combat micro-metastases and keep the cancer in remission and prevent metastasis.

On October 9, 2012, IMV announced positive interim results from this Phase I clinical trial.

Current analysis, which now includes all patients enrolled in the study, confirmed previously reported results and uncovered new findings which are highlighted as follows:

· All patients receiving the DPX-Survivac combination therapy who were evaluable by tetramer staining (n=10) produced survivin-specific CD8 T cells following one or two vaccinations. Importantly the CD8 responses were maintained with booster vaccinations. The activation and maintenance of these specific immune cells is of particular interest in immunotherapy since CD8 T cells are implicated in identifying cancer cells, infiltrating tumors and killing cancer targets.

· All patients receiving the DPX-Survivac combination therapy (n=12) demonstrated antigen specific immune responses as measured by at least one of the study’s three immune monitoring assays (ELISpot, tetramer analysis and multiparametric intracellular cell staining). In 11 of 12 patients, the immune responses were confirmed by two assays (five patients) or three assays (six patients) performed. These immune responses were established with one or two vaccinations and further increased or maintained with follow-up booster vaccinations.

· Analysis of immune responses by ELISpot showed that a cohort of patients receiving the higher dose of the vaccine therapy produced an average stimulation factor of greater than 600 times (600x) over baseline following their third vaccination. For one of these patients, the stimulation factor reached greater than 1,200 times (1,200x) over baseline. These immune responses are in agreement with the previously reported average increase of 350 times (350x) over baseline for these same patients following their second vaccination.

· DPX-Survivac was deemed well tolerated with no significant systemic adverse events reported in any patients recruited in this study. Reported adverse events were restricted to injection site reactions, which were experienced by the majority of patients after repeated vaccinations. Those patients presenting the strongest immune responses were more likely to exhibit more pronounced injection site reactions. There were no dose limiting toxicities experienced during the trial and no patient withdrew consent due to adverse events.

The Phase I study is part of a Phase I/II trial cleared by the U.S. FDA and Health Canada. The Phase II portion of the trial will be a randomized, double-blinded, placebo-controlled study with a vaccine dose selected based on the Phase I results. The Phase II trial will assess the clinical benefit of DPX-Survivac in patients with advanced ovarian cancer.

We are encouraged by the positive data from this Phase I study. The positive data continue to demonstrate that IMV's technology can speed up immune responses and make them stronger and longer lasting, for a wide range of vaccines. We have seen positive results from IMV’s candidates whether in cancer immunotherapy or in protection against infectious disease.

The fact that DPX-Survivac can generate and maintain this response is strong evidence to support continued advancement of this candidate.

Phase II Trial of DPX-Survivac is on Schedule

Based on existing clinical data, Immunovaccine has already received clearance from U.S. FDA and Health Canada for the initiation of a Phase II trial of DPX-Survivac immediately following the completion of the ongoing Phase I study.

The Phase II trial will be a randomized, double-blinded, placebo-controlled study with a single vaccine dose selected based on the Phase I results. The Phase II trial will assess the clinical benefit of DPX-Survivac in patients with advanced ovarian cancer.

Update On Other Clinical Programs

· Signed an investigator-initiated study agreement for a Phase I/II trial of DPX-0907 in breast and ovarian cancer. The trial will be conducted at the Busto Arsizio Hospital in Italy with Marco Bregni, M.D., head of the hospital's Oncology Unit, serving as the study's principal investigator. Immunovaccine expects the Phase I/II study to be initiated during the fourth quarter of 2013. The study agreement provides critical non-dilutive funding for Immunovaccine's ongoing advancement of its clinical stage DPX-0907 cancer vaccine program.

· Reported positive preclinical data for DepoVax™-formulated anthrax vaccines developed in collaboration with the National Institutes of Health (NIH). Study findings suggested that the DepoVax™-based vaccines provided a more rapid and long lasting immune response as compared to the licensed anthrax vaccine BioThrax™. This immunogenicity study is part of an ongoing bio-defense research program being conducted in partnership with NIH.

· Received up to $407,700 in Industrial Research Assistance Program (IRAP) funding to support the development of a respiratory syncytial virus (RSV) vaccine formulated with DepoVax™. RSV is a common lung disease in children, the elderly and patients with a compromised immune system. The funding will be used to advance Immunovaccine's RSV program, including the formulation of RSV antigens in the Company's patented DepoVax™ vaccine-adjuvanting technology. The funding will help IMV prepare for the first human trial of its DepoVax™ platform technology in infectious diseases.

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High Utilization at Maritime has Grupo TMM Tracking Ahead of 2012

Tue, 21 May 2013 07:30:00 -0400

By Ken Nagy, CFA

On May 16, 2013 Grupo TMM (OTC:GTMAY) the Mexican intermodal transportation and logistics Company, released results for its first quarter ended March 31, 2013.

Maritime remains the dominant division at Grupo TMM. The Company's offshore business continued with high utilization and Ports and Terminals reported increased auto exports at Acapulco, particularly South America bound, as well as higher volumes at maintenance and repair.

As a result, Grupo’s consolidated revenue for the first quarter fiscal 2013 was strong at $837.0 million pesos, improving year over year by $27.9 million pesos, from $809.1 million pesos for the comparable quarter of 2012.

The improvement in year over year sales for the segment was primarily due to a 7.9 percent revenue increase at offshore, as a result of higher average daily tariffs, to having two additional vessels in the fleet and to improved utilization, which grew from 92.4 percent in the 2012 first quarter to 95.7 percent in the 2013 reported quarter. Additionally, parcel tanker revenue improved 26.1 percent year over year due to higher volumes, and harbor towage revenue grew 9.3 percent due to an improved revenue mix attributable to the Liquefied Natural Gas, or LNG, services.

Grupo’s Maritime revenue for the first quarter improved nearly 5 percent or by $25.6 million pesos year over year to $554.5 million pesos.

Maritime operating profit for the quarter increased 16.8 percent year over year as a result of revenue increases at offshore and harbor tugs. Operating margin increased to 20.8 percent from 18.6 percent in the 2012 first quarter.

Also worth noting is that Maritime's EBITDA for the 2013 first quarter grew 9.2 percent to $257.4 million pesos compared to $235.8 million pesos in the 2012 first quarter. Likewise, EBITDA margin at Maritime improved in the 2013 first quarter to 46.4 percent compared to 44.6 percent in the 2012 first quarter.

Excluding other income net in both reported periods, consolidated operating profit in the 2013 first quarter was $35.9 million pesos, improving 13.6 percent from $31.6 million pesos in the 2012 first quarter. Other income net was $10.5 million pesos in the 2013 first quarter and mainly included $5.9 million pesos in cash dividends from affiliates and $1.6 million pesos in net tax recoveries. In the 2012 first quarter, other income net of $27.5 million pesos included $28.7 million pesos in cash dividends from affiliates, offset by a $1.3 million peso reserve for expenses associated with an arbitrage at the Maritime division.

Consolidated EBITDA in the 2013 first quarter was $203.7 million pesos compared to $213.6 million pesos in the 2012 first quarter.

The Ports and Terminals segment continued its trend of revenue growth, improving by $20.9 million pesos to $97.7 million pesos. Likewise, the Ports and Terminals segment’s operating profit during the 2013 first quarter increased 37.9 percent compared to the 2012 first quarter, largely due to profit improvements at Acapulco and at maintenance and repair, specifically at the Veracruz, Manzanillo and Altamira facilities.

As of March 31, 2013, TMM's total net debt was $9,891.7 million pesos. The Company paid approximately $395.0 million pesos of its Trust Certificates debt, including a capital prepayment of $5.0 million pesos. Of Grupo TMM’s total debt, only $239.1 million pesos or 2.4 percent is short term. This compares to $332.6 million pesos or 3.1 percent of total debt being short term as of December 31, 2012.

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BioLife Has More Room To Run

Mon, 20 May 2013 15:00:00 -0400

Market Trends Offer Opportunities for FPMI

Mon, 20 May 2013 07:45:00 -0400

By Brian_Marckx, CFA

FluoroPharma Medical, Inc. (OTC BB:FPMI) seeks to develop breakthrough molecular imaging agents for positron emission tomography (PET) to fulfill critical medical needs. The company’s products are designed to improve patient diagnosis and management by evaluating various forms of cardiac disease at the cellular and molecular level. Each year, millions of patients undergo molecular imaging studies in the U.S. The main reason for these studies is to detect and evaluate ischemic heart disease and myocardial infarction (MI) in patients with acute and chronic forms of coronary artery disease (CAD). These images provide benefit in the initial evaluation of patients with suspected but unproven CAD, and in those patients in whom a diagnosis of CAD has been established and information on prognosis or risk is required.

FluoroPharma's current focus is on three separate cardiac molecular imaging pharmaceuticals, two of which are in clinical-stage (BFPET, CardioPET) and recently entered phase II clinical trials. The third candidate, VasoPET, is still in early development stage with initial clinical testing still likely to be years away. If all goes to plan, the first of the three products could be on the U.S. market within the next three to four years. FluoroPharma's products are aimed at improving overall patient care via improved disease detection and are expected to; provide significantly greater diagnostic accuracy compared to currently employed nuclear imaging agents and modalities, increase the use of PET in cardiac imaging, and help reduce the number of unnecessary diagnostic and therapeutic procedures.

In the U.S., there are an estimated 12 million PET imaging procedures done per year - however, the vast majority of these scans are for the diagnosis of cancer. While PET is becoming more established in the cardiac setting, this segment continues to be dominated by lower cost competing modalities. By all accounts, this is quickly changing as several factors have led to a shift in favor of PET for the diagnosis of cardiac disease. FluoroPharma expects to capitalize on this growth through the introduction of novel cardiac PET tracing agents, the market for which is expected to grow by at least 14% annually over the next four years to approximately $900 million (or more). Aside from one currently marketed branded cardiac PET tracer (which suffers from certain issues), the market is largely is wide open.

Cardiac Imaging Modalities

Within cardiac imaging there are several different modalities including ultrasound, MRI, PET, computer tomography angiograph (CTA or CT) and single-photon emission computed tomography (SPECT). PET and SPECT are nuclear (also called molecular) imaging modalities which provide the highest level of detail relative to organic anatomic changes (i.e. - function and metabolism) in the body while the others primarily only provide information about the anatomy and structure of the body. CT and MRI, while sometimes used as an adjunct to PET and SPECT for cardiac imaging, have not gained widespread acceptance as a first-line diagnostic for this application and are generally viewed as complementary to molecular cardiac imaging. This is especially the case for myocardial perfusion imaging (MPI) which is used to determine the volume of blood flow to the heart and the function of the heart muscle. CT coronary angiography, which uses a high speed (64-slice) CT camera and drugs to slow the heart, is a relatively new procedure and provides more functional detail of the coronary arteries than conventional CT scans. Although CT coronary angiography is gaining greater acceptance in the diagnosis of CAD, MPI via nuclear imaging remains the most definitive non-invasive technique for diagnosing CAD. As PET and SPECT are considered the gold-standards for high accuracy cardiac imaging, we confine our discussion solely to these two imaging modalities.

PET Growing At SPECT's Expense…

Nuclear imaging uses radioactive materials called radiopharmaceuticals or radiotracers which are injected into the patient and accumulate in the area of the body to be imaged. These tracers emit very minute levels of radioactivity which are detected by a camera (i.e. - PET, SPECT) which can then provide very detailed molecular images.

PET and SPECT are the two most widely used nuclear imaging modalities. SPECT has some utility in a number of applications including neurology and oncology but is primarily used in cardiology. In cardiac scans, PET has been shown to provide a better picture of blood flow compared to SPECT which allows it to better identify those patients that should undergo revascularization and reduce reliance on coronary angiography as a definitive diagnostic. Another significant differentiator is that PET scans are quantifiable, while SPECT scans are not - the difference is important as approximately 20% of CAD patients have global ischemia as a result of multi-vessel CAD which can not be detected by SPECT but can be with PET due to its quantifiable functionality. PET's superior sensitivity has been documented in clinical studies and was even more apparent with heavier and large-breasted patients. PET uses different types of radiopharmaceuticals compared to SPECT, which contributes to the greater sensitivity of PET.

Despite the greater accuracy afforded by PET, nuclear imaging is currently dominated by SPECT, accounting for approximately 90% of all nuclear scans. In aggregate, molecular imaging is used in approximately 10 million MPI scans every year in the U.S. Estimates put the number of SPECT cameras currently in use at about 14k, compared to just 140 dedicated PET systems being used for cardiac applications. The dominance of SPECT up to now has to do with its lower cost and, until recently, more favorable insurance reimbursement. In addition, PET has historically been limited to only a few PET centers and used primarily for oncology.

The tides are turning however, with rapid growth in the number of dedicated PET centers and technological advancements making PET scanners even more sensitive and providing greater image uniformity (especially as compared to SPECT). The increased adoption of PET over SPECT in cardiology has also been facilitated by the introduction of lower cost PET scanners, coupled with significantly higher reimbursement compared to SPECT - which makes the economics of owning a PET scanner much more palatable for imaging facilities than they might have been previously. An opportunity to increase PET scanner utilization beyond oncology into applications such as cardiology is viewed highly attractive to health care providers which are looking to cover the relatively high fixed cost of their nuclear scanners (compared to a relatively low per-scan, variable cost). This, along with a global shortage of molybdenum-99 (used for SPECT imaging), has helped to significantly increase the use of PET, especially as a first-line diagnostic for cardiac procedures. In fact, The American College of Cardiology Environmental Scanning Report 2011 notes, "A greater use of PET can be expected for both assessing blood flow quantitatively and molecular imaging of atherosclerotic plaques and myocardial disease states." The expected transition away from SPECT to PET for cardiac imaging is echoed by a May 2011 molecular cardiac imaging industry report by TriMark Publications titled Nuclear CardiologyMarkets;Trends, Industry Participants, Product Overviews and Market Drivers which notes, "A continued movement towards PET from SPECT will result in a nearly 50% of the entire cardiac SPECT market transitioning to PET within the next decade, resulting in a total SPECT decline from over 90% of the nuclear medicine studies to 68%."

BFPET

BFPET is a novel blood flow imaging agent being developed for use in conjunction with stress-testing for the detection of ischemic (reversibly damaged) and infarcted (irreversibly damaged) tissue within the myocardium in patients with suspected or proven chronic CAD. BFPET, a Flourine-18 labeled tracer, has been designed to enter the myocardial cells of the heart muscle in direct proportion to blood flow and membrane potential - which are the two most important physiological indicators of adequate blood supply to the heart. BFPET has been designed to effectively differentiate among those cells of the myocardium that are ischemic, infarcted and those that are healthy. Because ischemic and infarcted cells take up significantly less BFPET than normal healthy myocardial cells, the signal emitted by BFPET is inversely proportional to the extent of myocardial injury. Therefore, as a result of BFPET’s use, FluoroPharma believes ischemic heart tissue can be more reliably detected using BFPET. BFPET is expected to primarily be used in conjunction with stress-testing for patients with suspected or proven chronic CAD. If approved, BFPET will represent the first molecular imaging blood flow agent commercialized for use in the cardiovascular segment of the PET imaging market.

BFPET has completed phase I trials and recently entered phase II trials to assess its efficacy in CAD subjects. Phase II trials will compare BFPET to Rb-82 and/or traditional SPECT agents. Based on current expected timelines, we believe phase II trials might be completed by sometime in 2013. If all goes to plan, phase III trials could wrap up and an NDA filed by the end of 2015. This potentially puts BFPET on the U.S. market by 2016.

Phase I trials (used to assess safety / tolerability, distribution and dosimetry) consisted of 12 healthy individuals which were injected with one dose of BFPET while at rest (i.e. - not stressed-tested). Results, announced in July 2008, showed a favorable profile on all categories (safety, distribution, dosimetry) and no adverse events were experienced.

BFPET Pre-Phase II Study Results Very Encouraging…

In late July 2012 FlouroPharma announced that quality of the initial images using BFPET in a 20-patient (with coronary artery disease) investigator-led stress perfusion imaging study conducted at a hospital in Beijing China were "spectacular" and "superb". This study is similar in the design of the phase II study where BFPET will be compared to Rb-82 and/or traditional SPECT agents such as sestamibi which suffer from certain drawbacks such as high cost or comparably (relative to BFPET) lower image quality.

Alan Fishman, principal investigator of the BFPET phase I trial, notes in the press release relative to the current study that "initial results are impressive. Image quality obtained using PET is superb. BFPET shows clear diagnostic qualities as well as increased resolution, inherent in PET. The initial images look spectacular and we are confident that when all the patients are imaged, the data will further support clinical development of the agent." His confidence was further bolstered when additional data was available in November 2012, noting "We saw a high level of agreement between the angiography, the SPECT and the BFPET images. These additional images demonstrate that BFPET shows clear diagnostic qualities as well as the increased resolution, inherent in PET."

In early January 2013 FPMI announced that phase II trials of BFPET are being conducted at Massachusetts General Hospital. The specific trial design will be announced prior to the commencement - until then we estimate BFPET enrollment will also be approximately 50 patients.

BFPET market is huge…

BFPET will be used to measure cardiovascular blood flow in MPI exams. Approximately 10 million perfusion imaging exams are performed in the U.S. every year. SPECT currently dominates this market although, as noted, SPECT suffers in image quality compared to PET. PET MPI exams use the tracer Rb-82 which, as noted, is relatively expensive which has limited its use. FluoroPharma expects to capitalize on the deficiencies of SPECT and Rb-82 by positioning their Flourine-18 labeled BFPET tracer as a high accuracy, relatively safe agent for MPI.

BFPET will be used with PET in combination with stress testing for the identification of ischemic and infarcted tissue in patients with chronic CAD (approximately 85% of CAD is considered chronic as opposed to acute) as well as in combination with FDG (or CardioPET) in patients with acute CAD that are undergoing CVA.

The potential market for BFPET is huge - essentially encompassing the entire MPI procedural population. However, as the vast majority of MPI procedures are done using a modality other than PET, the proportion of this market that BFPET would realistically be able to initially attain would likely be relatively low. But, due to the rapidly growing acceptance of PET in cardiac diagnostics along with the advantages of BFPET compared to Rb-82, deeper penetration within MPI could come fairly swiftly. FluoroPharma estimates that PET will account for approximately 5% of the U.S. molecular imaging market by 2015 and 25% share within five years after BFPET makes its commercial launch (both of which are very conservative relative to the estimates cited in the aforementioned market study). They also believe BFPET could eventually capture approximately 65% share of the evaluable cardiovascular PET market.

Based on these assumptions, FluoroPharma estimates that BFPET could capture about 1% - 3% of the total market for MPI radiopharmaceuticals in the first full year after launch (i.e. - possibly ~2016/2017) and will account for about 20% - 30% of the market five years following launch (i.e. - possibly ~ 2021/2022) - which, depending on the selling price that the company is able to achieve, could mean revenue to FluoroPharma from sales of BFPET as high as $50 million in the first full year after launch and ~ $700 million five years after launch.

CardioPET

CardioPET is a novel molecular imaging agent (also labeled with Flourine-18) in development for the assessment of myocardial metabolism. FluoroPharma intends to develop CardioPET for use in the following areas: (a) detection of ischemic and infarcted tissue in patients with suspected or proven forms of acute and chronic CAD, including those that cannot undergo stress-testing; and (b) Cardiac Viability Assessment (CVA), for the prediction of functional improvement prior to, or following revascularization in patients with acute CAD, including myocardial infarction.

FluoroPharma believes that CardioPET may be ideal for CVA through its ability to specifically identify jeopardized but viable myocardium - that is, heart tissue that has suffered an acute episode of ischemia, but is still viable. Identifying viable myocardium, also referred to as hibernating or stunned myocardium, from non-viable scar tissue is crucial because it is well documented that revascularization in patients with substantial viable myocardium results in improved left ventricular dysfunction and survival. The company believes that CardioPET, if approved, may have several significant advantages for assessing cardiac viability using PET, and would represent the first imaging agent available in the U.S. for use in patients with acute and chronic CAD that cannot undergo stress-testing. CardioPET is designed to provide the metabolic component for CVA. Accordingly, it may be used with either BFPET or other blood flow agents in performing CVA.

In the acute setting, CardioPET could potentially play a critically important role in emergency rooms, helping to better assess the risk of patients presenting with signs of acute coronary syndrome. Patients coming into emergency departments that show signs of ACS are initially triaged based on a review of their medical history and through some gate-keeper type of tests such as a chest x-ray, EKG and certain biomarker tests such as Troponin. While these tests are generally good for providing information relative to whether someone has recently suffered a cardiac event such as a heart attack, they have certain shortcomings. EKG's have shown to be highly accurate in the confirmation of ACS but suffer from high false positives - which means many low-risk patients may be inaccurately diagnosed as high-risk. Troponin and other biomarker tests, used to detect elevated levels of certain proteins released following a heart attack, are accurate in determining whether a cardiac event occurred but the accuracy of the tests is highly dependent on when they are administered as these biomarkers peak in the body ~8 to 24 hours after the onset of a heart attack. This means triage decisions may be delayed, potentially putting a patient at greater risk.

While these gate-keeper tests are generally valuable for triaging patients to a high-risk group (which should be admitted to the hospital immediately), they provide less guidance for intermediate and low risk groups. This often results in either over- or under-diagnosis and inappropriate follow-on testing and treatment for intermediate and lower risk patients. CardioPET could be ideal adjunctive test for this patient population, which accounts for ~85% of the patients emergency departments see every year with signs of ACS. CardioPET could allow emergency room physicians to better diagnose these patients determine the next course of action - whether it be release and outpatient follow-up or admit to the hospital and treatment.

CardioPET completed phase I trials and in March 2012 FluoroPharma announced the initiation of the phase II trial design. The company signed a letter of intent with SGS Life Sciences to provide clinical research services for phase II trials of CardioPET - this agreement was consummated in September 2012 when the companies signed a Clinical Research Agreement. The Belgian-based trial will be open label and designed to assess safety and performance of compared to stress echocardiography, myocardial perfusion imaging (MPI) and angiography. The trial will be conducted at two sites in Belgium. Enrollment is expected to consist of between 30 and 100 patients with known stable chronic coronary artery disease that can not undergo stress testing.

Phase I trials (used to assess safety / tolerability) consisted of 6 patients with diagnosed CAD and 15 normal healthy volunteers (i.e. - control group). Phase I testing completed in April 2007 and demonstrated CardioPET was safe with no patients experiencing any adverse events.

On 2/28/2013 FPMI announced that the initial images from phase II trials "show high resolution in the heart and provides extremely clear image quality". In the press release announcing the results of the most recent images, Dr. Roland Hustinx, one of the investigators in the study, notes, "The (phase II) images obtained from CardioPET are high quality and agree with previous findings."

We view this news as an obvious and significant positive for FPMI and their CardioPET candidate and our outlook remains highly positive on FPMI. If all goes to plan phase II will wrap up in 2013 and phase III completed and an NDA filing potentially happening by the end of 2015. U.S. launch could potentially happen by 2016.

CardioPET for cardiac viability…

CardioPET's chief clinical uses are expected to be to identify patients with jeopardized but viable myocardium that will benefit from PCI and in the evaluation of CAD in patients that can not exercise. PET imaging using CardioPET will be positioned as an alternative to exercise stress-testing. CardioPET's target markets will be the approximately 4 million patients with chronic CAD that can not undergo exercise stress testing, the 1.6 million people that could benefit from cardiac viable assessment, and a portion of the 12 million MPI procedures. As there are no directly competing tracer products in the non-stress testing indication, FluoroPharma expects to be able to capture a significant portion of this segment shortly after launch. Within five years of launch FPMI believes that they can attain as much as 80% share for the myocardium viability indication, 30% of the CAD diagnosis at rest indication, and 7% of the MPI indication. Based on these assumptions, the company believes that within the third year of launch, CardioPET could be used in approximately 700k procedures, growing to 1 million+ procedures in year five post-launch. This could equal a potential revenue opportunity to FluoroPharma of approximately $400 million in the third year (i.e. - ~2019/2020) and $600+ million in the fifth year (i.e. - ~2021/2022) after launch.

VasoPET

FluoroPharma is developing VasoPET as a novel molecular imaging agent for the detection of vulnerable coronary artery plaque in patients with CAD. VasoPET, if approved, would represent the first PET cardiac product to reliably image inflamed plaque and therefore may differentiate between vulnerable and stable coronary artery plaque.

The rupture of atherosclerotic plaques and the subsequent formation of thrombi are currently recognized as the primary mechanisms of myocardial and cerebral infarctions. Therefore, the detection of vulnerable plaque in atherosclerotic lesions is a desirable goal—and to date remains both a significant unmet clinical objective and a large unaddressed market opportunity.

Coronary artery plaques grow over time and progressively narrow the lumen (i.e. - opening) of the coronary artery until blood flow to the heart diminishes to a critical level. The decrease in blood flow causes symptoms of chest pain (angina), at first during exercise and then progressively during rest. Rupture of the plaque and/or clot formation overlying the plaque may then result in myocardial ischemia and/or myocardial infarction. Coronary artery plaque that is vulnerable is differentiated from its stable form by a large lipid-rich atheromatous core, a thin fibrous cap, and infiltration by inflammatory cells such as macrophages. The risk factor for rupture (and subsequent heart attack) is currently thought to be independent of plaque size and arterial narrowing, but rather is thought to correlate more with the presence of inflammation.

VasoPET has completed preclinical testing and preparation for an investigational new drug (IND) application is currently ongoing. Based on current expected timelines, an IND could be filed and phase I trials started towards the back half of 2014. Eventual FDA approval and subsequent launch is likely to be at least four years away (~ 2017+).

VasoPET for identification of vulnerable plaques…

VasoPET is expected to be able to identify the presence of inflammation and vulnerable plaques, the rupture of which could increase the risk of heart attack or stroke. The target market for VasoPET is expected to be those patients that have been diagnosed with ischemia through conventional exercise stress testing and specifically those that have already experienced an acute cardiac event such as a heart attack or stroke. VasoPET could be ideal in helping determine effective treatment to this patient population including appropriate medication and dosage. This target market represents approximately 30% of the total CAD patient population, or about 4 million people. VasoPET could also have utility as a first line diagnostic for atherosclerosis, which would expand its potential target market to an additional ~ 50 million people. Another potential use is for determining a patient's response to statins (such as simvastatin, Lipitor, and Crestor), commonly used drugs to combat high cholesterol - FPMI pegs this indication at a potential market size of about 4 million. Based on estimated penetration rates of these target markets (0.6% of the atherosclerosis market and 10% of all the other potential indications,fiive years after launch), FluoroPharma believes that VasoPET could be used in approximately 30k PET scans in the first full year of launch, growing to 450k and 700k scans in the third and fifth year (post-launch), respectively. Assuming a ~$600 cost per dose, This implies a potential revenue opportunity of ~$18 million in year 1 (2017/2018), $270 million in year 3, and $420 million in year 5 (2022/2023).

Q1 2013 10-Q Filed

FluoroPharma filed their 10-Q for the first quarter ending March 31, 2013 on May 15th. Results continue to be in-line with our estimates both in terms of expenses and cash burn. In addition development progress remains closely tracking our expectations.

Importantly, we see FPMI's fundamentals improving as time passes, not necessarily because of positive divergence from our expectations relative to product development but more to do with how the overall market for PET is developing and ever-improving expectations for growth of PET and, in particular growth of PET for cardiac diagnosis. While it's been no secret that PET has, and was expected to, make significant gains in terms of growth of installed systems and in the number of cardiac scans performed, largely at the expense of SPECT, as new estimates (several sources offer estimates) are published relative to these expectations, the general theme is that cardiac PET may accelerate even faster than was thought just a few years ago. This trend, along with an aging and fattening population (i.e. - more heart disease), offers a very attractive opportunity for FPMI. See our full report which includes a discussion on fundamental trends that we see favoring FPMI.

Q1 operating expenses were $1.1 million, down from $1.4 million in Q4 and below our $1.5 million estimate. We reiterate that management has done an impressive job keeping expenses down and cash burn to a minimum despite meaningful progress with development of the pipeline (including recently moving both CardioPET and BFPET into phase II trials, with initial images already coming from these studies) as well as with awareness-building and capital raising efforts.

Q1 net loss and EPS were $1.0MM and $0.04, better than our $1.6MM and $0.07 estimates. Cash used in operating activities was $672k, which was below the ~$825k average quarterly burn in 2012. FPMI exited Q1 with $631k in cash and equivalents, compared to $1.3MM at the end of 2012.

Recent highlights in product development include two separate rounds of high quality images from a BFPET study being conducted in China and high quality initial images from the CardioPET phase II trial. Relative to increasing visibility and awareness to industry leaders, FPMI's products were highlighted at two major scientific forums during Q3 2012; the high quality BFPET images were presented in Baltimore at the Annual Scientific Session of the American Society of Nuclear Cardiology in a lecture titled, "Nuclear Cardiology in 2012 and Beyond: Can We Meet the Challenges" and earlier that week in Dublin, Ireland two abstracts describing FPMI's products were presented as posters at the World Molecular Imaging Congress.

FPMI also presented at Taglich Brothers Small Cap Conference earlier this month.

We have made no material changes to our financial projections following the close of Q1. We think 2016 or 2017 could potentially be initial launch year of FPMI's first commercialized product. We are maintaining our $2.35/share price target (validated with our DCF valuation) and Outperform rating.

FPMI Attractive Valuation

Assigning valuation of FluoroPharma is somewhat tricky given that the first commercial product launch is still at least several years away. There are also no publicly available acquisition transactions in the radiopharmaceutical space involving a target company similar to FluoroPharma that could be used to value the company.

As a result, we believe an appropriate valuation methodology is to use price/sales ratio based on an estimate of revenue two to three years after when the first product may launch. Based on management's assumptions relative to demand for their products and growth of the respective markets, estimated revenue in 2019 could be as much as $1.7 billion. We have significantly haircut these estimates as we think these may be more of a best-case scenario. We use a 2.5x price/sales multiple to our estimated (i.e. - ballparked) 2019 revenue of $155 million and discount this back to the present at a fairly lofty 25%/year. We feel this discount rate is appropriate given that product development is still at an early enough stage where there is not insignificant risk of failure to hit expected milestones, including eventual FDA approval and commercialization. These inputs result in a current valuation of approximately $52 million, or about $2.35 / share.

We have also built a DCF model through 2022 which also supports a valuation of approximately $2.35. Key inputs to our DCF model are meaningful revenue commencing in 2017 and growing to around $340 million in 2022 and a ~19% cash flow discount rate (which again, reflects inherent risks of a FPMI's development-stage status). Our DCF model calculates a valuation of $2.43.

Depending on the progression, success and timeliness of product development and related likelihood of ultimate FDA approval / commercialization, it may be appropriate to adjust the discount rates used in both valuation methodologies. Similarly, depending on how certain other factors evolve over the next few years such as the reimbursement environment for radiopharmaceuticals, growth of PET for cardiac applications, and the competitive landscape for novel PET cardiac tracers, it may prompt modifications (up or down) to our forecasted revenue and cash flow estimates. As it is now we value FPMI at $2.35/share. Based on the current share price of $0.80, we feel the stock remains undervalued and are maintaining our Outperform rating.

See below for a link to our full 22-page report on FPMI.

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Acquisitions Drive the Top-Line at InterCloud Systems

Mon, 20 May 2013 07:30:00 -0400

By Ken Nagy, CFA

On May 15, 2013, InterCloud Systems Inc. (OTC BB:ICLD) the Boca Raton, Florida based end-to-end solution provider of value added cloud and managed service based platforms, professional services, applications and infrastructure to both the telecommunications industry and corporate enterprises, filed its 10Q quarterly report for its first quarter, ended March 31, 2013.

For the first quarter ended March 31, 2013, revenues jumped $10.881 million year over year to $12.401 million from $1.520 million for the comparable quarter of 2012.

The year over year upturn in revenues was driven by the completion of three acquisitions in 2012.

Furthermore, as a result of the recent acquisitions, InterCloud Systems has become a multi-faceted company with an international platform that is expected to allow the Company to leverage its corporate and other fixed costs and capture gross margin benefits.

It should also be noted that the Company has also entered into definitive agreements for two additional acquisitions that are expected to close during the second quarter of 2013.

Gross profit for the quarter was $3.635 million resulting in gross margin of 29.3 percent. This compares to gross profit of $655,355 and gross margin of 43.1 percent during the quarter ended March 31, 2012.

The lower gross margin was a result of the acquisitions completed in 2012. The gross margin on the Company’s telecommunications staffing services, which was its largest service sector, was 20 percent for the three months ended March 31, 2013, which decreased overall gross margin.

Still, it is expected that as the telecommunications staffing services portion of InterCloud’s revenue increases, the Company’s overall gross margin percentage will continue to decline, while the gross margin dollars will increase.

Operating expenses increased to $3.030 million for the first quarter, up $2.115 million from the comparable three months of 2012.

Operating income for the three months ended March 31, 2013 was $605,485 compared to an operating loss of $259,034 million for the first quarter 2012.

Still, net loss attributable to common shareholders increased year over year by $717,053 to a loss of $1.050 million for the first quarter. This compares to a net loss attributable to common shareholders of $333,815 for three months ended March 31, 2012.

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