The MissionIR Report - Mid-September 2012
In-depth analysis, timely updates, latest market news
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Market News
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Company Updates
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Copper surges on hopes that demand will improve
The price of copper pushed higher Friday on a bet that it may be one of the first commodities to benefit if the U.S., Europe, and China prove successful in building up their economies. Copper for December delivery rose 12.25 cents, or 3.3 percent, to finish at $3.8325 per pound. The price has increased 12 percent since Aug. 1.
Many investors consider copper a reliable barometer of global economic health because it is used as raw material in a wide range of products, from construction materials and automobiles to consumer products such as cookware. Authorities in the U.S., Europe, and China have approved measures aimed at re-energizing economic growth. Manufacturing has been weak in all three regions while the job markets are anemic in the U.S. and Europe.
Copper should be one of the first metals to benefit if manufacturing improves as a result of stronger economic growth, said George Gero, vice president at RBC Global Futures. "If there is industrial recovery, copper will be one of the first to notice it," he said.
Germany: Further Steps Needed Before Banks Tap ESM
Handing bank oversight to the European Central Bank is not in itself sufficient to allow the euro zone's rescue fund to directly assist banks, Germany's Finance Minister said, warning he expected no such deal on supervision in 2012.
Wolfgang Schaeuble made the comments after talks between EU finance ministers on Saturday exposed deep divisions about a proposed banking union. That may disappoint investors who had been pinning hopes on a pledge by euro zone leaders to agree sweeping new powers for the ECB in 2012.
This in turn had been expected to unlock the possibility of direct aid to banks from the euro zone's rescue fund, the European Stability Mechanism (ESM), for countries such as Spain or Ireland.
"We have the declaration of the heads of governments of the euro zone that European banking supervision is a necessary but not sufficient prerequisite," Schaeuble told reporters after the ministers' meeting in Cyprus. "The rules of the ESM remain."
He said any country that is home to troubled banks would still need to apply for an adjustment program through the ESM.
The remarks contrasted with those of French Finance Minister Pierre Moscovici, who called for quick action and underlined the commitment by euro zone leaders to reach a deal this year.
"There are many questions on all of its aspects: the calendar for implementation, the scope of supervision, the role of the European Central Bank, the mechanism for supervision," Moscovici told reporters.
"These differences do not appear insurmountable at all to me. I am convinced that we will get there before the end of 2012: both because it's our duty and we have the possibility to do so," he said.
France's economic growth has ground to a halt since late last year and its banks have investments in struggling countries such as Greece.
Talks among EU finance ministers laid bare deep divisions not only among euro zone countries but also with many neighboring states, worried that the ECB's power could impinge on their banks.
Schaeuble reiterated his criticism of elements of the proposal, cautioning against expectations that a deal could be reached by the end of the year.
"I don't see that there can be direct recapitalization through the European Stability Mechanism already by January 1," he said.
Germany, which is keen to retain primary oversight for its regional savings and cooperative banks, had questioned whether the ECB should get the authority to supervise all 6,000 banks in the euro zone, arguing that it would overstretch the bank.
Officials in Berlin say it would be better to proceed more slowly with the reforms to ensure a water-tight system.
Sweden underscored the depth of the division. "There is a large number of countries that are very worried," said Finance Minister Anders Borg, saying Poland, the Czech Republic and the Nordic countries shared his concerns.
"There are very few countries outside (the euro) that think this is a balanced solution."
The close ties between governments and the banks they supervised and on whom they also relied to buy their debt, has dragged both ever deeper into crisis.
A banking union would break this link by making the policing of banks supranational and establishing central schemes paid into collectively to cover the costs of closing failed lenders.
For the plan to work, however, it will require countries to surrender a degree of sovereignty over banking supervision, which has long been a national responsibility.
But even those who stay outside the framework can be affected. Hungary, many of whose banks are owned by banks in the euro zone and who would in future be supervised by the ECB, is worried they will lose control of their lenders.
U.S. Stocks Extend
Fed-inspired Rally
U.S. stocks on Friday sealed a second week of gains as the Federal Reserve's bond-buying program fueled demand for riskier assets including the euro and commodities.
"We had a fair amount of data out right on the heels of the Fed, but probably the biggest influence today is still the after-effects of the Fed's announcement yesterday," said Jim Baird, chief investment strategist at Plante Moran Financial Advisors.
The dollar fell, oil prices neared $100 a barrel and Treasurys declined as the plan by Fed Chairman Ben Bernanke and his U.S. central bank colleagues spurred investor demand for riskier assets.
Stocks have been climbing for much of the recent summer, rallying around 4% in the last two weeks. "A good amount of this move was the fact that Europe has moved away from its Lehman moment," said Bill Stone, chief investment strategist at PNC Wealth Management.
Scaling back from a 113-point climb, the Dow Jones Industrial Average gained 53.51 points, or 0.4%, to 13,593.37, the highest close since Dec. 10, 2007. It gained 2.2% on the week, tallying gains for eight of the past 10 weeks.
Bank of America Corp. rose 1.6% on the day and was up 8.5% this week, bolstered by the Fed's decision Thursday to expand its long-term securities holdings with unlimited monthly purchases of $40 billion of mortgage debt.
"What [European Central Bank President Mario] Draghi is doing in Europe and what Bernanke is doing here is good news. They've effectively said that too little, too late is the most regrettable lament in the lexicon of central banking," said Hugh Johnson, chairman of Hugh Johnson Advisors LLC in Albany, N.Y.
Effective Sept. 24, UnitedHealth Group Inc. will replace Kraft Foods Inc. in the blue-chip Dow in the wake of Kraft's plan to spin off its North American food-store business. Kraft shares ended down 0.5%.
Up 1.9% from the week-ago close, the S&P 500 gained 5.78 points, or 0.4%, to 1,465.77, with energy performing best of its 10 industry groups after crude-oil futures topped $100 a barrel for the first time since May.
"It's better to sell bonds and get into something that is going to give you a return. The Fed is forcing investors to get out of safer investments; the search for yield is going to drive up the price of commodities, including oil," said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
The S&P 500 has also gained for eight of the 10 past weeks.
The Nasdaq Composite climbed 28.12 points, or 0.9%, to 3,183.95, the highest close since Nov. 9, 2000. Apple Inc. shares rose $8.30, or 1.2%, to $691.28.
The dollar fell against other currencies, including the euro.
The yield on the 10-year Treasury note rose to 1.868%, up 15 basis points, for the biggest one-day rise in six months.
The price of gold also gained as investors hedged against future inflation, with the metal finishing the floor session up 60 cents at $1,772.70 an ounce.
For every stock falling more than two gained on the New York Stock Exchange, where nearly 900 million shares traded. Composite volume of 4.89 billion surged past the year-to-date average daily volume of 3.64 billion.
"The positive gains have certainly helped out individual portfolios, and we've also had some positive news on the housing front nationally, so there are at least some early signs that perhaps we're starting to turn the corner there, which is a real positive," said Baird at Plante Moran.
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Cardium Therapeutics, Inc.
(CXM)
Cardium Therapeutics has come up with an important new bio-assay potency test for use with Generx, the company's advanced clinical stage product candidate. For use by interventional cardiologists, Generx is a gene therapy that utilizes the body's natural healing potential to grow microvascular blood vessels in the hearts of patients suffering from coronary artery disease.
An article in San Diego Biotechnology Connection describes how the new bio-assay and visualization test measures the formation and growth of blood vessels from Generx-derived proteins in cell cultures. Although Cardium has already developed the necessary tests for product release, the new test goes beyond FDA guidelines and supports Cardium's ongoing efforts to commercialize Generx. Specifically, the new assay evaluates and confirms the actual biological angiogenic capacity of each Generx production batch, and sets a new global standard in the field of regenerative medicine that now encompasses gene, cell, and stem cell therapies.
About Cardium Therapeutics, Inc. (CXM)
Cardium Therapeutics, Inc. is a health sciences and regenerative medicine company focused on acquiring and strategically developing new and innovative products and businesses to address significant unmet medical needs. Comprised of large-market opportunities with definable pathways to commercialization, partnering, and other economic monetizations, Cardium's current portfolio includes the Tissue Repair Company, Cardium Biologics, and the company's in-house MedPodium Health Sciences healthy lifestyle product platform.
The company's lead commercial product Excellagen® topical gel for wound care management recently received FDA clearance for marketing and sale in the United States. In addition to plans to advance the product's commercialization in the U.S. and internationally via strategic partnerships, the company plans to develop new product extensions for additional wound healing applications and is working towards securing approval for marketing and sale in South Korea and through the CE Mark application process in the European Union.
Generx®, Cardium's lead clinical development product candidate, is a DNA-based angiogenic biologic designed to treat patients with myocardial ischemia due to coronary artery disease. Cardium recently initiated its Generx Phase 3 / registration study in Russia. Consistent with its capital-efficient business model.
Cardium is also actively evaluating new technologies and business opportunities. The company utilizes its team's skills in late-stage product development to bridge the critical gap between promising new technologies and product opportunities that are ready for commercialization. Cardium is dedicated to building on its core products and product candidates to continually create new opportunities for greater success. Leveraging the advantages of its capital-efficient, asset-based business strategy, the company provides a diversified and more balanced portfolio of risk/return opportunities with the chief objective of providing long-term shareholder value.
SEFE, Inc.
(SEFE)
SEFE recently reported the completion of a low-power corona discharge motor prototype at its headquarters in Boulder, Colo. Well suited for medium and high power applications, this type of electrostatic motor represents an additional avenue the R&D team is exploring for the conversion of atmospheric electricity.
"Our prototype motor serves as a low power proof of concept for this type of electrostatic motor," stated SEFE Director of Engineering Michael Hurowitz. "We'll be working to increase the capabilities of these motors to handle much stronger currents as we move forward."
About SEFE, Inc. (SEFE)
SEFE, Inc. is focused on developing and deploying a promising solution to our world's energy problems. It is now more obvious than ever before that fossil fuels are increasingly more difficult to find and harvest. It is also well known by now that alternative energy, such as solar, wind and nuclear, has its own list of unsolvable issues. SEFE's unique technology, in comparison, harvests unadulterated, carbon-free, always-on and problem-free energy from a never ending source.
The company calls it True Energy because it's not an alternative to anything and it certainly isn't petroleum based. SEFE's solution works by capturing and converting naturally occurring static electricity in the atmosphere into a constant, abundant and decidedly green source of renewable energy. The patented technology has been designed to be robust, easy to implement and user-configurable from the start so that these systems can be deployed anywhere and generate current usable by any localized source.
Because the cost of deploying and maintaining SEFE systems is relatively low, the company believes it can sell a kWh of electricity at $0.03 per unit. In comparison, nuclear energy costs approximately $0.14 per kWh and wind energy costs approximately $0.07 per kWh. SEFE is currently prosecuting four pending United States Patent Applications to protect their core intellectual property. Once issued, these patents will provide barriers to entry and fortify their foundational business construct.
The company has grown from a national company to an international concern with planned partnerships in China, India, Australia and the EU. SEFE is also well supported by a highly capable management team that has accumulated more than 30 years of experience in corporate management and governance. The company also employs a host of associates who are experts in fabrication and product development, FAA regulations, engineering and utility consultation, among others.
VistaGen Therapeutics, Inc.
(VSTA)
VistaGen Therapeutics announced that Platinum Long Term Growth VII, LLC purchased a $750,000 secured convertible promissory note, supplementing its purchase of a similar note earlier this year in the principal amount of $500,000. All amounts due under the two notes are expected to be rolled into a proposed financing by Platinum anticipated to result in gross proceeds to VistaGen of at least $3.25 million, including $1.25 million from the two outstanding notes.
VistaGen also told investors of the strategic restructuring of approximately $2.38 million of long-term indebtedness to Morrison & Foerster LLP (M&F), its intellectual property counsel. The restructuring is expected to result in VistaGen's issuance of restricted common stock to M&F, at a price of $1.00 per share, as payment for approximately $1.38 million of the principal amount of such long-term indebtedness.
"We are very pleased with these recent endorsements from our largest institutional investor and our highly-regarded, long-time intellectual property counsel," stated Shawn K. Singh, CEO of VistaGen Therapeutics. "Their confidence in our team and stem cell technology platform is a key component of the foundation underlying our core drug rescue, predictive toxicology and drug metabolism screening initiatives."
About VistaGen Therapeutics, Inc. (VSTA)
VistaGen Therapeutics is a biotechnology company applying stem cell technology for drug rescue and cell therapy. Drug rescue combines human stem cell technology with modern medicinal chemistry to generate new chemical variants ("drug rescue variants") of once-promising drug candidates that have been discontinued during late-stage preclinical development due to heart or liver safety concerns. VistaGen also focuses on cell therapy, or regenerative medicine, which includes repairing, replacing or restoring damaged tissues or organs.
VistaGen's versatile stem cell technology platform, Human Clinical Trials in a Test Tube™, has been developed to provide clinically relevant predictions of potential heart and liver toxicity of promising new drug candidates long before they are ever tested on humans.
By more closely approximating human biology than conventional animal studies and other nonclinical techniques and technologies currently used in drug development, VistaGen's human stem cell-based bioassay systems can improve the predictability of the drug development cycle and lower the cost of new drug research and development by identifying product failures earlier in the cost curve. According to the Food and Drug Administration even only a ten percent improvement in predicting failure before clinical trials could save $100 million in development costs, which savings ultimately could be passed on to patients.
Using mature human heart cells produced from stem cells, VistaGen has developed and internally validated CardioSafe 3D™, a novel three-dimensional (3D) bioassay system for predicting the in vivo cardiac effects of new drug candidates before they are tested in humans. VistaGen is now focused on using CardioSafe 3D™ to generate up to two new, safer small molecule drug rescue variants every twelve to eighteen months. VistaGen anticipates that these drug rescue variants will be modified versions of once-promising new drug candidates that have been discontinued by pharmaceutical companies and academic research institutions because of heart toxicity concerns, despite substantial prior investment and positive efficacy data demonstrating their potential therapeutic and commercial benefits.
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