The Mission Report

The MissionIR Report - January 2013

In-depth analysis, timely updates, latest market news


Market News

Company Updates


More Borrowers Opt for
15-Year Mortgages

Long considered a fringe character in the mortgage scene, the 15-year loan is now riding a wave of popularity.

As a result of super low interest rates, many borrowers are opting for the deal that allows them to pay off their mortgages in half as much time as the traditional 30-year mortgage.

According to recently published data that doesn’t include refinancings, nearly 16% of the fixed-rate mortgages that lenders sold to Freddie Mac during the third quarter were 15-year loans, up from almost 10% a year prior. And 15-year mortgages accounted for nearly a third of refinanced loans during the first seven months of this year, according to the latest data by CoreLogic. The figure has been climbing since 2007, when they made up just 8.5% of refinancings.

The 30-year mortgage became the standard in lending because its lower monthly payments made real estate affordable to more Americans. While the 30-year remains king, the gap between the two loans’ popularity is shrinking. “The 15-year loan has gone from really being almost a non-issue item to a new trend,” says Stu Feldstein, president at SMR Research, which tracks mortgage data.

The key to the shift is lower interest rates, which makes it easier for borrowers to manage payments on 15-year loans—and still pay off their notes in half the time. Fixed rates on 15-year mortgages average 2.81%, down from 3.36% a year ago and 5.85% in mid-December 2007, according to mortgage-information website

The 15-year loans are also a lot cheaper than 30-year fixed-rate mortgages, which average 3.44%. That 0.63-percentage-point spread is wide compared with historical figures. Before the housing crisis, 15-year fixed-rate mortgages were typically just 0.25 to 0.35 percentage points cheaper than their 30-year counterparts, according to

Homeowners who are refinancing stand to gain the most from the spread between the two loans. In the past, refinancing from a 30-year into a 15-year mortgage usually meant ending up with a bigger monthly payment in exchange for a slightly lower rate. But in today’s market, the much lower rate allows some borrowers—particularly those who have been paying down a 30-year mortgage for several years—to make this switch without seeing an increase in that payment.

For instance, a couple who signed up for a 30-year $300,000 mortgage in January 2004 with a 5.75% fixed rate would have a roughly $1,751 monthly payment. By refinancing the remaining balance of about $255,828 into a 15-year fixed rate loan at 2.81%, the new monthly payment would be slightly lower at almost $1,744.

Longer term, the benefits add up even more. By reducing the repayment period, the couple would save just over $127,300 in interest over the life of the loan. In addition, they are building equity into their home faster than borrowers with longer-term mortgages. That means they could be more likely to get approved for home-equity loans and borrow a larger amount against their home.

Attention Turned to China as New Year Approaches

Chinese stocks have staged a remarkable comeback in the final weeks of 2011, gaining more than 11 percent in December after languishing in negative territory for most of 2012, prompting analysts to say 2013 may finally be the year Chinese stocks break out of the doldrums.

The Shanghai Composite Index last week hit a five-month high on Christmas day and was trading 0.4 percent higher on Friday as investors bet that the worst is over for Chinese stocks.

According to Jack Bouroudjian, CEO of fund manager Bull and Bear Partners, money is waiting to return to the Chinese stock market now that the dust has settled on the once-in-a-decade leadership transition in November.

"During an election or transition of power, usually you get that type of dysfunction and disruption. It's one of the reasons people avoided China over the course of this last year," Bouroudjian told CNBC Asia's "Squawk Box" on Friday.

"Guess what? The dust has now settled. We are going to see capital go back to China," he added.

Low valuations, economic stimulus and several rounds of monetary easing were all supposed to bring about a long-awaited turnaround in China's languishing stock market, but for most of 2011, Chinese stocks have failed to live up to their promise. China's stock market has made losses for three years from 2009 to 2011 and fell a whopping 20 percent between May and December this year.

While the Chinese market has seen a few rallies this year, they have been short-lived. For example, from late September to the middle of October the market gained about 6 percent in 4 weeks, only to reverse direction.

The Shanghai index has also treaded below the 2,000-point level several times last year.

But as the key index recovers this month on more signs that the worst could be over for the Chinese economy, analysts are becoming more optimistic that 2013 could be the year Chinese stocks rebound.

Data on Thursday showed annual growth of China's industrial profits quickened 22.8 percent in November from October's 20.5 percent, reinforcing signs of a steady economic recovery thanks to pro-growth policies.

"Economic fundamentals are definitely improving, and that should underpin the rally," said Norman Chan, head of investment with Caliber Asset Management in Hong Kong. "We think that the rebound can continue into 2013."

Despite this month's gains, the Shanghai Composite is still the worst performer among the major indices this year, having gained about 0.6 percent. The S&P 500 is up 12.8 percent in the year to date, Japan's Nikkei 225 has climbed 23 percent and Hong Kong's Hang Seng has gained 22.9 percent.

According to the charts, the Shanghai index could climb to the 2,400-2,500 range in the first half of 2013, implying an upside of about 8.5 percent to 13 percent from current levels, Chan added.

Alan Lam, analyst with Julius Baer in Hong Kong, agrees that the market is near a bottom.

"We have always said that the market would see a bottom in the fourth quarter, and I think that's what's happening," Lam said. "We think there will be short-term corrections on the way up, depending on how the economy performs, but I do think in 2013, the Shanghai Composite will be in positive territory."

In 2013, most economists are expecting the Chinese economy to expand more than the 7.5 percent forecast for 2012, the slowest annual growth since 1999.

Muni Bonds Gain Popularity Among Investors

Yield-hunting investors who are willing to endure a little short-term volatility are considering municipal bonds.

Why now? What about the heated debate in Washington, where lawmakers are mulling changes to the favorable tax treatment of debt sold by states, cities and other municipalities, as well as nonprofit organizations?

2013 will bring new factors to consider as you plan your retirement savings. MarketWatch's Christopher Noble recently discussed tips on how to protect your funds in the coming year.

The interest earned on most municipal bond holdings is exempt from federal income taxes (and in many cases state and local income taxes).

But faced with the challenge of how to curb spending and raise revenue, politicians could decide to tax muni interest or in some way limit the tax break.

Difficult as it might be, look beyond the headlines. Muni bonds deserve closer inspection because, simply put, they often carry higher yields than their taxable counterparts. Moreover, credit quality is likely to improve with the economy.

“With a reasonably favorable credit environment for municipalities, we still expect muni bonds will be the place to be,” says Matt Tucker, head of fixed income strategy at iShares, a unit of investment giant BlackRock Inc. The highest-quality, AAA-rated 10-year muni bonds yield about 1.76% — on par with similar Treasury yields but worth more if you’re in one of the higher tax brackets.

“Once you decide what your allocation to fixed income is, you look for the best alternatives within fixed income — and munis make the most sense,” says Thomas Metzold, a manager of the $5.1 billion Eaton Vance National Municipal Income Fund,which gained 14.1% this year through Dec. 26, according to investment researcher Morningstar Inc.

Municipal bonds of all maturities have returned 7.2% so far in 2012, according to an index compiled by Bank of America Merrill Lynch. The index’s effective yield is 2.6%.

At the same time, the firm’s Treasury bond index has returned about 2%, and its effective yield is just under 1%.

Metzold cautions that the muni market is unlikely to duplicate such strong performance again in 2013 because interest rates fell so dramatically this year. Bond prices rise when interest rates decline.

“Next year, we look to clip the coupon, which isn’t bad in a low interest-rate environment,” he says. Meanwhile, he adds, the alternatives for income investors are hardly attractive: certificates of deposit and money-market accounts, for example, offer close to zero-percent return and in fact lose money after factoring in taxes and inflation.

Still, the federal debate over munis’ tax-exempt status bears watching. The topic has come up in the past and the tax exemption survived because it was deemed an effective subsidy for state and local governments that benefitted their citizens.

Cardium Therapeutics, Inc. (CXM)

In recent news, Cardium Therapeutics announced it was on the winning side of a patent decision made in Europe. This decision resolved a long-standing competition between Cardium and its licensor the University of California, and Boston Scientific (NYSE: BSX) and its licensor Arch Development, over rights to key methods for the application of cardiovascular gene therapy to the treatment of coronary heart disease. Cardium’s Generx® gene therapy candidate, which employs these key methods, is currently in late-stage clinical studies.

“The resolution of these important reviews of our gene therapy patents, and the consistent decisions in our favor including rulings by the U.S. courts of appeal, underscore the value of our patent portfolio, which we believe reflects a breakthrough approach to the treatment of coronary heart disease,” stated Dr. Tyler M. Dylan-Hyde, Chief Business Officer and General Counsel of Cardium Therapeutics.

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.

GlobalWise Investments, Inc. (GWIV)

GlobalWise Investments appointed Mr. Roy H. Haddix to the Board of Directors. Mr. Haddix is also now serving as Chairman of the Audit Committee of the Board, and as a member of the Nominating and Corporate Governance Committee of the Board. An overview of his career accomplishments can be found at the following link: Roy H. Haddix Appointed to Board of Directors

“We’re very pleased to announce that Roy has joined our Board of Directors,” stated William “BJ” Santiago, CEO of GlobalWise. “2012 has been a year of significant growth in our channel partner program, client base and revenue. We believe Roy’s knowledge and experience will be of great value as we continue our efforts to rapidly scale our business and add new national and international channel partners in 2013.”

About GlobalWise Investments, Inc. (GWIV)

GlobalWise Investments, Inc., via wholly-owned subsidiary Intellinetics, Inc., is a leading-edge technology company focused on Enterprise Content Management (ECM) solutions for the digital age. The ECM industry continues to grow rapidly as a result of unrestricted proliferation of digital content within today's business environment. Leveraging its proprietary cloud-based computing software, GlobalWise is poised to capture a significant market share of this burgeoning industry.

GlobalWise's ECM service is delivered to customers via five unique delivery models which cover the spectrum of business needs: Cloud/Saas (Software as a Service), Hardware Vendor Integrated Service, Software Vendor Integrated Service, Premise (Client-Server), Hybrid (Premise & Cloud/Saas).This diversity gives advanced security & privacy features with an on-demand structure needed for large Tier 3 and Tier 4 businesses that are currently underserved by the market.

The Intellinetics platform defines a new industry benchmark and game-changing approach by combining advanced virtualization & automated content management with an open and service-oriented architecture using web services. The company provides strategies, tactics, and technologies used to manage paper and digital assets from capture to long-term archive, without the need for manual processes conducted by a full time employee.

GlobalWise's management boasts a combined total of over 150 years in ECM leadership and industry experience. The ECM industry is expected to exceed $5.1 billion by 2013 with Gartner predicting a compound annual growth rate of 9.5%. IBM Market Insights predicts adoption of cloud computing to grow by 26% CAGR between 2010 through 2013. Leveraging management and key department heads, Intellinetics has a strong foundation from which to capture significant market share within the lucrative $149 billion Business Software & Services industry.

VistaGen Therapeutics, Inc.

VistaGen Therapeutics recently announced its membership in the Toronto-based Centre for Commercialization of Regenerative Medicine’s (CCRM) Industry Consortium. CCRM is funded by the Government of Canada, six Ontario-based institutional partners, and more than 20 companies representing the key sectors of the regenerative medicine industry. CCRM supports the development of foundational technologies that hasten the commercialization of stem cell-based and biomaterials-based products and therapies.

“VistaGen’s membership reflects our strong association with CCRM and its core programs and objectives, both directly and through our strategic relationships with Dr. Gordon Keller and the University Health Network (UHN). Our long-term sponsored research agreement with Dr. Keller, UHN, and UHN’s McEwen Centre for Regenerative Medicine offers both a solid foundation and unique opportunities for expanding the commercial applications of our Human Clinical Trials in a Test Tube™ platform by building multi-party collaborations with CCRM and members of its Industry Consortium,” stated Shawn Singh, VistaGen CEO.

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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