The Mission Report

The MissionIR Report - Mid-February 2012

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Market News

Company Updates


Gold Prices Slide on European Concerns

Gold dropped on Tuesday as the dollar strengthened versus the euro on renewed fears of credit downgrades in major European economies and uncertainty over Greece's bailout.

Bullion fell with the euro after Moody's warned it may cut its triple-A credit ratings of France, Britain and Austria. The ratings agency cited the euro zone debt crisis.

Gold has slipped in February after rising 11 percent in January, when it was boosted by the Federal Reserve's nero-zero interest rate outlook for nearly three more years. Analysts expect the precious metal to trade in a range for the foreseeable future.

"Any rallies will be capped against the overall potential of an economic slowdown, absent truly new actions by the European governments," Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.

"I'm not surprised to see gold working in a trading range in next couple of weeks," he said.

Spot gold was down 0.2 percent at $1,719.36 an ounce by 11:06 a.m. EST, having touched an intraday low of $1,711.70 earlier in the day.

U.S. gold futures for April delivery were down $3.40 at $1,721.50.

While the Moody's news rattled the markets, focus remained on Greece, which has acknowledged it still has much to do to persuade the European Union and International Monetary Fund to save it from a chaotic default.

Euro zone finance ministers have asked the Greek government for details of how it will fill a massive gap in its plan for extra savings this year ahead of a key meeting on Wednesday.

Gold remains more sensitive to moves in the euro in the short term than to rising risk aversion. The euro zone debt crisis has been a positive driver of prices last year.

Technical selling weighed on gold again when it failed to rise above Monday's high around $1,730 an ounce. Last week, gold encountered heavy technical selling around $1,750 an ounce, the highs set in early December.

"Gold had a good run-up but it's banged its head against resistance around $1,760.00," Saxo Bank senior manager Ole Hansen said.

On the physical side of the market, gold demand in major consumer India was soft on Tuesday as traders bet prices would continue to fall, after briefly ticking higher.

India Inflation Drops to 26-Month Lows

Helped by a drop in food prices and a stronger rupee, the rate of inflation in India recently fell to a 26-month low, fueling hopes that the central bank will soon cut interest rates.

The government on Tuesday said India's wholesale price index was up 6.55% in January from the year-earlier month, down from 7.47% in December and a revised 9.5% in November. It's also the lowest inflation rate in 26 months in India.

The drop was led by primary food articles, mainly potato and onion prices, which had surged in the same period last year.

But to the surprise of some economists, core inflation also eased to 6.6% year-on-year in January, from 7.5% in December, with the drop there led by textiles, wood and paper products.

The Reserve Bank of India, which hiked interest rates 13 times between March 2010 and December 2011 to curb high inflation, late last year signaled that monetary policy would shift towards supporting growth. India's economy decelerated last year due to the impact of higher rates, slow growth in the U.S., and financial turmoil from the crisis in Europe.

At its last meeting in January, the RBI took a first step towards easing monetary conditions by lowering the level of cash reserves it requires banks keep.

Recently, India's government forecast growth of 6.9% for the current fiscal year ending in March, compared with 8.4% in the previous year.

"Today's lower core inflation print, coupled with the deceleration in growth supports our view of the RBI easing [its key interest rate] by a minimum of 100 basis point in 2012," said Rohini Malkani, an economist at Citibank.

However, economists and analysts here believe the central bank will wait until April to start cutting interest rates, only after the government announces its budget for the coming fiscal year, due out in mid-March.

Core inflation at 6.6% is still above the RBI's "comfort zone" of 4% to 5%, while government subsidies to keep fuel prices lower for India's mostly poor population have kept some pent up inflation pressures.

Also key will be commodities prices and the rupee. After a slide in the second half of last year, a more than 7% appreciation in the in January also played a role in bringing down inflation for India's economy, which is heavily dependent on imports of oil and other commodities.

Oil Rises to Three-Week High

Oil advanced to the highest level in three weeks as German investor confidence surged and sales at U.S. retailers climbed in January.

Oil gained for a second day after the ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations rose to 5.4 in February from minus 21.6 in the previous month. U.S. retail sales increased 0.4 percent, the Commerce Department reported today.

"The economic sentiment is turning more bullish in Europe and that's supportive for the oil market," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "The U.S. economy is on the pace to show somewhat between moderate and strong growth."

Oil for March delivery gained 61 cents, or 0.6 percent, to $101.52 a barrel at 9:16 a.m. on the New York Mercantile Exchange . The price reached $101.68, the highest since Jan. 19. Prices are 2.7 percent higher this year.

Brent oil for March settlement fell 11 cents to $117.82 a barrel on the ICE Futures Europe exchange.

The German confidence index is the highest since April 2011 and the growth is the third straight increase. Economists forecast a gain to minus 11.8, according to the median of 40 estimates in a Bloomberg News survey.

"There's greater optimism that the worst of the Greek situation is over and signs that the economy is getting better," said Fred Rigolini, vice president of Paramount Options Inc. in New York. "Getting above $100 is important and adding to the bullish momentum in the market."

Inventories grew by 1.6 million barrels, or 0.5 percent, to 340.8 million in the week ended Feb. 10, according to the median estimate of 10 analysts surveyed by Bloomberg News. It would be the highest level since Sept. 23 and the fourth weekly gain, the longest string of increases since April. Eight respondents forecast a gain and two a drop.

Retail Sales Up Modestly as Recovery Advances

Retail sales rose less than expected in January, hurt by discounting in the auto sector, but a rebound in an underlying measure of sales suggested a solid underpinning for the economy's recovery.

Total retail sales increased 0.4 percent last month, the Commerce Department said on Tuesday, below economists' expectations of a 0.7 percent increase.

Sales excluding autos, gasoline and building materials rebounded 0.7 percent after falling 0.4 percent the prior month.

"I don't think there's anything here that really brings into question the fact that the economy has been improving," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

U.S. stocks opened weaker on the date, while Treasury debt prices rose. The dollar rose against a basket of currencies.

Fears of a sharp slowdown in the U.S. economy have faded in recent weeks on signs that the job market is picking up and manufacturing is accelerating.

Another report on Tuesday showed confidence among small U.S. business owners hit a four year-high in January, according to the National Federation of Independent Business.

With the economy strengthening, there is a good chance the Federal Reserve will raise interest rates before the end of 2014, according to a Reuters poll of economists. The Fed has said it expects to hold rates low through the end of that year.

Still, with the unemployment rate at 8.3 percent in January, a significant minority still expect a further easing of monetary policy in coming months.

In the retail sales report, spending at gasoline stations rose 1.4 percent - the biggest gain since March 2011 - while receipts for electronics increased 0.5 percent.

Dampening the overall increase, sales of cars and autoparts dropped 1.1 percent, while purchases at non-store retailers, a category dominated by online sales, also fell 1.1 percent.

The decline in auto receipts was surprising given that motor vehicle sales in January were the highest in nearly two-and-a-half years.

But the increase in core sales, which correspond most closely with the consumer spending component of the government's gross domestic product report, suggested consumers were not growing more timid.

"The headline number was a little weaker than expected but the core figure was better so net-net it was not entirely a negative report," said Boris Schlossberg, director of currency research at GFT in Jersey City, New Jersey.

The government revised downward its estimates of retail sales in both December and November, suggesting consumers did not spend as much as previously thought during the holiday shopping season.

In another report, the Commerce Department said business inventories rose 0.4 percent to $1.56 trillion in December. Economists polled by Reuters had forecast inventories increasing 0.5 percent in December.

The economy still faces threats from a potential worsening of Europe's debt crisis or the possibility or fiscal tightening at home, although comments by Republican lawmakers on Monday suggested a deal was within reach to extend a payroll tax cut.

AdCare Health Systems, Inc.

AdCare Health Systems, Inc. recently presented at the UBS 22nd Annual Global Healthcare Services Conference. Held at the Grand Hyatt New York in New York City, the conference featured presentations and updates from the leading global healthcare services firms that continue to advance the healthcare industry.

AdCare CEO Boyd Gentry, and its chief acquisition officer, Chris Brogdon discussed the emerging opportunities in the highly fragmented healthcare segments of senior assisted living and elderly nursing care, as well as the exceptional progress of the company's M&A program. The entire presentation can be viewed at the following link: AdCare Health Systems, Inc. UBS Healthcare Conference Presentation

About AdCare Health Systems, Inc. (ADK)

Ohio-based AdCare Health Systems is an expanding national leader in the development, ownership, and management of care facilities, including nursing homes, assisted living facilities, independent living facilities, dementia/alzheimer's units, sub-acute units and retirement communities. In addition, the company provides a variety of home health care services.

The company's mission is to provide the finest in care facilities, and has a history of success in their development as well as management. In particular, the senior living facilities market is considered to be one of the most dynamic and rapidly growing sectors within the healthcare arena. Changing demographics, coupled with the limited supply of senior living facilities, clearly supports this growth. AdCare is exploiting these trends by growing both internally and through strategic acquisitions.

The company has a seasoned senior management team, with substantial senior living, healthcare, and real estate industry experience. The senior management team is incentivized to continue to grow the business through their combined ownership of approximately 25.6% of the common stock. The resulting numbers underline AdCare's growth strategy, with revenues showing steady growth for the last 9 years, and now in line for another record breaking year in 2011.

Earlier this month it was reported that Ladenburg Thalmann analysts initiated coverage on shares of Adcare, setting a "buy" rating and $7.50 price target on the stock. The stock is currently trading at $4.05 with a market cap of approximately $49 million. Combining its current annualized run-rate with transactions currently in the process of closing, AdCare's estimated annualized revenue run-rate is anticipated to exceed $300 million.

FluoroPharma Medical, Inc.

FluoroPharma Medical, Inc. recently presented at Noble Financial Capital Markets' 8th Annual Equity Conference. Thijs Spoor, President & CEO of FluoroPharma Medical, delivered the company's presentation, summarizing the rising importance in medical diagnostics of PET technology and the associated radiopharmaceuticals such as those developed by FluoroPharma.

During his presentation, Mr. Spoor exposed the major gap between the promise of PET and the current availability of chemical agents needed to make the promise a reality. The entire presentation can be viewed at the following link: FluoroPharma Medical, Inc. Noble Financial Capital Markets Presentation

About FluoroPharma Medical, Inc. (FPMI)

FluoroPharma Medical, Inc. is a biopharmaceutical company focused on discovering and developing patented Positron Emission Tomography (PET) imaging products to improve patient management by evaluating cardiac disease at the cellular and molecular levels. The company is currently advancing two products in clinical trials to fulfill critical unmet medical needs. The agents will provide clinicians important tools for detecting and assessing pathology before critical manifestations of disease.

The company's proprietary molecules labeled with the radioactive isotope of fluorine combined with PET scanning provide non-invasive, highly specific and efficient assessment of heart metabolism and physiology. FluoroPharma's cardiovascular program addresses the largest segment of the nuclear medicine market.

Molecular imaging fulfills numerous unmet needs in diagnosis by enabling visualization, characterization and measurement of biological processes at the molecular and cellular level. Unlike traditional imaging modalities – MRI, CT, and Ultrasound – that reveal the anatomical abnormalities and cause for disease, PET provides insight into physiology and can detect disease before anatomical manifestation is identified. According to GAI, the market for molecular imaging agents currently exceeds $1.7 billion annually and promises rapid growth for the foreseeable future.

FluoroPharma's comprehensive technology platform was developed by scientists at the Massachusetts General Hospital. To date, the company has been issued four US patents and has seven applications pending in addition to strong international protection. With a solid and experienced management team in place and the necessary resources to advance clinical development, FluoroPharma is well positioned to capitalize on its superior imaging technology.

GlobalWise Investments, Inc.

GlobalWise Investments, Inc. announced the completion of its acquisition of Intellinetics, Inc. Intellinetics, now a wholly owned subsidiary of GlobalWise Investments, is a leading-edge technology company focused on Enterprise Content Management (ECM) solutions for the digital age. Leveraging its cloud-based computing software, GlobalWise Investments is poised to capture a significant market share of the burgeoning ECM industry.

William J. "BJ" Santiago, President and CEO of GlobalWise Investments, stated, "IBM Market Insights predicts adoption of cloud computing to continue growing at a compound annual growth rate of 26% until 2013. Through its acquisition of Intellinetics, GlobalWise Investments is well positioned to secure a strong foothold in this rapidly growing ECM industry."

GlobalWise Investments, Inc. (GWIV)

GlobalWise Investments (GWIV), 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 60 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, Inc. announced the identification of its initial Top 10 drug rescue candidates. The company plans to launch two formal drug rescue programs by the end of next quarter. VistaGen's goal for each of its stem cell technology-based drug rescue programs is to generate and license a new, safer variant of a once-promising large market drug candidate previously discontinued by a pharmaceutical company no earlier than late-preclinical development.

"We are now at an advanced stage in our business model," stated Shawn Singh, VistaGen's Chief Executive Officer. "After more than a decade of focused investment in pluripotent stem cell research and development, we are now at the threshold where game-changing science becomes therapeutically relevant to patients and commercially relevant to our shareholders. We have positioned our company and our stem cell technology platform to pursue multiple large market opportunities."

About VistaGen Therapeutics, Inc. (VSTA)

VistaGen Therapeutics, Inc. 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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