The Mission Report

The MissionIR Report - April 2013

In-depth analysis, timely updates, latest market news


Market News

Company Updates


The Dow to Surpass 16,000 by January: Siegel

Over a year ago Jeremy Siegel proclaimed that the Dow Jones Industrial Average, then near the 12,000 level, was on its way to 15,000. Despite another global-slowdown scare last summer, more European-debt indigestion and a brutal election and fiscal fight, the market has just about obliged, with the Dow riding the latest leg of the four-year-old bull market to a new high near 14,600 last month.

“We’re not done yet,” says Siegel, professor of finance at the Wharton School of the University of Pennsylvania and author of Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long Term Investment Strategies, 4th Edition, a study of stock returns since the 19th century.

Siegel forecasts a continued climb in the Dow to between 16,000 and 17,000 by the end of 2013, with a possibility of a trip to 18,000 by the end of next year.

Siegel hangs his upbeat view on the impressive profit gains of Corporate America and the extremely low interest rates that ought to embolden investors to pay more for company earnings, in the form of higher share prices. After failing to keep pace with the powerful rebound in reported profits off the grim 2008-2009 recession, stock prices since late last year have shot up quickly even as earnings growth has moderated, fattening their price-to-earnings multiple.

Stocks, according to Siegel, “should have a higher P/E” when their “major alternative” – bonds – have such low yields. The Standard & Poor’s 500 index is a bit above 14-times the consensus profit forecast for 2013, which Siegel views as modest given long-term Treasury yields around 2%.

Of course, one could counter that stocks, by these standards, only look attractively valued relative to a category of investments called bonds that most now view as exceedingly expensive.

Siegel offers that “interest rates are way too low, and the bond market is a dangerous place.” His rosy take is that long-term Treasury interest rates can rise above 3% or even reach 4% without compromising the bullish outlook for equities.

While Siegel has correctly been optimistic on stocks during the current bull market, his consistent favoritism toward equities since the publication of “Stocks for the Long Run” in 1994 has left him open to charges of being a “perma-bull.” Siegel, along with many others, was positive on stocks near the 2007 market peak and thought 2008 – the year of the financial-crisis meltdown - would be another up year. Still, his work on the return potential in stocks for those with a very long-term time horizon has not been upended even by the 2007-2009 bear market.

Siegel also points to the long-term market record to argue that stock investors need not fear the day when the Federal Reserve eases off, or reverses, its extraordinary monetary stimulus efforts.

While the stock market can be expected to wobble or even sell off sharply upon seeing the Fed become less generous at some point, Siegel points out this will only happen under better economic conditions, which would support corporate performance. The historical pattern says the start of a Fed tightening program is not what thwarts a stock bull market. Rather, only when the Fed is getting closer to the end of a rate-boosting cycle does the Dow typically peak and humble the bulls.

Millennial Housing Boom Underway

The housing market has leaped head first into recovery mode. March’s housing numbers show that the S&P Case-Shiller Index is rising more quickly on an annual basis than it has since 2006, existing-home sales have experienced 12 months of year-over-year price increases and new home sales are 29% higher than they were a year ago.

A new survey by PulteGroup shows that the housing market will continue its upward trend. The study interviewed renters between the ages of 18 and 34 (otherwise known as generation Y or millennials) and found that 65% of respondent's intentions to buy homes had increased over the past year. 52% of millennials indicated a desire to own and build equity.

There are around 90 million millennials living in the United States, making them the largest demographic group in the county's history - an onslaught of this group into the housing industry could create a boom larger than anything the U.S. has ever seen before.

But according to the survey most of these millennials will not be living in their new home alone. 76% of millennials will be moving in with their better half and 22% will be moving in with a relative or roommate.

The most important feature for millennials looking for a new home is the layout. 69% of respondents desired an open kitchen and family room space for entertaining purposes.

Still, things might not be as peachy as they seem says Jonathan Miller, President and CEO of Miller Samuel. “I think we’re seeing a sign of that but it’s still very early in the process," he says. "The idea of people living with their parents because they can’t afford to go out on their own has been a problem since the credit crunch began five or six years ago."

Miller also notes that more millennials are buying because they’re faced with record high rents. “When faced with these rents,” Miller tells The Daily Ticker, "they’re more likely to make the rent vs buy decision and some of them are ending up on the purchase side.”

Miller claims that credit needs to continue to ease in order to get more Generation Y’ers into homes. “I think credit is going to ease over the next couple of years, but it certainly isn’t at the moment," he says.

Still, there is a silver lining. Most millennials are first time owners meaning they don’t have to grapple with selling a home or coming up from a home that’s underwater, says Miller, in that way the housing market is much more accessible to them.

Gold Settles at Lowest Level in Nearly Four Weeks

Gold futures fell sharply Tuesday to end at their lowest level in nearly four weeks, as strength in the dollar and a rally in U.S. equities lured investors away from the precious metal.

“Risk appetite is continuing to pressurize gold,” said Mark O’Byrne, executive director at bullion dealer GoldCore, but the metal’s fundamentals remain sound and “smart money will continue to buy on the dip.”

Gold for June delivery dropped $25, or 1.6%, to settle at $1,575.90 an ounce. That was the lowest settlement for a most-active contract since March 7, FactSet data show.

It was just a day earlier that gold reclaimed the $1,600 an-ounce level, rising $5.20, or 0.3%, to settle at $1,617.90 an ounce, feeding off weaker-than-expected U.S. manufacturing data.

On Tuesday, investors grappled with a clutch of downbeat European data, including figures showing a deeper factory downturn in March, which drove the euro south against the dollar. The greenback also climbed as the Japanese yen weakened ahead of a Bank of Japan policy meeting.

Whereas a weaker dollar provides support for prices of dollar-denominated commodities such as gold and oil, a stronger dollar works in the opposite direction. The ICE dollar index traded at 82.877, up from 82.744 late Monday in North American trading.

The recent tight trading range and the Easter holiday likely moved gold prices closer to the levels traders have set for automatic sell orders, according to Gene Arensberg, editor of the Got Gold Report, which provides technical analysis of the gold and silver markets.

Cardium Therapeutics, Inc. (CXM)

Cardium Therapeutics announced recently that it has received ISO 13485:2003 certification for its Excellagen® advanced wound care product by BSI, one of the world’s leading certification bodies. This certification is a stand-alone standard developed by the International Organization for Standardization that provides harmonized quality management systems requirements for manufacturers of medical devices. Cardium’s compliance with ISO 13485 represents an important next step forward to compliance with European regulatory requirements.

“This ISO certification represents a major achievement and milestone for Cardium and moves us forward in our CE Mark Certification application for authorization to market and sell Excellagen in the European Union, which currently consists of 27 member countries,” stated Christopher J. Reinhard, Chairman and CEO 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.

Chanticleer Holdings, Inc. (HOTR)

Yesterday, Chanticleer Holdings announced its financial results for the fourth quarter and full year ended December 31, 2012. Restaurant revenue for the fourth quarter 2012 increased to $2.0 million, more than twice the year-ago fourth quarter’s $980,000 and up 14.5% from Q3 2012. Gross profit margins for the fourth quarter 2012 were 61.4% compared with 58.2% in the third quarter 2012, and 48.5% in the year-ago fourth quarter.

“We expect to open four new locations in 2013, to bring our total restaurants to 10,” Mike Pruitt, President and CEO of Chanticleer, stated. “We are pleased with our expansion into Hungary, and look forward to moving ahead with our plans to increase our seating capacity in that restaurant with the opening of a new patio area, in time for the upcoming tourist season. While our Budapest location is our first entry into the Eastern Europe market, we are targeting other locations in that region. In addition to Eastern Europe, we are also focusing on opening in Rio de Janeiro, Brazil, and other South African cities. We believe we have a solid business model that will help us to propel our growth in our international markets.”

About Chanticleer Holdings, Inc. (HOTR)

Chanticleer Holdings, Inc. owns and operates Hooters® branded restaurants in emerging international markets. As one of the most well-known restaurant brands in the world, Hooters has a menu that consists of moderately-priced American bar food and the world-famous Hooters girls. The company has ownership interests in the parent company of the Hooters brand, Hooters of America (HOA), four Hooters restaurants in South Africa, one restaurant in Hungary, one Hooters restaurant in Australia, and the exclusive franchise rights to develop and operate Hooters restaurants in three of the most populous states of Brazil: Rio De Janeiro, Minas Gerais, and Espirito Santo.

The first Hooters® restaurant opened October 4, 1983, in Clearwater, Florida. Today there are more than 430 Hooters restaurants in 28 countries. During its history, Hooters has continued to rank high amongst the industry's growth leaders. The Hooters concept has stayed true to its roots with its beach-themed concept, logo, uniform, menu and ambiance being similar to what existed in its original store, and has proven successful in small-town America, major metropolitan areas, and internationally.

In 2011, Chanticleer (NASDAQ: HOTR; HOTRW), together with a group of major private equity investors, acquired Hooters of America (HOA) and its largest franchisee Texas Wings, Inc. Today HOA is the Atlanta-based operator and the franchisor of over 430 restaurants in 28 countries. Chanticleer has rights to develop and operate restaurants in South Africa, Hungary, and parts of Brazil, and has joint ventured with the current franchisee in Australia, while evaluating several additional opportunities.

Chanticleer's core growth strategy involves expanding the Hooters® brand in emerging markets and other rapidly developing global economies. The rising number of middle class consumers in emerging markets is driving the demand for recognized international brands. Targeting underpenetrated international markets with proven market success, the company aims to achieve consistent, above-average growth rates and favorable financial returns for its shareholders.

VistaGen Therapeutics, Inc.

VistaGen Therapeutics recently presented key enhancements to LiverSafe 3D™, its human liver cell-based bioassay system designed to predict liver toxicity and drug metabolism issues, in a poster presentation at the Society of Toxicology’s 52nd Annual Meeting. Dr. Kristina Bonham, Senior Scientist, Hepatocyte Biology Project Leader, presented VistaGen’s poster entitled “Selection of CYP3A4+ hESC-derived Hepatocytes for Drug Metabolism and Toxicity Assays.”

“These data demonstrate that we have substantially improved our LiverSafe 3D™ and now have the potential to identify and purify human hepatocytes with more mature functions, as well as provide a novel assay for drugs that effect CYP3A4 enzyme expression, activity and key drug-drug interactions,” H. Ralph Snodgrass, PhD, VistaGen’s President and Chief Scientific Officer, stated. “I am excited by the fact that further improvements in our differentiation protocols have enabled our scientists to produce cultures with more than 80% mature hepatocytes expressing CYP3A4 without cell enrichment, which will dramatically accelerate our initiation of drug rescue programs focusing on both liver and heart toxicity.”

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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