The Mission Report

The MissionIR Report - April 2014

In-depth analysis, timely updates, latest market news


Market News

Company Updates


U.S. Stocks Hold Steady Near Record Amid Payrolls Data

U.S. stocks maintained near all-time highs, hardly moving, as investors weighed data showing companies added to payrolls last month and comments from Federal Reserve officials.

Intuitive Surgical Inc. rose 3.7 percent after JMP Securities LLC upgraded the stock’s rating. MannKind Corp. jumped 76 percent after its inhaled treatment for diabetes won the recommendation of a U.S. advisory panel. Apollo Education Group Inc. slipped 8.3 percent after it received a subpoena from the Education Department for marketing and recruitment records.

“You’re seeing a bit of fatigue in general,” Matt Lloyd, the chief investment strategist at Advisors Asset Management Inc. in Monument, Colorado, said in a telephone interview. His firm oversees $14.2 billion. “What you get there is a choppy market with nothing overly done on both sides. We still have a trajectory higher and positive growth. But on the whole in the economy, it’s two steps forward and one step back.”

The S&P 500 rose 0.7 percent yesterday to cap a third day of gains, the longest streak since February, as consumer and technology stocks pushed the gauge to a record and an index of manufacturing boosted optimism the economy withstood severe winter weather.

Equity Valuation

The equities benchmark trades at 17.4 times reported earnings, the highest level since 2010 and 11 percent above its five-year average, according to data compiled by Bloomberg.

Data reported yesterday showed February factory goods orders rose 1.6 percent, topping an estimated advance of 1.2 percent.

A separate report indicated companies in the U.S. boosted payrolls by 191,000 in March, according to figures from the ADP Research Institute in Roseland, New Jersey. The median forecast of 38 economists surveyed by Bloomberg called for a 195,000 advance.

The government’s monthly jobs report for March is due April 4.

Reports from hiring to factory output had shown weakness this year as freezing temperatures and mountains of snow kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders.

Fed Chair Janet Yellen said last week that “considerable slack” in the labor market is evidence that the central bank’s unprecedented accommodation will be needed for “some time” to put Americans back to work.

Fed Comments

Investors also watched comments from Fed officials today to gauge the timing and pace of further cuts to stimulus.

Fed Bank of St. Louis President James Bullard said in a Bloomberg Radio interview that a further slowing of inflation could prompt policy makers to suspend tapering of bond purchases, though he doesn’t expect that to happen.

Atlanta Fed President Dennis Lockhart said in a separate speech that he supports a “continued phase-out” of bond purchases.

The central bank has cut $10 billion from its monthly bond buying in each of its past three meetings, leaving the total at $55 billion.

The Fed stimulus has helped propel the S&P 500 higher by as much as 179 percent from its bear-market low in March 2009. The equity gauge climbed 1.3 percent in the first three months of 2014, its fifth consecutive quarterly advance.

Sweet Spot

“Growth appears not too strong to feed the Fed’s hawks but neither too slow to question the recovery, re-emphasizing the sweet-spot concept -- which should be the most favorable environment for risky assets in 2014,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Asset Management in Copenhagen, wrote in an e-mail.

Investors have removed $3.7 billion from U.S. equity exchange-traded funds in the past five days and added $1.3 billion to bond ETFs, data compiled by Bloomberg show. Financial stocks saw the most money removed among industry ETFs, losing $489.2 million during the past week.

Yellen Jobs Dashboard Shows Rate Rise Far on Horizon

More than two-thirds of the gauges on Janet Yellen’s labor-market dashboard are still showing worse readings than before the recession, reinforcing her belief that the economy will need “extraordinary support” from the Federal Reserve for “some time to come.”

Only two of the nine indicators flagged by the new Fed chair -- payroll growth and layoffs -- are back to where they were in the four years leading up to the last economic downturn. The seven others, including joblessness, underemployment and labor-force participation, have yet to return to their 2004-to-2007 averages.

“The unemployment rate and a lot of these other series aren’t where the Fed thinks they need to be,” said Joe LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York and the top forecaster of unemployment over the past two years, according to data compiled by Bloomberg. Policy makers are “going to need a general sense that the labor market has entered a more sustainable path before they start to consider the possibility of raising interest rates.”

Yellen is using what she calls her “dashboard” of jobs data to justify the Fed’s easy-money policies and to argue that there’s still considerable slack in the labor market almost five years after the recession’s end. While the job market has strengthened considerably from the depths of the downturn, it is “not back to normal health,” the Fed chief said in a March 31 speech in Chicago.

Main Laggards

The biggest laggards have been long-term unemployment and participation. More than a third of the jobless have been out of work for more than 26 weeks, while the share of the working-age population in the labor force is at an almost 36-year low.

“The indicators are mixed,” said Roberto Perli, a partner at Cornerstone Macro LP in Washington and a former central bank economist. “That allows the Fed to stay the course” and keep interest rates low.

Yellen’s console of statistics has pluses and minuses. While it provides a broader picture of the labor market than focusing on the unemployment rate alone, it can confuse investors about the Fed’s intentions because it introduces additional variables without making clear how much weight the central bank is giving to each statistic.

“The market is more vulnerable to surprise in some of these other labor-market data,” LaVorgna said.

Some economists, including Michelle Girard of RBS Securities in Stamford, Connecticut, also worry that the instrument panel overestimates the amount of slack in the labor market and includes gauges that aren’t susceptible to changes in Fed policy.

The Fed is projected to begin raising interest rates in the third quarter of next year, according to the median estimate of 65 economists in a Bloomberg survey conducted March 7-12.

Obama Says 7.1 Million Health Sign-Ups Rebut Criticism

President Barack Obama’s declaration that over 7 million health-plan enrollments serve as a rebuke to critics of his signature law won’t diminish the opposition nor stop the scrutiny of the overhaul’s effect.

“The Affordable Care Act hasn’t completely fixed our long-broken health-care system, but this law has made our health-care system a lot better,” Obama told administration officials, lawmakers and other supporters in the White House Rose Garden. “The debate over repealing this law is over.”

The enrollment figure is a symbolic achievement for the president, matching initial estimates by the Congressional Budget Office that his administration adopted as a goal before new insurance exchanges opened Oct. 1. In February, after the marketplaces experienced widespread computer errors, preventing many people from signing up until December, the CBO scaled back its estimate to 6 million. That number was reached by March 27.

The total announced by Obama doesn’t reflect all enrollment from 14 separate state exchanges on the final day or people who started the process and weren’t able to finish because of technical difficulties. Republicans said the figure lacks credibility because it doesn’t account for people who never pay their first premium to their insurers, the final step required to enroll. While the law sought to provide health-care coverage to the uninsured, it’s not clear how many people who enrolled through the exchanges already had a health plan.

“These numbers are a total fantasy -- they’re arbitrary and fictitious,” Representative Michael Burgess, a Texas Republican, said in a statement yesterday that was typical of the reaction from his party.

Obama said that Republicans have criticized the law “without offering any plausible alternative.” Since 2011, the House of Representatives under Republican control has voted 55 times to repeal parts or all of the 2010 Patient Protection and Affordable Care Act, known as Obamacare, and has never passed legislation to comparably expand U.S. health insurance coverage.

Methes Energies International Ltd. (MEIL)

Renewable energy company Methes Energies offers a wide range of products and services to biodiesel fuel producers. The company recently received a deposit from Antilla Energy VBA to start the manufacturing process of one Denami 600 Biodiesel Processor to be delivered to Aruba in September 2014.

Antilla intends to use the Denami 600 to convert waste cooking oil into produce biodiesel that will then be blended with diesel fuel and distributed to clients across the island. Antilla’s plan is to grow its facility to about 6 million gallons per year, anticipating adding four more Denami 600s as part of its broader goal to help Aruba reach its “Green Aruba 2020” targets.

Nicholas Ng, President of Methes Energies, said he expects this order to be the first of many more manufacturing orders. “We have been working with several clients that are, just like Antilla, at a point where they now need to order their Denami. It is a sometime a long process but at the end it is very rewarding for our clients and our company," he said in a news release.

About Methes Energies International Ltd.

Methes Energies uses its own proprietary technology to produce high-quality biodiesel processors and systems to capitalize on the growing demand for renewable energy, surging energy prices, and the value of biodiesel as a practical and realistic long-term replacement for conventional diesel fuel. The Company’s processors are flexible and can use a variety of virgin vegetable oils, used vegetable oil and rendered animal fat feedstock, allowing operators to take advantage of feedstock buying opportunities. Methes Energies also markets and sells high-quality biodiesel fuel produced at its 1.3 MGY (5 MLY) showcase production facility in Mississauga, Ontario, and at it’s 13 MGY (50 MLY) facility in Sombra, Ontario, to customers in the U.S. and Canada.

Methes Energies’ broad range of expertise and solutions include all aspects of the engineering, manufacturing, production, logistic, marketing and distribution processes. Among other services, the company leverages its cutting-edge biodiesel processors, pre-treatment systems, and other solutions to address real and specific biodiesel production challenges for large and small-scale biodiesel producers and entrepreneurs seeking to produce their own fuel.

In 2007 the company introduced the Denami 600, the industry’s first compact, full automated continuous flow biodiesel processor designed to run on a wide variety of feed stocks. This reliable, cost-effective and superior method of producing top-grade biodiesel exceeds current ASTM standards.

The company also sells feedstock to its network of biodiesel producers, selling their biodiesel production and providing clients with proprietary software to operate and control their processors. Methes Energies remotely monitors the quality and characteristics of its clients' production, upgrades and repairs their processors as necessary, and advises clients on adjusting their processes to use varying feedstock to improve the quality of their biodiesel.

As a competitive and highly respected revenue-generating player in the North American biodiesel sector, Methes Energies is fast building a network of biodiesel operators and facilities to capitalize on buying power and economies of scale. The North American demand for biodiesel is sizeable and the company is well positioned for global expansion throughout Europe, South America, Africa and Asia.

VistaGen Therapeutics, Inc.

VistaGen Therapeutics is a biotech company applying stem cell technology for drug rescue and cell therapy 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.

The company’s proprietary stem cell technology platform, called Human Clinical Trials in a Test Tube™, is designed to provide clinically relevant predictions of potential heart and liver toxicity of new drug candidates before they are ever tested on humans. 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 and is also developing LiverSafe 3D™, a novel predictive liver toxicity and drug metabolism bioassay system for drug rescue applications.

AV-101, VistaGen's lead small molecule prodrug candidate, has successfully completed phase I clinical development in the U.S. for treatment of neuropathic pain, a serious and chronic condition affecting millions of people worldwide, depression, and other neurological diseases and conditions.

About VistaGen Therapeutics, Inc.

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.

VolitionRx Ltd. (VNRX)

VolitionRx is a life sciences company focused on developing blood-based diagnostic tests for different types of cancer – the overarching goal is to make the tests as common and simple to use as existing diabetic and cholesterol blood tests. VolitionRx most recently announced data from a pilot study into the utility of the company’s NuQ® tests to diagnose prostate cancer.

The results demonstrate that NuQ® assays were able to detect approximately 80% of prostate cancer cases, and also showed capability to differentiate between colorectal and prostate cancer. This indicates that NuQ® ELISA tests could be used to detect both prostate and colorectal cancers.

"This is a very exciting outcome for us as we continue the development of our NuQ tests," said VolitionRx Chief Scientific Officer Dr. Jake Micallef. "To have proof that with the right panel combination, NuQ tests can distinguish between different types of cancer as well as healthy samples, is just what we've been working towards. Detection of two major cancers with a blood test is a major milestone and a sound basis on which to investigate further cancers for panels of NuQ tests that detect and distinguish cancer diseases."

About VolitionRx Ltd.

VolitionRx Ltd. is a life sciences company focused on bringing to market its inexpensive, accurate, and scalable cancer detection blood tests. The company intends to use its NuQR suite of products to fill a looming void in cancer diagnostic testing, for which there currently is only one blood test in common clinical use.

NuQR is based on VolitionRx's proprietary NucleosomicsR technology, capable of measuring and identifying nucleosome structures in the blood. The company has secured strong intellectual property protection for its products, further strengthened by patent applications in the United States, Europe and worldwide. Following ongoing clinical trials and regulatory approval, VolitionRx will market its diagnostic and screening tests for individual cancers under the NuQR brand.

The company is currently conducting clinical trials for its first product, a diagnostic test for colorectal cancer. Colorectal cancer is the third most common cancer in the United States - current tests are expensive, invasive and unpleasant, resulting in a significant need for an improved alternative for colorectal diagnoses.

VolitionRx's primary office and laboratory are based in Namur, Belgium, from which the company's strong team of professionals spearhead corporate initiatives. The company's executive management team is further supported by a scientific advisory board staffed with senior scientists from around the world, as well as a highly experienced board of directors.


For more frequent updates, follow us on Twitter!