Knobias ClipReport (8-23-2007)

Submitted from Knobias ClipReport

The overall market experienced saw optimism as many predicted the rally was a pricing in of a rate cut by the Fed in September. Inflationary concerns seem to be at the back of market’s mind even though it was a primary concern of the Fed over the past few months. The culmination of a rate cut and increasing inflation could be something many long term investors should consider. Merger and acquisition activity also raised optimism as online brokers TD Ameritrade and E-Trade were reportedly in talks.

Continuing the theme from last week, small cap bios trading at near cash levels have finally seen attention from many traders. Renovis Inc. (RNVS), Telik Inc. (TELK), Idenix Pharmaceuticals Inc. (IDIX), and Hollis Eden Pharmaceuticals (HEPH) were all higher from their mention last Thursday. Threshold Pharmaceuticals (THLD) and Gene Logic Inc. (GLGC) were close to even, while Pharmacyclics, Inc. (PCYC) was down.

Another name popped on the screen during Wednesday’s session and also had a positive news announcement.

Nuvelo, Inc. (NUVO) is a biopharmaceutical company dedicated to improving the lives of patients through the discovery, development and commercialization of novel drugs for acute cardiovascular and cancer therapy.

The Company’s latest 10-Q showed a current asset balance of $139 million while their market cap was just a shade over $100 million. On Wednesday, the Company announced enrollment of the first patient in the SONOMA-3 (Speedy Opening of Non-functional and Occluded catheters with Mini-dose Alfimeprase-3) trial evaluating lead product candidate, alfimeprase, for the treatment of central venous catheter occlusion (CO).

This open-label, single-arm trial will evaluate the safety and efficacy of a single 10 milligram dose of alfimeprase with a concentration of 5 milligrams per milliliter in up to 100 patients with occluded central venous catheters.

Following the news, Brean Murray reinstated coverage of the name with a Hold which was at a Sell before the suspension of their coverage. Also of note was a Schedule 13G filing on August 13th which displayed a position acquired by three 3 arms of an investment firm. The culmination of the shares equaled 8.4 million shares or 15.75% of the outstanding.

Earlier in the month, The Company announced that it was reducing its workforce by approximately 30% and realigning its organization to focus on core development programs that it believes will produce nearest-term proof-of- concept data. The company plans to continue to pursue development of alfimeprase, NU206 and NU172 and has decided to suspend development of rNAPc2 in all indications including cancer and acute coronary syndromes (ACS).

As a result of the reduction in workforce, effective August 3, 2007, the company expects to have less than 80 employees, a reduction of 45 percent from year end 2006. Nuvelo expects this realignment of personnel and programs to result in reduced annual expenses of approximately $15 million from current levels.

While shares were down heavily following their somewhat misleading earnings number earlier in the month, Wednesday’s session saw the name come back into favor of traders, gaining some 16.5% on 2.7M shares traded. While charges and extraordinary expenses may result from the work force cut, the name could be positioned now to focus on key products and return value to holders. With valuations this low and candidates in the pipeline, investors would be wise to watch.


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