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Small cap watch - IMRS and GALE

1/8/2014

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Every day, I screen for interesting small caps breaking out from their lows on small volume. Today I take a closer look at IMRS and GALE:

IMRIS (IMRS) is Canadian medical company that produces VISIUS Surgical Theatre, a magnetic resonance device which helps doctors provide improved surgeries. Neurological hospitals are using this device to resect brain tumors, cure epilepsy, Parkinson's disease, stroke intervention, aneurysm, and Chiari malformation, and other neurological procedures using deep brain stimulation.

Advantage of the device is that the patient doesn’t have to be moved during surgery, therefore avoiding any potential health complications. High resolution images are available almost immediately, surgeons can take action according to them in real-time (almost 40% of doctors actually modify procedure after iMRI). Almost 8% of patients required additional surgeries after the first one, doctors using iMRI reduced this number to 0.

Recently , IMRS stock jumped 40% on positive news regarding their operations. President and CEO Jay Miller announced, that the total number of patients treated will approach 17 000 by the end of 2014, an increase of roughly 31% in one year over the previous eight years. Hospitals are starting to adopt the device and increase the number of operations and applications for it. The company estimates, that there are 3.6 million procedures around the world, which could be better served with iMRI, that means they are currently addressing 0.04% of the market. Sales for the last 9 months ending September rose to 36 mil. USD (12% increase), if the company captures at least 5% of it’s estimated potential, we could be looking at revenues of at least 4000 mil. USD per year.

IMRS stock is currently selling for 113 million, with 22 million shares floated and a 1.2% short float.
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Galena (GALE) is a biopharmaceutical company developing targeted oncology treatments. It’s highly anticipated product is NeuVax, which is a vaccine created to prevent the recurrence of breast cancer in successfully healed patients. In addition, they started selling Abstral, a cancer pain tablet with a 400 mil. USD market potential. The vision of the company is to reduce the cash burn with Abstral and gain patient recognition in preparation for NeuVax launch. The drug reduced breast cancer recurrence from 25% to around 5% in the studied cases. It is currently in Phase 3, which will take considerable time to complete, but will be probably the only effective treatment available to patients. There are 40 000 people suffering from breast cancer recurrence in the US, with an additional 80 000 in EU.

The stock shot up 16% yesterday, after announcing they enrolled the first patient to Phase 2 trials of GALE-301 (Folate Binding Protein - FBP), what is a targeted vaccine aimed at preventing the recurrence of ovarian and endometrial cancers. Both of them are not as prevalent as breast cancer, but are much more aggressive and the chance of a successful treatment drastically declines after they return. There are not many therapies available right now, so any progress in this field would be of tremendous help to patients worldwide.

The company has a market cap of 544 million USD, a total float 104 mil and a short float of 15.3%. The stock hasn't been bought by any insiders recently. Both companies have a lot of potential but it I think IMRS would be a better buy right now, the stock has caught momentum and the company is already generating sales from it's product. Plus, it's a low float stock with insignificant short interest.
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