New CEO Presentation Profile Snapshots.

Transporting frozen life safely! Sonnenfeldt's stealth solar play! Breeding test mice to personalize the preferred cancer drug and treatment for a particular individual! Increasing EBITDA and revenues for cloud-play Fusion Telecommunications!

    By Robert J. and Brian D. Flaherty 

In late May my son Brian and I attended the second annual Marcum Microcap Investor Conference in New York City. Later we heard  online updates in July and August. The following four Up and Comers  caught our eye.

Need cells to make a new baby or to regenerate your damaged heart? Who can  transport life with frozen logistics for safe, swift, tracked, life science? President and CEO Jerrell W. Shelton of tiny Lake Forest, CA -based Cryoport, Inc. (CYRX-0.42) was the first presenter starting off the Marcum Microcap conference. This former journalist began with a video explaining how his Cryoport replaced dry ice with its own unique frozen liquid nitrogen  Dewar technology package to keep life science cells and other   products at -150 degrees Centigrade for up to ten plus days.

Unknown Cryoport provides end-to-end cryogenic logistic solutions to the life science industry through the combination of purpose-built proprietary packaging, information technology and specialized cold chain logistics expertise. It can manage the entire shipment process, including initial order input, document preparation, customs clearance, integrator/courier management, shipping tracking issue resolution and delivery. Cryoport can record "the chain of condition" and also "the chain of   custody" to meet the exacting shipping requirements for scientific work and for regulatory purposes.

"We are in a different world today," Shelton says. "Stem cells are in every organ of the body and are the basis of a new regenerative medicine. This is the medicine of the future!"

If you are relatively young, think about your precious reproductive sperm, eggs or life products now being degraded by being shipped in dry ice which has to be changed often or by other means with the risk of being totally spoiled. Think about a part of your heart destroyed from a stroke and being regrown by cells. If you're a senior citizen think about embryonic tissue from the placenta relieving your orthopedic pains instead of being spoiled.

Cryoport wants to be the enabler to get life science products from its shipper to the point of care.

"We're unique; people don't know about us," says Shelton. The need is there. Scientists have worked for decades to get various cells in exactly the right condition for a task but then shipped the precious cargo in dry ice and hoped everything went well.

Estimating a core shipping market about $1.5 billion, Shelton divides the pie into three segments. The current market is using liquid nitrogen which was sparked by global success with bull sperm. It can be  classified as dangerous goods. Cryoport claims its packaging is safer and best.

The second market   segment is shipping with dry ice which has been going on for 100 years. Often there is degrading of the cells during shipment and sometimes up to a 100% loss. The third segment is those shipping life science products now where Cryoport's superior packaging would bring more reassurance and a lower risk of loss of the precious cells.

"I've turned around a lot of companies in my career,"   Shelton continues. "In some companies I've had to fire every single individual. In this company I would hate to lose anybody." He stressed that especially included the dedicated team in his shipping and tracking. Recently he began expanding his sales force and attending life science meeting to let scientists and other potential customers know what tiny Cryoport can do.

"We think we have the shipping solution for life science," sums up Shelton. "We have a clear path to grow. It is just the matter of getting the proper funding and executing afterwards."

Sounds simple! However, Cryoport is a tiny money-losing company whose annual sales run rate recently only hit $3.5 million. Besides larger, entrenched , better financed  rivals, great obstacles exist. One is the need to raise more capital. How much does Cryoport need for marketing, sales, other functions and vital infrastructure which requires capital? $50 million!

For more information please visit: http://www.cryoport.com/   

Michael  Sonnenfeldt  wakes up and shakes up solar sleeper Carmanah Technologies. Writing the first story on a public company is fun. So let's do it again. Old friend Marc Liu of Capitol Isle Partners called our attention to a stealth solar power turnaround where Marc is an early and so far modest shareholder. In the past Marc has written for us so we listened.  

Marc observed that since fabulously successful Michael Sonnenfeldt became Chairman of little known Victoria-Canada -based Carmanah Technologies Corp. (CMH.TO-2.70 & CMHXD-2.49) this solar sleeper has come to life. After over a year of effort by a new management team led by President and CEO John Simmons, Carmanah broke slightly into the black with net income of $0.4 million on about $9 million in revenues  for its second quarter ending June 30, 2014.

What a dramatic improvement  from the loss of $2.5 million on revenues of $6.3 million in the second quarter of 2013.  After two recent private placements brought in new capital of $6.5 million in U.S. dollars now the balance sheet shows $10 million in cash and no debt.

On July 2 the key acquisition of Florida-based Sol, Inc. where Michael Sonnenfedlt was chairman  dramatically broadened Carmanah's product line. Sol was a privately-owned Florida-based leading manufacturer of industrial and commercial outdoor solar lighting systems, which are sold in over 60 countries.

A Phi Beta Kappa who received his Bachelor's and Master's degrees in management from MIT, Sonnenfeldt made his fortune during his first 25 years primarily in  real estate and has also been successful in finance and other investments. He has a spectacular record in achieving successful turnarounds. He conceived and initiated what was then the world's largest commercial renovation. The project transformed the rundown 2.4 million square foot Harborside Terminal in Jersey City, NJ into the sparkling Harborside Financial Center.

While serving as Chairman of Sol, Inc. Sonnenfeldt saw a fit with troubled money- losing Carmanah where sales had been falling. He was attracted by its reputation for delivering strong and effective products for industrial applications worldwide. Its solar systems performed reliably in some of the world's harshest environments.

On July 2, 2014 Carmanah announced it completed a merger with Sol, Inc. which became a wholly- owned subsidiary. Later in July CEO John Simmons stated, "One year ago we began a process to restructure and refinance the company. During the period we have grown revenues, improved margins and lowered operating costs all of which have served to restore profitability. In that time we have raised approximately $12 million to bolster our balance sheet and have completed the acquisition of Sol, Inc. The consolidation of our common shares (by a ten for one reverse stock split) is an important milestone for Carmanah. It signals our view that we have completed the restructuring process. We are now shifting to focus a strategy of profitable growth both organically and by way of acquisitions."

On his August 8 conference call, Simmons thanked his team. "We've got it going, people, so let's keep it up." He stressed the solar outdoor lighting products which came with the Sol acquisition. "Our view is more and more street lighting needs will be met by solar." He added the combined company hopes to lead the way.

On the subject of more acquisitions, Simmons explained that remaining a $25 million in revenue company simply could not justify the structure of a public company which required at least $100 million. Figures for SOL, Inc. will be picked up in the third quarter. Simmons is actively looking for more acquisitions to build their core solar lighting business as well as some of their other divisions.    

After a 10 for one reverse stock split on August 10th, about 17 million shares are outstanding with a float of 6.8 million shares. Not surprisingly, Sonnenfeldt is the largest shareholder.

This looks like a good time to get on board this budding turnaround. It is bidding on contracts worth $950 million in new business for their existing divisions. That is an extraordinary effort for a tiny tot that only recorded $25 million in sales last year. This could be the start of something big!

For more information please visit: http://carmanah.com/ -RJF

FOLLOW UP: Both follow- up companies in this issue appeared at the Marcum conference. Each is  still archived at http://www.flahertyfinancialnews.com/ and contain lots of background we are not going to repeat here.

Featured in our Flaherty Financial News Newsletter #37 back in July 2013 Fusion Telecommunications International (Nasdaq:FSSN- 4.60) was losing money, with a negative net worth and a heavy load of debt. We pointed out brand new 42-year-old CEO Matthew Rosen backed by a network of financially powerful people including the Chairman his dad had turned the corner. He was making the proper moves although the turnaround was not yet apparent to outsiders.

It still isn't but turnarounds take time. At the Marcum conference Rosen noted competitors traded for 4 times revenues and Fusion was then trading for under one times. Of course, many are a lot bigger, better financed and profitable. But if management can perform well, the opportunity is the value gap can be closed.

Following a one for 50 share reverse stock split, Matt Rosen rang the bell to celebrate New York City -based Fusion's  stock market listing upgrade to Nasdaq. This listing should increase liquidity, while making it easier to use stock for acquisitions and to raise growth capital.

For the first six months ending June 30, 2014 Fusion reported an increased loss of $1 million, or $0.38 per fully diluted share compared to net income of $0.1 million for the same period of 2013. In a turnaround all sorts of complex transactions occur. Fusion had some with acquisition, restructuring and derivative moves so reporting positive net income must wait.  

But Fusion's other vital financial signs look good. For the first six months Revenues rose 51.5%, business services (because of the acquisition) 110%, gross margin 45.8%, up from 29.7% and EBITDA $6.1 million, up from $0.8 million. Organic internal growth was up 5%. Looking ahead, Rosen felt 15%  internal growth would be possible from cross selling products and adding geographical reach. More sales  will come from acquisitions in new geographic areas which increase scale or others which add products. The annual  revenue run rate is now over $90 million with EBITDA   heading toward $12 million. "This is just the beginning for us," Rosen said at the Marcum.

Fusion provides integrated cloud solutions to small, medium and big businesses. Its advanced high availability service platform enables leading edge solutions, including cloud voice, connectivity and applications such as storage and security. Fusion's innovative yet proven cloud solutions lower their customers' costs with new levels of flexibility, scalability and speed of deployment.

Fusion's strategy has been to be able to offer solutions to businesses not just single products. Also it wants to go after vertical industries. The first is the biggest opportunity- healthcare. Others like transportation will come when Fusion is ready. "When we go to a customer we are actually providing a full solution, not just one single product," says Rosen. He notes his own family has invested about $10 million in Fusion. Many of his backers also have anted up so their interests are aligned with shareholders.

The cloud is already a $155 billion industry still growing in double digits annually. By providing solutions and good service customers can upload their infrastructure on to the cloud and concentrate on running their business. But the huge opportunity has attracted well financed giants like Amazon and IBM to slug it out.

When elephants battle often little animals get unintentionally stomped. But alert smaller companies can see the weakness inherent in giants and develop a smart strategy to flourish. Fusion has a chance to become one of the winners. For more information please visit: http://www.fusionconnect.com/ So far, so good! -RJF

Your personal "avatar mouse" to test and try out  your cancer drugs before you do! Back in our annual Flaherty's Favorites of the Famous for December 2002 Bob Flaherty came in first among that period's stock pickers with a 12 month gain of 258% 12 months later. That was  for his stock pick of venture fund Harris & Harris Group (Nasdaq:TINY-3.23). So Bob perks up when he runs into new TINY holdings hoping a new one may be ready to take off.

That was why at Rodman & Renshaw's 2013 NYC conference Bob initially visited TINY's portfolio investment Champions Oncology (CSBR-0.78). Fascinated we wrote it up. See "Of Mice and Men" in Flaherty Financial News Newsletter #39 on November 4, 2013.

Modern medicine often harms or even kills patients  doctors try to help. Drugs have different side effects and some work on some particular problems better than others. Worse, results vary with each sick individual. You can die while your doctor is trying to find out which drug is best for you or might work. And those horrible side effects!

Here is the gist of what we found so exciting in our original story. "The problems of oncology are simple," CEO Joel Ackerman said back then. "Most drugs deliver little or no benefit to most of the patients who take them. Response rates are low."

What to do? His Hackensack, NJ -based Champions breeds special immune-deficient mice which can be implanted with a patient's particular cancer to create TumorGrafts that preserve the human characteristics of the original human tumor. Then various cancer drugs can be tried to see which might work best and which might cause serious side effects before its use on each particular human patient. While using this trial and error approach is tough on the avatar mice, doctors can then use what appears to be the best drug and best treatment for each particular patient.

Champions Oncology uses this technology in conjunction with related services to offer solutions to two customer groups. The first is Personal Oncology Solutions in which results help guide the development of personalized treatment. The other is Translational Oncology Solutions in which pharmaceutical and biotechnology companies seeking personalized approaches to drug development can lower the cost and increase the speed of developing new drugs.

The two businesses are synergistic. Working to help individual patients creates "a Living Tumor Bank." These tumor graphs can be used as models to predict therapy for individual cancer patients from which Champions has taken those tumors. Naturally this means doctors could use the cancer drugs which look as if they would work first and use the supposed duds last.

But the big payoff financially would come from helping pharmaceuticals improve how they develop their drugs going forward. Often billions are wasted doing Phases I and Phase II when Phase III -whether the drugs work on people -is a big flop.

That is because the testing is done on human beings and the safety testing must be done before even getting to  those on efficacy. Efficacy results from these living transported tumors in avatar mice could provide helpful hints on what will work and what will not in Phase III. This advance heads up would save drug developers a fortune. And using avatar mice offer opportunities  too.

How has our mouse master been doing? For the full year ended April 30, 2014, total revenues grew to a record high of $11.6 million, up 39% over fiscal 2013. An important clinical research collaboration was formed with Mount Sinai Medical Center in New York. Excluding stock-based compensation of a $2.8 million loss from operations was $3.5 million.

At the Marcum Microcap conference Joel Ackerman, who has been CEO for over 3 years, began, "We are just at the beginning of a very exciting march forward." Cancer is a disease of genetic mutations at the cellular level. Every tumor, like your signature or finger print, is different. No two people have the same type of tumor.

Result: It is very hard to predict patient response. It is very hard to know what drug an individual will respond to because every cancer is fundamentally unique. That is why 90% of the drugs entering the FDA clinical trial process never reach the commercial market. Most patients get little or no benefit from most oncology drugs they take. That's in spite of paying the high drug cost and enduring all the resulting toxicity.

Champions has over 600 tumors in its living tumor bank today and gets more as it deals with new individual cancer patients. Avatar mice are proving to be a high fidelity model for predicting cancer drug response in humans more than 80% of the time. It is active in the U.S., U.K., Singapore and Israel and plans further expansion. The bigger its living tumor bank becomes the more things that become possible.

The mice process is not yet reimbursable. Down the road results must demonstrate that this is a test that is worthy of being reimbursed. So right now individual customers are those who can afford to pony up.

At a $12 million in revenue run rate, serving individuals accounts for about $2 million while serving pharma would be about $10 million. Besides getting drugs used in the order they work best on their own personal avatar mouse, individuals can save on the cost of not  taking other expensive drugs that otherwise they would have taken and got no benefit. Also   experimental drugs or new  drug combinations can be tested on the mice to find solutions not possible today with the limits on human testing.

The profit potential from serving pharmaceutical companies is much greater. Champions can run studies for the pharmaceutical industry at about 10% of the cost of a study on humans. Because studies are on avatar mice, not humans, studies can go directly to efficacy. Do the drugs work on the avatar mice? If not, not preparing for human efficacy tests  will save a lot of waste in needless Phase I and II trials when any Phase III would probably  flop.

Also intriguing, drugs which fail for the general population can be used on a subgroup to find a patient group in which the drug might be promising. And drugs can be used in combinations with other drugs to find a combo  which might be beneficial. Experimenting on avatar mice just offers so much potential to try new things.

So far Champions has projects with Teva and Pfizer and hopes for lots more. It can license its platform for work companies want to do themselves in their own laboratories or it can work on special projects with upfront cash and milestone payments. Using avatar mice is such a new concept that its possibilities can make a major advance in cancer treatment.

But all that must come later. First must come reaching positive cash flow. Second will be determining the research budget and what to tackle next.

For more information please visit: http://championsoncology.com/ . For an eight-year-old company Champions has come a long way. - RJF

About Harvard's mysterious Dave What's-His-Name? My widowed cousin Marie Doyle surprised me and everyone by marrying again at 80. Bill the groom was three years her senior and also named Doyle.

A retired Braintree, MA banker, Bill took Marie back to his Harvard College  reunion where she met his college roommate. At the functions everyone else wore their name tag except for the roommate who just wrote "Dave" on his.

Marie assumed Dave had a silly sounding last name which made people laugh. So she told him Harvard is a forgiving place and he shouldn't be so ashamed of showing up wearing his last name. She kept at it each day. On the final day Dave showed up with his full name-David Rockefeller.

Years earlier at Forbes I interviewed David when he had just become President of the Chase Manhattan, now JPMorgan Chase. I asked him what his biggest challenge was.

Surprisingly, he said it was overcoming his last name. He felt he had to prove himself every day to show he deserved his promotion. "I have to prove I'm for real!"

Recently Bill and Dave passed away at 99. Each did his best to fill their lives with service to others. They left the world a better place. They were for real! -RJF

We hope each and every reader feels as well and happy as we do today. Blessings to you all! Without readers what would we writers do?