Even with the end of day rally, oil, gold, and defensive plays were still trading near highs. The reversal could allow for tardy investors to enter other defense names while others might turn to some of the pharmaceuticals to sock away some of their excess cash in hopes of better returns than treasury securities. A couple of small cap names that might top a few lists include Idenix Pharmaceuticals Inc. (IDIX) and Emergent BioSolutions, Inc. (EBS).

Idenix is engaged in the discovery and development of drugs for the treatment of human viral and other infectious diseases. Last week, shares saw an increase in volume following a Reuters news report that two international studies of a new drug, telbivudine, have produced potentially good news for hepatitis B patients, showing that it suppresses the virus that damages the liver faster and better than other treatments. A study showed that telbivudine, produced jointly by Novartis AG (NVS) and Idenix, reduced the virus more quickly and after 52 weeks, those taking telbivudine achieved 10 times more reduction of the virus per millilitre of blood than those using lamivudine. In addition, a higher percentage of patients in the telbivudine group achieved non-detectable hepatitis B DNA level in blood serum than the group taking lamivudine, which is made by GalaxoSmithKlein PLC (GSK).

Document Security Systems Suffers
Setback in Fight with European Central Bank
Shares of Document Security Systems, Inc. (DMC) ("DSS") took a hit on Wednesday after the Company announced that it had lost a patent invalidity lawsuit in France brought against DSS by the European Central Bank ("ECB"). The Tribunal de Grande Instance de Paris, 3rd Chamber - 3rd Section of the High Court of Paris ruled that European Patent No 0455750B1 has been revoked in France. Document Security fell as much as 19% on the news, hitting a session low of $5.10, down $1.21 from Tuesday’s close of $6.31. The disagreement spans back to 2005, when DSS filed a patent infringement suit in the European Court of First Instance ("CFI") against the ECB alleging that the Euro banknotes produced by the ECB infringe DSS’ patent. The ECB countered by filing a claim of invalidity with patent courts in France, Germany, the United Kingdom, the Netherlands, Austria, Italy, Spain, Luxembourg and Belgium. The CFI ruled on September 5, 2007 that it was not the correct venue for infringement proceedings, thus opening the door for countryby- country infringement litigation. To date, the patent has been validated in Germany, but held to be invalid in the United Kingdom. DSS is appealing the U.K. decision, and intends to appeal this latest ruling as well. Even with the unfavorable French decision, the Company maintains that the ECB was required to win in all nine European countries where invalidity proceedings were filed in order to achieve a complete invalidation of the patent. Chairman and CEO Patrick White stated in Wednesday’s press release, "Our victory in Germany is really all the ‘win’ we need as it has given Document Security Systems the ability to move forward on an infringement lawsuit and seek real monetary damages for the unauthorized use of our patent." The Company develops optical deterrent technologies that help prevent counterfeiting, identity theft, and brand fraud from the use of the most advanced scanners, copiers and imaging systems. DSS’ customers include international governments, major corporations, and world financial institutions. The Company has posted TTM revenues of $5.9 million with net losses of $6.2 million.

Disappointing Sales in Wireless
Causes 36% Decline for Spectrum Control
Trading on Spectrum Control, Inc (SPEC) fell 36.422% after yesterday’s conference call in which the company reported weaker than expected orders despite a 60% jump in 4Q profits during the quarter. As reported in the conference call, customer orders for Signal and Power Integrity products rebounded late in the quarter, but overall, were negatively impacted by soft market conditions, particularly in the telecom equipment sector. The softness in telecom the company observed was in the wireless side, and with a several of the manufacturers. The company, however, isn’t sure if the weakness is in the global or domestic market because it doesn’t have information on where the end products are shipped to. Additionally, sales for microwave Components and Systems used in various military and defense applications were down about 2% from the previous fiscal year. Said Spectrum President & CEO Richard Southworth, "The current environment and the softness of orders that we saw during most of the fourth quarter has made us hesitant at this point in time [to forecast] on a short-term basis for the next quarter, but ongoing all of our previous goals and targets remain in place." Today’s sharp decline is still somewhat surprising given that the company has reported higher earnings for the seventh consecutive year, generating net income of $3.2M, or $0.23 per share diluted on sales of $34.7M. Compared to fiscal 2006, Spectrum’s net income increased by 90%, with earnings per share up 84%. However, with customer orders and related shipments for the quarter falling short of previous expectations by more than $1M, Spectrum stated that it was unable to leverage its fixed manufacturing overhead as effectively as anticipated. The company also stated that its defines dynamic growth by targeting an average 25% increase in revenue. Over the last five years, Spectrum has averaged about 10% organic growth, with the remainder of growth expected to supplement through acquisitions. Specturm has been aggressively evaluating acquisition opportunities, but during 2007, it spent a lot of the time and resources normally applied to that in getting its State College facility up and running, which, in effect has played a hand sapping its supplimental growth. But as a result of its resources, three of its businesses are now centered in that facility and the company now believes it has very good opportunities going forward for acquisitions for 2008.

CardioVascular Bio Shares Open Higher on
Positive Article in February "Reader’s Digest"
Shares of CardioVascular BioTherapeutics, Inc. (CVBT) opend higher on Wednesday after the Company announced that its angiogenesis therapy has been featured in the February 2008 issue of "Reader’s Digest." The article, titled, "Heart Hope," refers to the therapy as a "new lease on life" for patients suffering from severe coronary heart disease who do not have any other viable treatment options. The active pharmaceutical ingredient in the Company’s drug candidates is Fibroblast Growth Factor 1 (FGF-1), which has multiple applications for the regenerative treatment of cardiovascular disease. FGF-1 141 is a human protein manufactured using a proprietay technology to facilitate the grwth of new blood vessels in the heart, tissues and organs that have been compromised by impaired blood supply, a process referred to in the scientific community as "angiogenesis." In the article, Thomas J. Stegmann, MD, co-founder, co-president, and chief medical officer of CVBT explains, "the protein is like a seed that causes new vessels to sprout, creating a network of capillaries and small arteries." The Company has FDA-authorization for a Phase II trial to treat severe Coronary Heart Disease (CVBT-141H) and a Phase I trial to treat Peripheral Arterial Disease (CVBT-141C). The Phase II trial of CVBT-141H is expected to begin in the coming months. A Phase Ib or Phase II trial to treat dermal wound healing in diabetics (CVBT-141B) is also planned to begin in 2008. Dr. Stegmann concluded, "We are pleased about being highlighted by ‘Reader’s Digest’ for our intensive work in the field of angiogenesis therapy. Our goal is to provide a viable treatment that gives heart disease patients hope and can return them to the quality of life they once enjoyed."

Shares of Premier Exhibitions Fall
Heavily After News of Lowered Guidance
Shares of Premier Exhibitions Inc (PRXI) fell sharply in Wednesday’s intraday trading on heavy volume trading after the Company announced it was lowering its guidance for FY08. In a press release issued Wednesday morning reporting Q3 results, PRXI announced revenues of $16.47M, up from last year’s $7.95M, but below consensus estimates of $17.09M. Q3 adjusted EPS was 14c besting last year’s 9c and consensus estimates of 13c. GAAP EPS for Q3 was 8c. However, the Company also reported that it was lowering its guidance for the fiscal year ending February 29, 2008. PRXI now expects FY08 total revenue of $56.9M to $61M and EPS of 38c to 46c. Both estimates are below consensus estimates for FY08 which currently call for revenues of approximately $66M and EPS of 58c. In addition to its Q3 results, the Company also announced that CFO and VP Stephen Couture, intends to resign as an executive officer. Couture is expected to help PRXI in its search for a new CFO and in transitioning his responsibilities. PRXI is in the business of developing and touring museum quality exhibitions. It is known for its Titanic exhibitions, which it conduct through whollyowned subsidiary RMS Titanic, Inc. and which honor the ill-fated liner RMS Titanic. Shares of PRXI opened at $5.70 and fell as low as $5.60 during Wednesday’s trading after closing at $8.67 on Tuesday. The Company’s stock price was at $6.05, or down more than 30%, at 2 p.m. ET. The 52-week low for the Company was $6.42 while the 52-week high is $18.61.

RAISES Q4 SOFTWARE REVENUE GUIDANCE: Perficient, Inc. (PRFT) is raising its revenue guidance for the fourth quarter of 2007. The Company expects its fourth quarter services and software revenue, including reimbursed expenses, to be in the range of $61.2M to $62.7M, comprised of $56.6M to $57.8M of revenue from services including reimbursed expenses and $4.6M to $4.9M of revenue from sales of software. The Company’s revised guidance range includes approximately $500K of services revenue from ePairs, Inc., a $6M firm which Perficient acquired in late November 2007. The revised guidance range of services revenue including reimbursed expenses would represent services revenue growth of 35% to 38% over the fourth quarter of 2006.

ANNOUNCES REDUCTION OF 65 EMPLOYEES: In an 8-K filed on January 8, 2008, Coldwater Creek, Inc. (CWTR) reported that it has implemented a staff reduction which will affect 65 employees. The reductions, which became effective immediately, are expected to result in annualized pre-tax savings of approximately $6M for FY08. No positions were eliminated in the CWTR’s retail stores, distribution center or customer contact centers.

COMPLETES $25M PRIVATE PLACEMENT: NeurogesX, Inc. (NGSX) has completed a $25.0 million private placement of its common stock to support the development of its late stage portfolio of novel pain management therapies. The Company received approximately $25 million in gross proceeds from the sale of 4,020,910 shares of its common stock at a purchase price of $6.18 per share and the issuance of five-year warrants to purchase 1,206,273 additional shares of NGSX common stock at an exercise price of $8.034 per share. The warrants were purchased at a price per underlying share of $0.125.

RELEASES 2008 GUIDANCE: Gulf Resources, Inc. (GFRE) announced financial guidance for calendar 2008. Management expects to report 2008 revenues of $87 million, net income of approximately $23.5 million and earnings per share of $0.23, based on the approximately 100 million shares currently outstanding.

ANNOUNCES LAUNCH OF 5 NEW PRODUCTS IN 2008: Sciele Pharma, Inc. (SCRX) announced today that it will be launching during the first quarter of 2008 its new Sular(R) formulation, which was recently approved by the FDA in four dosage strengths. In addition, the Company also plans to launch five new products in 2008: 120-milligram and 40-milligram fenofibrate doses for treatment of mixed dyslipidemia; Prandin(R) (repaglinide) for type II diabetes, and, upon FDA approval, PrandiMet(R) (repaglinide/metformin) also for type II diabetes; a head lice asphyxiation product upon FDA approval; and a new Women’s Health product. Sciele also reaffirmed the Company’s full-year guidance for both 2007 and 2008. As previously announced, full-year 2007 revenue will be within a range of $375 million to $385 million, and full-year 2007 diluted earnings per share will be within a range of $1.53 to $1.58 per share, after a non-cash expense of $0.10 per share related to the Company’s redemption of its 1.75% Convertible Notes. Also as previously announced, full-year revenue guidance for 2008 will be within a range of $440 million to $455 million and full-year 2008 diluted EPS within a range of $1.97 to $2.07 per share. This guidance for 2007 and 2008 assumes an R&D expenditure rate of approximately 8% of revenues and does not include any unapproved products or any potential restructuring time charges related to the new Sular conversion.

AWARDED EUROPEAN PATENT: IDenta Corp. (IDTA) has been awarded a new patent from the European Patent Office for the development of IDenta’s new Heroin Drug Detection Kit, which is currently being produced in Israel and marketed in countries throughout the world.

SIGNS $1.6M AGREEMENT: Electronic Industries Ltd. (RADA) announced that it has signed an agreement with a strategic customer to transfer on a non-exclusive basis the production capabilities for its digital video recorder (DVR). The agreement is divided into phases. The initial phase, which is valued at approximately $1.6 million, is for the delivery of test equipment and training in connection with the establishment by the strategic customer of the production infrastructure for the product and for some integration efforts. RADA expects to receive approximately $3 million in orders for DVR units in 2008 from the strategic customer in addition to payments for the first phase, and believes that the contract has the potential to generate approximately $9 million in revenues over the period 2009 through 2014 for the sale of parts, components, sub-assemblies and ground debriefing systems.

PRODUCT FEATURED IN PUBLICATION: Nymox Pharmaceutical Corporation (NYMX) announced the publication of a positive peer-reviewed paper on the clinical utility of the Company’s AlzheimAlert(TM) urine test as an aid to physicians in the diagnosis of Alzheimer’s disease in the current issue of Expert Review of Molecular Diagnostics (January 2008; 8:21-28). The article reviews the large number of basic research and clinical studies to date concerning the accuracy and specificity of the Company’s urinary assay and concludes that the product adds significant useful information in the diagnosis of Alzheimer’s disease (AD), particularly for the family physician. The author documents several of his own clinical cases where the assay results proved useful in either arriving at a diagnosis of AD or in helping to rule it out.