Zingo Adding "Zing" to Anesiva

In the past several months, Anesiva, Inc. (ANSV) has gained approval for Zingo, unveiled its marketing strategy, prepared for the commercial launch in the second quarter of 2008, formed three alliances for Zingo for the U.S., Europe and Canadian markets, licensed technology to leverage the Zingo platform, moved forward into a phase III program for Adlea, and raised nearly $48 million in cash. We think things are going very well for Anesiva. Management continues to operate according to plan, and 2008 is shaping up to be a banner year.

Yet the stock has languished. Wall Street has yet to take notice and we think that represents an attractive opportunity for small-cap biotech investors.

The approval of Zingo in August 2007 was a major step forward and hurdle cleared for management. Since that time, management has formed a co-promotion partnership with Sagent Pharmaceuticals and outlined the commercialization launch plans. Sagent, although not a household name, is truly an ideal partner for Anesiva on Zingo considering the company's expertise in gain formulary status and its desire to promote specialty products into the hospital market.

We are bullish on Zingo and believe the drug-device has the potential to become the standard of care. Besides the positive developments with Zingo, Anesiva is also staying focused on leading pipeline candidate Adlea.

Over the past several months, management has initiated two dose-finding phase II programs in knee and hip replacement, with one additional program in shoulder surgery to begin shortly. The company met with the FDA and outlined a regulatory path for approval for Adlea that involves two phase III trials - one in total knee replacement surgeries and the second trial in bunionectomy. The 300+ person bunionectomy trial began enrollment in March 2008. We expect the TKA phase III trial to initiate shortly. We also look forward to a phase II/III trial with Adlea in OA to begin in 2008.

Anesiva remains relatively unknown to Wall Street. The shares are significantly undervalued, misunderstood, and poised for a big run over the next several quarters given several catalysts with both Zingo and Adlea. We continue to see $12 as fair-value and we are reiterating our Buy rating. We arrive at our target by discounting our 2012 EPS estimate of $2.22, applying a peer-group average multiple of 25x, back to present day at 30%.

Modest Target on iPass Shares

iPass, Inc. (IPAS) has been gaining traction on subscription-based initiatives and broadband has grown to comprise the bulk of access revenue. We believe iPass will be able to generate strong broadband revenue growth, but until the company is able to generate meaningful revenue and profit growth from software, we believe this will remain subdued.