Luckily, I had the courage to hold on to CRLS through its
December plunge (and was even brave enough to buy a bit more at
$2.375). The stock's welcome recovery in the past couple of days
is likely due to the abatement of tax-loss selling and a somewhat
improved market for biotechs.
In addition, it may be that the recent media focus on cloning
has rubbed off on CRLS. I doubt the announcement by Chicago
physicist, Richard Seed, that he intends to clone a human has had
any impact. However, there's a new book on cloning by Gina
Kolata, a NY Times Science Writer (Clone: The road to Dolly and
the path ahead) -- she's been doing the talk shows (I heard her
on NPR today) and recognizes the scientific significance of
cloning. If someone was looking for a cloning stock play, CRLS
would be a pretty good contender.
CRLS, as you may know, has the capacity to make money with its
"cloning technology" in two ways:
1) According to the company's SEC 10K, it is the "only"
biotech contract research organization (CRO) "that is currently
able to use its proprietary transgenic and other related
technology to provide services for its clients that require
transgenic animal models for the evaluation of therapeutic lead
compounds for further development and for genomics research in
order to determine the function of human genes and identify gene
targets implicated in disease."
2) CRLS also has an exclusive license to the Ohio University
patent for DNA microinjection technology, which is widely used in
the creation of transgenic animals. It has sublicensed this
patent, which expires in 2006, to a number of companies including
PPL Therapeutics and Genzyme Trangenics. About 20 transgenic
products are now in development, with some in Phase II and III
trials for FDA approval. Since CRLS's sublicenses include
royalties of up to 5% on transgenic products developed using DNA
microinjection technology, it could earn multi-millions if and
when sales of transgenic products take off.
Under $4 per share, CRLS's stock seems undervalued just based
on the potential of its CRO business. So, I figure, you get the
enormous patent royalty potential for free. |
