That's a tough order. I'll try.
1. TGX moved to the NYSE to get a more stable market. The stock flew all over the place on the NASDAQ and I guess management thought things would calm down on the NYSE. TGX stock is still pretty volatile.
2. The company has a product which now has a long - I think 10 year - record of doing in cancer in prostates. This got investors and the mo-mo crowd piling on to TGX in a big way a couple of years ago and amidst a lot of volatility it ran up to I think $35+/- ($65 or 70 pre split). TGX signed up J&J to do their marketing world wide, though very little product has been sold outside of the States. They arranged loans and raised equity to install I think 14 cyclotrons, all of which were due in between about mid 1997 and 1Q00.
3. Last summer suppliers of Iodine seeds (a competing alternative) had troubles. TGX's sales went up even faster than before. TGX and investors thought it was all because TGX/JNJ were doing such a fine job. Then 4Q98 earnings came up a bit short and management really bobbled the announcement. The mo-mo players went away and without a candid discussion of events the price collapsed. The combination of slowed sales - still growing but not as fast as thought - and the arrival of all the new cyclotrons made for a less than promising outlook.
4. Since then TGX has caused J&J to go back to aiming their sales effort at the patient rather than the urologists. Many urologists are so surgery oriented that they have perhaps been reluctant to switch from surgery to seeds. This was probably more true years ago before seeding had established a ten year history of good outcomes. Still, J&J had been putting their efforts on the doctors and had ignored the patients.
5. Now it seems J&J is focusing on patients, and sales this past quarter were growing a little faster. Maybe the rate of sales will pick up even more in this quarter now that the efforts aimed at the patients are showing up in magazines and on TV screeens around the country.
6. There are other seed makers in the market. NASI and Amersham come to mind. TGX is the only one focused exclusively on Palladium seeds which have a different half life and different performance characteristics, which seem to be advantageous. Do your own DD and read what the pros have to say on this. The market seems to have a good bit of room to grow in this country.
7. TGX bought a facility from the Feds at the Oak Ridge nuclear facility. I am not clear what it involves, but CJ stated that that facility will enable TGX to increase the output from their cyclotrons four fold. That will get cyclotron costs way down. This should allow broader penetration and perhaps even foreign sales.
8. The company is mum about other potential uses for seeds. Seeds are approved for use on solid mass tumors, not just prostate tumors. Will they work for breast tumors? or ??? Silence. They recently announced the hiring of a very high calibre scientist. Did they hire him to wash windows?
9. At the moment I think the stock price is saying OK the company is not broken, but lets see some real signs that it is fixed. My suspicion is that it is fixed, hence I own the stock. This next quarter's earnings report should show whether TGX sales have resumed a strong growth curve. All along they have contended that it would take six months or so for the changed marketing strategy to work and that means it should be working by now.
10. Oddly, the company made a statement when they last announced earnings about Y2K and it's potential affect on sales. Without elaboration, that statement scared people and dropped the stock price after the recent run up to $13. From what I have gleaned, the problem lies not at TGX, but with the many hospital facilities. Some half of the hospitals in this country are going broke under current government reimbursement policies and that does not leave a lot of money for Y2K remediation. I think what TGX meant was that problems at hospitals might upset seeding procedures for some period of time around the turn of the year, and they can not predict just how that might come down. Will people accelerate treatments to get them out of the way? Will they defer treatments in order to focus on Y2K transition problems? Will nothing happen? My suspicion is that if I had cancer I would want the treatment whether it was Dec 21 or Jan 12 would not change my plans, just perhaps the timing, such that, taken together, 4Q99 and 1Q00 should smooth out whatever Y2K effect there may be. If this is what they meant, they sure did not say it clearly. As management is regarded with a little suspicion by some folks, that is not the right way to say things.
11. There is a law suit. I have no idea of the current status. IT was filed in the Northern District of Georgia around 2Q99. I was invited to join. I read the write up and threw it away. The suit asserts that management concealed what was really happening to sales in 1998 in order to sell shares at advantageous prices. I think the whole suit is a pile of rot and opportunism. The management stock sales in question took place early in 1998. The sales distortion took place mid-year and beyond, and the bobbled reporting took place in Jan 1999, way too late to have affected stock sales in early 1998 unless you are traveling backwards through time. If anything, management can be faulted for not perceiving what was really happening to their sales as a result of their competitors problems and for not being aware of the way J&J was going, or not going, about their marketing effort and for not conveying that to investors promptly. I suspect that being new and growing so fast, they assumed too much with respect to J&J and had no idea what was going on at their competitors until after the fact. After all, competitors seldom announce their problems to each other.
Anyone with additional comments, please add them. |
