Hui,
I still own MTXX but seriously doubt if Zicam would prevent or treat SARS. That said, I seriously doubt if Pleconaril, Viropharma's drug for the common cold, would prevent or treat SARS but their stock went up 50% anyway. I stumbled across the following article which relates zinc to the Coronavirs, the virus that health officials believe causes SARS. Incidentally, the coronavirus is one of several viruses that cause the common cold.
Unique Identifier 8830521
Medline Identifier 96112286
Authors Yoo D. Parker MD. Cox GJ. Babiuk LA
.
Institution Veterinary Infectious Disease Organization, University of Saskatchewan, Saskatoon, Canada.
Title Zinc-binding of the cysteine-rich domain encoded in the open reading frame of 1B of the RNA polymerase gene of coronavirus.
Source Advances in Experimental Medicine & Biology. 380:437-42, 1995.
Abstract
We cloned and sequenced the second open reading frame of the RNA polymerase gene, ORF1b, of bovine coronavirus. In the region representing nucleotide positions 4919-5677 upstream from the initiation codon of the 32K non-structural protein gene, we identified two putative functional domains. One of these domains contained four leucine residues repeated exactly in every seventh position, and the other domain represented a cluster of cysteine and histidine residues. The DNA sequence representing these domains was cloned and expressed in Escherichia coli as fusion proteins with glutathione S-transferase from Schistosoma japonicum. A high level expression of the cysteine-rich domain was achieved as a fusion protein when the bacterial culture was induced with IPTG. In a solid phase zinc binding assay using the recombinant fusion protein, we found that the protein containing the cysteine-rich domain was able to bind to radioactive zinc in vitro, demonstrating that the polypeptide encoded by the ORF1b of coronavirus is a zinc-binding protein.
Does this mean that Zicam could be effective against the Coronavirus or SARS? I have no idea, and even though I doubt it, facts don't always move stocks in the short term. Can you make any money on MTXX based on the SARS scare? I don't know, but that isn't the reason that I own the stock.
I own Matrixx because the company continues to grow the top and bottom line, cash flow continues to improve and is now positive, debt continues to go down and cash continues to go up, and the company continues to release new products. Sales of Zicam products, which now total seven, grew 49% in 2001 and 47% in 2002. The company said that they expect to grow sales a minimum of 30% in 2003, but like in 2002, I think that they are low-balling the guidance so they can beat it. The reason that I think they will grow sales more than 30% this year is because two of their five new products launched in September 2002 had negligible distribution in 2002. They should grow sales of those two products, maintain their approximately 30% growth in existing products, and increase sales from the release of at least two new products later this year.
Matrixx earned 14 cents per share in 2002 and would earn 26 cent per share in 2003 if they grow sales only 30% and maintain their cost structure according to guidance provided last month. That would represent an 86% increase in earnings per share. They are paying off the rest of their debt this year, which is all from their acquisition of the remaining 40% of Gel Tech that they didn't own, they will be cash flow flow positive in operations for the second year in a row, and sales and earnings are continuing to grow. The stock is worth more than 2.8 times sales, which is where it currently trades. Incidentally, if Matrixx increases sales 40% in 2003, they would earn 37 cents per share before taxes, which would represent a 164% increase over 2002. I don't have an opinion about whether the stock could pop because of rumors or hype about a connection with SARS. That isn't the reason that I own MTXX, but as we saw with VPHM and other stocks, speculation rules in the short term.
Anyway, that's the long answer to your comment. I haven't mentioned MTXX here in a while and took the opportunity to explain why I own it in the Z Portfolio. The stock will eventually catch up to the excellent fundamentals. |
