***************** DUE DILLIGENCE **********************
from a yahoo poster...
alert: 50 day average CROSSING above 200 day average.
Matrixx Initiatives (MTXX) owns the Zicam brand of over-the-counter pharmaceuticals for cough and colds.
One of their medicines reduces the duration of the common cold to last only 3 days.
Their specialty is innovative drug delivery methods.
Fastest growing OTC pharmaceutical company.
Started with 1 product in 1999. Now 16 products for cough and cold season 2004.
www.zicam.com
Their cold remedy is patented.
Cough and cold sector is an annual $3 billion market. The Zicam brand is the fastest growing brand in this sector and one of the most recommended brands by pharmacists.
Profit margins of their products are in the 70% area. Phenominal. Products are sold in over 75,000 stores
nation wide with broad acceptance and large amounts of shelf space granted to them by retailers due to
the brand popularity and profit margins.
Two analysts estimate 40% annual growth over
next 5 years. What other company is growing earnings that much ? Few if any.
No debt.
Cash flow positive.
Past yearly earnings growth:
2002: 14c / share
2003: 35c / share
2004: 46c / share estimate given by CEO
and re-affirmed in July earnings statement.
(30% earnings growth from year 2003).
Buffett calculator yields a 5 year price in the $80's given last years earnings and 40% annual growth for next 5 years.
moneychimp.com
Small float: 9.4 million shares
High short interest: ~ 1 million -- watch for SQUEEEZE
Some think it could turn into an alpha stock like TASR and TZOO because
of its sales and earnings growth and very small shares in the trading float.
Company executives with impressive large pharma work histories, many from Johnson & Johnson.
(Can find their profile at Zicam website)
MTXX released 6 new products during Q3 for the 2004 cough and cold season. They continue R&D for products into the future. The new products were distributed to over 75,000 stores durning Q3. Sales are booked when products leave MTXX warehouses. Q3 sales are expected to be the best yet, due October 26.
Despite legal costs of $1m last Q, they beat analysts earnings expectations by 40%. Legal costs due to risks cited below will continue to be $1m per Q.
All time high of $36. Last cold season's high of $20.
There is also interest in working with large pharma's to expand Zicam product line into international markets, however, each country has very specific regulations that have to be addressed. UPDATE: They just added a Board member with International expertise.
RISKS
1. Over 10 million doses of Zicam have been used since 1999. As of this Oct, the FDA has received 100 complaints of people having sense of smell loss.
2. The major cause of smell loss is the common cold virus. The people using Zicam were using it to treat a cold.
3. An FDA representative said they will await medical research on this issue. If shown to cause loss of smell, the FDA said they will require a risk label put in the package insert.
4. Ambulance chasers have been advertising heavily for clients to sue for product liability. So the proof lies with them to show medically that Zicam was the cause. So far 200 people are suing without scientific research.
5. THESE RISKS have been reduced after Oct 5 research news. Research done on animals, cadavers, and living people. More research will be complete in 6 months. This info will be sent to the FDA to demonstrate with medical research there is no relationship with Zicam and anosmia. The Oct 5 news was very significant and a blow to the shorts and ambulance chasers.
6. The FDA relies on medically sound medical research sent to them. They don't fund research, just review what is given them.
7. Used as directed, the Zicam Cold Remedy pump shoots 1/8 of an inch. |
