Agreed - Sales ramp is the key determinant for driving the shares higher. I mentioned the importance of the Guidant lawsuit becuase I believe that is the quickest way to drive the revenue line.
I own the shares becasue of the patents. The patents brought Johnson & Johnson on board. Without the patents GSI would have to fight the gorilla's of the cardiovascular field on pure marketing and a pretty good product. I would not want those odds.
Guidant is being sued over more than one product because GSI's patent is a method of use patent and not a specific device infringement. In the Hernia market there are apx. 600,000 procedures in the U.S. annually, figure at least that many in Europe, add even more for Japan and the Far East. Balloon dissection has penetrated only a small fraction of the total market. As Stewart Elliot says in his post Guidant is selling close to 20,000 balloons per quarter in this category. At $250 per balloon that's $5,000,000 per quarter, $20,000,000 per year. GSI's current technology value is only $19,700,000. I have not heard that Guidant is selling significantly more balloons during the last two quarters, but I could be wrong.
The real kicker in my mind regarding the Hernia lawsuit is that GSI will get either: 1) A nice royalty rate from Guidant on all the balloons they sell or 2) force Guidant to pull their existing product and redesign their hernia product line. This would serve to give GSI a nice boost in quarterly revenues and give them a better shot at a market opportunity of $300,000,000 (1,200,000 * $250) in hernia alone.
As to the MI harvest of the saphenous vein I have not seen reliable figures as to the size of the current market. Anecdotal evidence indicates that this could be a very quick uptake on the roughly 400,000 domestic procedures that use the Saphenous vein for bypass grafts. With a higher ASP than hernia and quicker uptake this market could be bigger than the hernia market. Guidant thinks its an important field and they have stated that they want their Origin division to be a cardiovascular firm. GSI has sued Guidant over their Vasoview product. Th upside is the same as the hernia field. This is why I believe that the lawsuit in the Spring is the first big test of the stock price.
Just my opinion - investing is a personal decision. All comments made are my own and are neither a solicitation to buy or sell. The above statements are not intended to form an investment opinion.
Regards |
