"What's with Arthur Guiry filing to sell 30,000 shares on December 4?"
David, you had long discussion today. After reading your profile I do not know why someone can take your location so seriously. Somehow everyone forgot about the original question. May I try to answer? Of course, everything written here is only mine, usually incorrect, opinion.
Chromatics Color Sciences International Inc.
(NASDAQ:CCSI)
Positive.
1. Noninvasive measurement of bilirubin concentration is very promising. (No needs for blood samples, which increse safety and reduce time for test, as well as all reagents necessary. Even more: NO PAIN).
2. FDA approval of the Colormate III system for bilirubin measuring.
3. Dec. 1, 1997. "...consulting contract with Frederick Frank, vice chairman of Lehman Bros."
Negative.
1. Great overestimation of the potential market size. (more than 10X in my calculations; I could b completely wrong)
2. Insiders selling.
3. Luck of any agreement 6 mos after FDA approval.
4. Luck of any market penetration for previous 9 years in any field.
5. Possibly incorrect direction: laptop type instead of hand-held simple devices.
6. Competition.
Let's concentrate on the first one.
EARNINGS ESTIMATION.
1.Estimations of an annual amount $ spent on monitoring bilirubin jaundice in the US.
"Chromatics Announces Analysis of Existing Market for Newborn Bilirubin Testing"
September 15, 1997
"... The World Health Organization has published the current annual
birthrate of approximately 4,000,000 births in the United States,
with approximately 10 percent of these births being premature
infants. The company estimates that individual bilirubin blood
tests on newborn infants (heelsticks), which are not part of a
general panel blood test, total approximately 15,000,000 tests
performed annually in the United States, based on data made
available by the World Health Organization, the American Academy of
Pediatrics, independent market studies commissioned by the company
and business proposals from potential marketing partners.
The company believes that published reimbursement amounts by
third party insurance carriers for heelstick bilirubin blood tests,
not part of a panel test, range between $22-$34 per test in the
United States. Assuming a $22 fee, the company estimates that
approximately $330 million is spent annually on monitoring bilirubin
infant jaundice in the United States...."
Company estimates a current annual amount spent on monitoring bilirubin jaundice in the US of $330,000,000.
Amounts of The cost to the patient US annual spending
tests to the patient (by consumers)
15,000,000 22$ 330,000,000$
(CCSI called this estimation "conservative" at the conference call ...)
A) Please compare:
spectrx.com
"SpectRx, Inc. Expects Rapid Growth --Building on 1996 Agreements with Abbott Laboratories and Other Strategic Partners."
January 7, 1997
"The infant Jaundice market is estimated at $200 million."
spectrx.com
'Healthdyne Technologies/SpectRx Sign Agreement to Market Non-invasive Bilirubin Test'
July 17, 1996
"In the United States 1.5 million to two million newborns are screened yearly for elevated bilirubin levels. Infants with elevated bilirubin levels are tested and monitored daily for two to four days. On average, a stand alone bilirubin test costs about $20. Approximately $100 million is spent annually in the U.S. on bilirubin testing. The Bili-Test will be targeted for hospitals, clinics, doctors' offices and for the home healthcare industry, and is expected to be available in 1997."
Amounts of Price per test US annual spending
tests (for consuner) (by consumers)
15,000,000 22 -34$ 330,000,000 $
about 20$ 100,000,000 or 200,000,000 $
B). It is patients' spending. Unless CCSI supposed to sale or lease their devices directly to each customer, they should estimate care providers spending. And the estimation is 2,2.
"On average, it required 5.7 (range, 4.6 to 6.5) minutes of a phlebotomist's
time to obtain a capillary blood sample for a serum bilirubin determination,
whereas a TcB measurement required 27 (range, 10 to 40) seconds. The direct
cost of performing a serum bilirubin determination was $2.20 per test,
compared with $0.15 per test for a TcB measurement, a savings of $2.05 per
test. "
Maisels, M. Jeffrey, MB, BCh; Kring, Elizabeth, RN
Pediatrics, Volume 99(4).April 1997.pp 599-601.
Transcutaneous Bilirubinometry Decreases the Need for Serum Bilirubin
Measurements and Saves Money. (Be carefull here. Check their estimation method. They do not include spectrofotometer price. It should exist in any hospital for many different analysis, as well as for two forms of bilirubin measuring. They did not calculate the price of education. Remember that the simplest way to determine jaundice is still eye, almost 0 direct cost).
5M$ X 2.2$=33 M$ EVEN if you agree with CCSI tests amount estimation. 33,000,000
If you do not expect that spending for bilirubin measurement by service providers will be significantly increased next year (I do not have any information about that) THAT'S IT.
33,000,000 $-estimation of annual amount $ service providers spent on monitoring bilirubin jaundice in the US.
2. Estimation of the amounts of mashines required.
a) From the amount of tests:
"... The Company estimates there are approximately 15,000,000 bilirubin blood tests currently performed annually, in monitoring Bilirubin infant jaundice in the United States". CCSI Conf. Call, Sep.17,1997, p4.
Given that test takes 40 sec, how many tests we can expect to be done by one mashine per day. Let's be "conservative" - 10 test/per day per machine. About 4,000 mashines would be necessary.
b) From the amount of hospitals and births
In the Oxford Research Group, Inc. (Oxford) research, (supplied by the company for potential investors) you can read:
"Hospitals:
...There are 5,000 hospitals in the US alone ..."
There is no any word what kind of hospitals they are, but let's consider that all of them are dealing with newborn infants. 4,000,000 infants(data from previously cited CCSI conf. call) per 5,000 hospitals is 800/ per year per hospital. Even if average stay is 5 days, about 11 infants/per hospital per day. How many mashines per hospital you may need?Again, time of measurement is 40 sec, 1-2 measurement per day. How many per hospital we need? Well, 1 mashine per 11 infant does not looks like underestimations at all. 5,000 mashines should be requered.
3. Earning estimation.
" The company also stated that it could not at this time disclose
the pricing structure and business models currently being discussed
with different potential distribution partners, including any
increased market potential for noninvasive testing. In this regard,
the company has recently retained the services of two business
advisors to assist in current discussions, analysis and execution of
its long range marketing and distribution plan." (same CCSI report)
Neither helpful nor pleasant.
The only number I could find was the price of parts for Colormate II system - 2,300 $.
It was done almost 10 years ago and any estimation seems to be speculative.
If anyone would like to calculate, may I ask you to share the results?
Any comments will be appreciated.
As usual, check ORIGINAL SOURCES!!! |
