GO CTEC !!!!!
Following is the article from the 5 JAN 98 issue of Investor's Business Daily. By Gerard A. Achstatter
EASY TEST
Cholestech's Cholesterol Exam
Is Simple For Givers, Takers
By: Gerard A. Achstatter
Investor's business Daily
"Giving loads of blood from inside a stuffy doctor's office is enough to scare most people out of getting their cholesterol checked.
That's too bad, since nearly 50% of Americans may have a cholesterol problem. Early detection could help save many of these people from heart disease, the side effect of high cholesterol.
Hayward, Calif. Based Cholestech Corp. has an answer. Its Cholestech LDX system is about as unobtrusive as a blood testing device could be.
It uses portable and disposable chemical-measuring cassettes to analyze blood. That design makes cholesterol tests simpler to administer and more convenient to take than older methods.
"Eighth-graders got exactly the same results from the LDX system as did trained medical professionals," said Andrea Tiller, Cholestech's chief financial officer.
The device's design also lets it be set up and used in informal settings like drug and department stores or in gyms.e?
It's already happening. More than 100,000 people have had their cholesterol levels checked by LDX systems installed at Wal-Mart stores in 15 states.
First, only a drop of blood is needed for the LDX device to get a reading on a patient's HDL "good" cholesterol and total cholesterol counts. And unlike older cholesterol tests, which can take about four days to yield results, Cholestech's device reports a count in five minutes.
This stands to popularize a test that has annoyed doctors and given Americans the shudders in the past. The test can now be given informally and scored in doctor's offices or even by pharmacists at drugstores.
"We're going to put pharmacists into the mainstream of health care," said Warren Pinckert, Cholestech's president and CEO. This will lead to increased drug compliance and less catastrophic events such as heart attacks, he adds.
Cholestech is "moving the testing function away from central labs," said Benjamin Andres, analyst with Deerfield, Ill based Vector Securities International.
The market for Cholestech's LDX system is virtually untapped. There are more than 80,000 physician office laboratories in the U.S. Only 3% of them have LDX systems because it has been cheaper until now simply to send blood samples to labs.
There are also 50,000 U.S. pharmacies, each of them a possible candidate for giving the LDX cholesterol test.
Patients could first be tested at a pharmacy. If they have a problem, a doctor could then prescribe cholesterol lowering medication. Patients can then periodically check how well the medication is working by getting follow-up screening at the pharmacy.
The LDX unit sells for $1,800. But most of the money to be made comes from the sale of the cartridge, which contains all the test's chemistry. The cartridge sells for $11. "Variable costs to make the cartridge are only a dollar," Vector Securities' Andrew guesses.
"Cholestech is the only diagnostic company to make money," he adds. "Other firms have had problems marketing to hospitals. Cholestech's product is marketed directly to independent doctors."
And competition is scarce, at least for now.
The closest competition to Cholestech's LDX system comes from clinical labs and hospitals, Pinckert says.
In addition, Cholestech is the only cholesterol screening and monitoring system that had been excused from rules passed by the Clinical Laboratory Improvement Advisory Committee, an industry watchdog.
An exception was made for the LDX system because its design makes the test easy to administer and less prone to error.
Since the test was exempted from the regulation, those who administer it must pay only $100 every two years in certification fees. In contrast, those who administer older, more complex tests must pay at least $3,048 in fees every two years, according to company reports.
The company's top risk is its reliance on one product. Cholestech's strategy for alleviating this risk is to add tests to the system by swapping out some software on a cassette that comes with the unit. Each cartridge has the capacity to store results from up to four tests.
The company is now developing a test that would screen cholesterol levels and measure liver damage. This liver test has the most synergy with the basic cholesterol tests since liver damage is the most common side effect of cholesterol-lowering therapy.
For the second quarter ended Sept. 28, Cholestech's revenue rose 77% to $5.4 million from a year earlier. Profit reached four cents a share compared with a two-cent loss.
The stock trades as CTEC near 11 «". |
