>>>>What is the real market for CCSI's bilirubin monitoring device? Simply quoting (estimates of) total amounts spent on current bilirubin testing seems misleading, as that is a "retail" number, whereas surely CCSI's slice of the bilirubin-test pie is a "wholesale" figure. CCSI will not participate in wild markups by hospital billers to patients and insurers.>>>>>>>>>>>
Wade, your comments are valid, and I will take one last stab at dealing with them if I might, as I think in a matter of days we will have someone else tell us what they think the "real" market is.
While CCSI was in the FDA , at the same time they were trying to define the Bilirubin market worldwide. As you can imagine, culling through documents, reports, published information worldwide it was an immense undertaking. They hired the best consultant in the United States, Frost & Sullivan, who over a 5 month or so period of time, at great cost, developed a highly educated number for CCSI.
Ay you know CCSI on 9/17 announced these figures in a press release, and in a Conference call. They said 15,000,000 heel pricks were done in the US at an average cost of $22, the low end of published data, to come up with a US market of $330,000,000. That number in Europe is about the same, and if you include Asia, it is about the same, and South America is maybe less than half. Those figures do in fact come to over a billion dollars +.
As CCSI started their negotiations with major companies, they found the numbers were greater than that, by the bidders. That is what is called a high quality problem.
Avalon stated they feel CCSI's market is about $36,000,000 annually. How do you get to that figure if any of the above is true?
I have a very serious experience with bilirubin in my family. Two infants, each over 9lbs. at birth were released early from the hospital. The first developed bilirubin upon returning home, and the mother had no idea what was wrong. The infant was put back in the hospital for 8 days, being tested 3-4 times, and treated under phototherapy, to cure the problem. There were over 25 tests done on one infant.
The second infant also had the same experience, but was treated as an out-patient, and the father had to leave work for 11 days to take the infant to the ER near them for blood testing. Hard on Mom, baby, and Dad, Also every expensive.
Now, just for the hell of it. What if a mother was given a CCSI device to take home, and test her baby for bilirubin. If this were your first, I daresay that the mother might use the device a few times a day, wouldn't you, with your newborn?
I am really going to stretch here, but what if every baby is eventually tested with the CCSI device?
If the lowest blood test costs $22 at the average hospital, with the health risks, invasiveness, etc..., and if CCSI"s device could be a fraction of that, do you think the Insurance Cos, and third party reimbursers be willing to pay the much reduced charge?
>>>>If the total US market for bili-testing is X, what % of X is CCSI's actual market? Where/when have the longs dealt with this issue? (And Skip, with all due respect, saying the worldwide market is 10 times X is unrealistic, as "the world", especially those parts of the world where most babies are born, does not spend the same kind of $ on high-tech medical care as we do.)>>>>
In fact I have dealt with this issue many, many times, but I will take one more stab at it.
1. I daresay in Europe they do spend the same.
2. I daresay in Canada they do spend the same.
3. In parts of Asia, and in many of the underdeveloped countries, bilirubin testing is not so prevalent, primarily because of the incumbent health risks associated with this test, but with this device, the problem is changed dramatically. In China, I believe that some families are allowed only one child, and I would guess they would want that child to be tested.
4.In South America, which is going to be the suprise, this product will find vast usage.
Realistically, any new medical device will take testing, getting approval from insurers, or Governments paying the bill. CCSI has felt that the market penetration might be 10% the first year, 20% the second year, and 40% the third year. However, that is going to be left up to their partner, which I believe will have many, many years of experience in distribution,dealing with regulations, and is an expert in marketing, and CCSI will be their partner.
From my perspective, all of this is going to come out in the wash this month, and all or most of all of our questions are going to be answered for all investors to evaluate.
If you had spent 2 years questioning peditricians, nurses, MD.s, et al. you might come away with my conviction concerning a lot of the above. But, when a man like Fred Frank, from Lehman Bros., is spending a good part of his time helping Darby with the negotations, and CCSI is BIESEGED with offers, than maybe someone that knows more than we do feels the same.
Before you fall completely asleep, let me try and quantify the other markets which no one is paying any attention to.
DENTAL: I believe that with 50,000 dentists and 5000 dental labs in the US alone, and in absolute terms we have more teeth to be capped that heels to be pricked, this market can be the equivalent to Bilirubin. Click on a cap at the dentists office, have a 100% match at the lab, and you save money, time, and achieve much better results.
COSMETICS: There really is no device on the market that can match your skin color with the degreee of accuracy of CCSI's device. They could garner 15-20% of a $7 billion market with a royalty agreement, with a number of companies, assuming they can give them the vast number of devices that they will want.
"Chromogenic diseases", granted not a medical term, rather an in-house term of CCSI's, but what if there are diseases, which might be close to bilirubin than CCSI can go after?
If CCSI can generate $1 per share in net income in the first year, $2 in the second year, this stock is going to sell at multiples from here, and those numbers are going to be a joke, REAL SOON!!!!!!!!
Needless to say, I wear blinders on CCSI, but my story is backed by fact, not theory. This is a devlopment stage company, granted, no sales and earnings, gee, that is a suprise, but it is going from the outhouse to the penthouse with a deal in the near future, and the questions will turn to how much can they earn rather than concentrating on some rag out of Avalon which says to short it.
Let's have this conversation in a month's time. Then we will all be on the same page.
Skip |
