I've been asked by lots of people, "What's going on with Bioject? How come such a strong rally, and how come now?" Here's an angle on BJCT that I haven't seen discussed.
As I've posted before, non-invasive portable and continuous blood glucose monitoring is one of the holy grails of medical technology. The Bioject/Elan joint venture device has the potential to be a serious player in this market. The GlucoWatch from Cygnus is ahead of us on the path to market, but Cygnus is having problems with their device. I'm not sure about the details of all of their problems, but what I do know about is this:
- They have accuracy problems when the patient is perspiring heavily.
- The use of an electronic current to extract interstitial fluid creates an inflammation on some patients, requiring a change of location. There are a limited number of places where a wristwatch can be put.
- The GlucoWatch needs a 30 minute cycle to perform each test, while our device requires less than 5 minutes.
On March 31, Becton Dickinson walked away from a distribution agreement with Cygnus for the GlucoWatch. Please look at daily charts for BJCT and CYGN, comparing both between April 1 and today. I believe that you will see that the market is beginning to choose who will be the winner here. The price of a share of CYGN has gone from 16 1/2 to 10. With 19.27M shares outstanding, they have lost market capitalization of $125M. At the same time, BJCT has gone from 1 7/16 to 2. With 25.23M shares out, we have gained market cap of $14M.
I would like to submit the thought that, if the Bioject/Elan device becomes the favored play, the entire $125M of market capitalization lost by Cygnus belongs to Bioject/Elan. Bioject's share (80%) is $100M, of which we've already gained $14M. Carrying this thought forward, we have $86M more left in this rally, or about $3.50 more per share.
Bioject at $5.50 a share sounds pretty good to me!
Marc Kahn |
