I've been following this for a few months. I shorted some at 15 and had to wait out a little ride up to 18 before reality struck.
Here's some things that you should know:
CCSI gives misleading market numbers. They say something like, "The amount spent on bilirubin testing annually is $330 million" and people start believing that will be the CCSI revenues. Most of "the amount spent" is taken by the hospitals. (They have an extraordinary markup to cover their overhead.)
A brief analysis of the bilirubin market is included in the report at spectrx.com Spectrx is a competitor that is marketing a bilirubin measuring device and developing medical devices for other larger markets. They are partnering with some big names in the field (Abbott Labs and Boehringer Mannheim). (No FDA approval yet, but shipping internationally, and they have a US partner.)
CCSI has no manufacturing capability that I know of. CCSI has no sales force. In my opinion, their intellectual property is weak, very weak. I will be very surprised if they can find any big name partner to distribute their product. Their business strategy is bizarre, usually these medical device companies find a partner and finalize manufacturing plans before pursuing the FDA approval.
Here's something I wrote a while back on the IP:
I've examined one of their patents [See patents.ibm.com ] and I think it protects their particular algorithm for extracting bilirubin concentrations from skin color measurements, but it seems to me that it would be trivial to avoid a conflict with this and still make a non invasive bilirubin measuring device. (I would feel much, much better about this if CCSI had a patent like US Patent No. 4,029,085 "Method for determining bilirubin concentration from skin reflectance." [See
patents.ibm.com ] but that's in the public domain now so anyone can practice it without a license.
Also, the company had some kind of deal with Avon a while back to sell a system to tell you what color makeup you should wear. Avon ended the deal. There was a lawsuit and CCSI got their 9,000 color measuring systems back and $4,000,000 or so. Some of these makeup machines were reconditioned and used to measure the bilirubin of infants for the FDA testing. The test did work (you can also diagnose jaundice by eye) and they did receive FDA 510-k approval. (That basically means they proved the test was as good (or better) than what is on the market now.)
The catch is that what the FDA approved is the makeup machine which is a briefcase sized machine. They keep talking about a handheld device, for use in the hospitals. That device has not received approval, and it will need to receive approval in order to be marketed.
There is also something that I think is fishy, but I haven't been able to figure it out. They changed CPA firms in March or April. It wasn't clear whether the old firm quit or CCSI fired them. (The press release made it sound like it was a joint decision, but I have my suspicions.) |
