Market Trim Tabs - June 9, 1998 - Charles Biderman, President
Renewed Buy: Chromatic Color Sciences (CCSI 8 3/4)
Stock Craters On Rumors Of New Short Sale Recommendation & Fund Selling.
Mt. Sinai Pediatric Chief Says Every Hospital & Pediatrician Will Have A CCSI Device
We are again recommending the purchase of Chromatic Sciences (CCSI - 8 3/4). Since we last wrote up CCSI on May 4, the stock price has dropped almost in half - from 16 1/2 to 8 3/4.
Our May 4 issue reported that Dr. Ian Holzman, Professor of Pediatrics and Chief of Newborn Medicine at NYC's Mt. Sinai Medical Center presented the successful results of a 2,441 newborn trial at this year's annual pediatric convention.
At that time we quoted from Dr. Holzman's conclusion: "The Chromatics Colormate TLC-BiliTest provides an accurate and linear estimate of serum bilirubin on a wide variety of infants, including those of many skin types, gestational ages, races and phototherapy. Its use in both nurseries and neonatal intensive care units should decrease blood drawing and increase the safety of early discharge. It will also be convenient for use by pediatricians in their offices and by home health care agencies."
Given the stock price drop since, maybe there is something we don't know that we don't know. We talked to a supposedly knowledgeable shortseller who, while claiming the stock was worth zero, had no hard news as to why.
Therefore yesterday we called Dr. Holzman and asked if we are missing anything. Dr. Holzman replied that he still says the Chromatics device is as effective as blood and either that device or its equivalent (which does not exist anywhere yet, so far as Dr. Holzman knows) will be in virtually every hospital, every birthing facility and every pediatricians office.
Dr. Holzman says he originally was skeptical about the Chromatic device but became convinced when he saw the test results. Last November Dr. Holzman became Director of Chromatic's Medical Advisory Board. Yes, he received the equivalent of 100,000 options at $7 and no cash. Would Dr. Holzman's options make him say it works when it doesn't? No.
Our original March 16 buy recommendation estimated the global market size for infant blood tests for jaundice at 45,000,000 tests costing $1 billion.
The obvious benefit to patients, and their parents, of the Chromatic device is not having to draw blood out of the heel of a day old babe. The obvious benefit to hospitals and/or lessors--there is no marginal use cost. One test device, assembled in quantity, will cost no more than several thousand dollars.
The only negative in the stock we could find is the reluctance of Chromatic CEO Darby Macfarlane to make any preliminary announcements as to the status of any joint venture agreements with various medical device distributors.
That kind of negative we can live with. Therefore, we recommend buying more CCSI |
