New York, June 9 -- Chromatics Color Sciences International, Inc.'s shares fell as much as 49 percent amid concern that the medical instrument maker exaggerated the size of the market for its product that tests infants for jaundice.
Shares of New York-based medical instrument maker fell 2 7/16 to 6 3/8 in midafternoon trading of 4.13 million, almost 12 times the three-month daily average. Earlier, the shares touched 4 1/2.
Chromatics overestimated the market for its Colormate III jaundice-monitoring device by more than 100 times, according to a report by Asensio & Co., which specializes in short-selling stocks.
Betting that a stock will fall, short-sellers borrow shares then replace them later with shares purchased at a lower price and pocket the difference. Asensio, which holds a short position in Chromatics, issued a report today with a "strong sell" recommendation for Chromatics stocks.
Officials at Chromatics Color Sciences weren't immediately available for comment.
New York-based Asensio estimated that the world market for such devices is smaller that 2.5 million a year.
The chief of newborn medicine at Mt. Sinai Medical Center in New York, though, disagreed with Asensio's assessment.
Dr. Ian Holzman said Colormate III's software makes it more accurate than other monitors that estimate bilirubin levels in blood by detecting changes in skin color. Patients with jaundice, which is caused by excess bile in the blood, develop a yellowish skin color.
Colormate III's accuracy broadens the market for the device because it can replace many costly and relatively difficult blood tests, Holzman said.
Asensio "confused the physical instrument with the computer program that allows this (technology) to be more accurate," said Holzman, who ran clinical trials of Colormate III before it received U.S. Food and Drug Administration approval in July. |
