Chromatics Color Mounts Spirited Defense Against Asensio
Dow Jones Newswires -- June 11, 1998
Asensio says in this article - and I presume will say in his next report - that "hospitals will not pay for the Colormate III because a normal bilirubin test for jaundice costs about about $1, while the Colormate III comes with a disposable feature that costs $20 to $30 a test.
"It is absurd to claim a non-invasive device needs a $20 plus disposable item. It is even more ridiculous to believe that any hospital will pay more than 20 to 30 times it existing cost for an unnecessary test," Asensio said. "No one will pay for it."
Anyone know anything about this alleged price? Has CCSI announced what the product will cost and how much it will go for? Or is this supposed to be announced along with the distribution deal?
NEW YORK -- Chromatics Color Sciences International Inc.'s (CCSI)
stock rose and fell like a roller coaster Thursday as company officials
mounted a spirited response to a sharply critical research report by a
controversial short-seller.
Company officials issued a lengthy written statement Thursday afternoon,
countering the report by Manuel Asensio, president of Asensio & Co., a
New York investment firm.
Chromatics Color Sciences stock - which closed last Friday at 10 3/4 -
plummeted as low as 4 1/2 earlier this week after Asensio's report issued
a strong sell and short-sell signal. Asensio, who has acknowledged he's
shorting the stock, claimed Chromatics fraudulently overestimated the
market for its Colormate III, a non-invasive device for testing infants for
jaundice.
Earlier Thursday, shareholders filed suit against Chromatics Color Science
in New York federal court.
In its statement, Chromatics called Asensio a "notorious short seller" who
targets small companies.
"It seems CCSI is only the latest on the the list of Asensio & Co.
attempted corporate slaughters," the statement said.
Chromatics' eight-page statement includes several studies, including
remarks from the head of pediatrics at William Beaumont Hospital in
Michigan countering Asensio's notion that the market for the Colormate III
was "extremely limited." The statement also cited estimates that 90% of
babies develop jaundice within the first week of their birth.
"As there are 132,418,000 babies born annually throughout the world it is
reasonable to assume that about 90% or 119,176,200 annually will be
potential subjects...," wrote Dr. Jeffrey Maisels, professor of pediatrics at
Wayne State University Medical School in Michigan. "....This does not
strike me as 'extremely limited."'
The company's statement also described Asensio's report as "ill formed,"
and countered allegations about exaggerated estimates, as well as
questions about the salability, competitiveness and effectiveness of the
Colormate III.
In late afternoon trading, Chromatics' shares were off nearly 1% at 7 7/16
on volume of 1.9 million, compared with average daily turnover of
466,000.
Earlier, the shares were trading up 6.7%, at $8 a share. The boost
appeared to be a continuation from Wednesday, when the shares rose
15.4% after company officials appeared on CNBC to refute Asensio's
allegations.
"The stock bounced yesterday. That was the first full response from the
company," said Charles Biderman, an analysts with Market Trim Tabs.
Meanwhile, Chromatics' officials said they are contemplating legal action
of their own and have notified the SEC.
Asensio was not immediately available for comment.
Reached for comment after the market close, Manuel Asensio stood by
his Chromatics Color Sciences International sell recommendation, which
appeared in a report he issued earlier this week. He also scolded the
medical experts cited in the statement issued Thursday by Chromatics
Color Science.
"Dr. Jeffrey Maisels has no business commenting on the market potential
or economic value of the Colormate III," Asensio said. "The non-evasive
bilirubin market is nothing new and well studied."
Asensio said the worldwide market for the Colormate II totals $2.5
million. He insisted that hospitals will not pay for the Colormate III
because a normal bilirubin test for jaundice costs about about $1, while the
Colormate III comes with a disposable feature that costs $20 to $30 a
test.
"It is absurd to claim a non-invasive device needs a $20 plus disposable
item. It is even more ridiculous to believe that any hospital will pay more
than 20 to 30 times it existing cost for an unnecessary test," Asensio said.
"No one will pay for it."
-By Johanna Bennett; 201-938-5670
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