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Non-Tech : Doc Stone's Bierstube und Trading Room
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To: M. Frank Greiffenstein who wrote (504)2/4/1999 9:28:00 AM
From: wolfdog2  Read Replies (1) of 638
 
Columbia Laboratories (COB)

I've been pounding the table for some time on this one. I recently attended COB's annual meeting; it looks as if this is the year COB finally gets its act together.

The company just got new financing to carry it until it becomes profitable, which should occur in Q2 of this year. An announcement concerning a revision of their marketing agreement for Crinone (COB's lead product) should come any day now. Fahnestock just issued an update on COB. I've copied the relevant portion of the post below.

To: Tangerone (471 )
From: John Kessinger Monday, Feb 1 1999 9:40PM ET
Reply # of 474

I received a copy of the report that Fahnestock issued on January 28th, the day of the COB annual meeting, in which they raised their rating from Buy to Speculative Buy. Let me quote directly from the report:

".. the company announced that it successfully raised over $6 million in a private issue of Series C convertible preferred stock. Prior to this announcement, we estimated that year-end cash and equivalents amounted to just less than $1 million, making the level of earnings critical to solvency.(!!!) The private placement addresses Columbia's current cash needs and bridges the company to a self-funding position that we expect will begin during the next several months.

Furthermore, the identification of new collaborative partners during the next several months related to Crinone and Chronodyne should coincide with sign-up fees that further expand the treasury. Thus the key financial risk that concerned us as Columbia was on the verge of turning profitable has largely been alleviated.

Columbia has a lean overhead structure that possesses operating leverage (earnings sensitivity to revenue).

Columbia is nearing a realignment of the marketing rights of Crinone...We suspect that the Swiss-based pharmaceutical company Ares-Serona, may acquire the rights from American Home Products. Ares-Serona has an approximate 70% share of the U.S. market for infertility pharmaceuticals and has extensive relationships with centers that specialize in ART procedures. We believe that the marketing changes should accelerate Columbia's sales.

Our recommendation of Columbia is based on Crinone capturing a dominant position of the market for progesterone used in infertility procedures, an estimated $150 million in the U.S. and a similar amount collectively in Europe and Central and South America. Our $24 three year price target reflects a 19.5 multiple on our 2001 EPS estimate of $1.23. Discounting at a 26% rate, results in a present value of $12, a potential appreciation of 152%."

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