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Biotech / Medical : Biomatrix (BXM) Looking Great -- Ignore unavailable to you. Want to Upgrade?

To: SC who wrote (534)	10/1/1999 8:21:00 AM
From: Jim Oravetz	Read Replies (1) \| Respond to of 569

I don't follow BXM, but saw this in SmartMoney. FWIW. ....You've heard people predict plenty of times before, that small caps are about to enjoy their day in the sun. But you might want to listen to the latest small-cap cheerleader. That's because it's none other than Goldman Sachs's Abby Joseph Cohen, our No. 1-ranked pundit and the most influential bull on Wall Street. Cohen recently told investors at a conference that she expects investors to start shifting their money into small and medium-size companies as they become less averse to risk over the next few months. "U.S. investors will become increasingly comfortable with the durability of the economic expansion, that inflation will take a lengthy period of time before becoming problematic, and they will start to extend out along the risk curve," Cohen said. OK, it's not exactly poetry - but it's music to the ears of small-cap believers. We decided to run a screen looking for undervalued and underappreciated small-cap companies. We searched for names with market capitalizations under $1.5 billion that are trading significantly off their 52-week highs and at discounts to their historical price-to-earnings ratios. We also wanted firms with sales- and earnings-growth rates higher than the averages for their peer groups. One company that fits the bill is biotechnology firm Biomatrix (BXM). It has a three-to-five-year growth rate of 39% yet sells for just 17 times next year's earnings. Its shares are down 52% from their 52-week high, which it hit back in April. "The performance of the company has been out of whack with its shares," Gary Stevenson of Morgan Keegan says. Unlike most other small biotech companies, Biomatrix already has products out on the market, and it's profitable. Its lead drug, Synvisc, is a therapy to ease the pain associated with osteoarthritic knees and works by supplementing the natural synovial fluid that provides lubrication and shock absorption in joints. The drug has been on the market since 1997, and as of the second quarter of this year has generated over $100 million in U.S. sales. The company's U.S. licensing and marketing partner, Wyeth-Ayerst Laboratories - American Home Products' (AHP) pharmaceutical division - has awarded the company a $7 million milestone payment for reaching this goal. Although Wyeth-Ayerst appears impressed with Synvisc sales, skeptics on Wall Street have amassed a fairly large short position in the stock. The skeptics have amassed a short position equivalent to 20% of the shares outstanding. That's largely because there have been some doubts about this relatively new therapy. But while investing in any biotechnology company is risky, investors may be comforted by new clinical data that show Synvisc provided statistically significant improvement in pain over the standard therapy, nonsteroidal anti-inflammatory drugs, according to Jerry Treppel of Banc of America Montgomery Securities. Jim