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Biotech / Medical : Organogenesis ORG -- Ignore unavailable to you. Want to Upgrade?

To: Bruce Cullen who wrote (1201)	2/16/2000 4:02:00 PM
From: CMason	Read Replies (2) \| Respond to of 1223

The only reason the company's setting sales records is that they've had virtually no sales to date: actual revenue from product sales in the most recent reported quarter was only $708,000. During that same period, they burned through $18 million of cash in operations, and spent close to another $5 million in capital expenditures, for total cash burn of $23 million. As of September 30, 1999, they had cash and investments of $14 million. If we assume that they burn about $6 million per quarter on operations, and that any further capital expenditures will be funded by the $5 million credit line they opened in November, they'll have only about $2 million left by the end of this quarter. The last 10-Q confirmed that they would have to raise more money to get to the end of 2000. Given the financing crisis they face, it's clear they're hyping the stock to try to float more stock, or a convertible. Acceptance of Apligraf has been disappointing at best. The new indication for diabetic foot ulcers addresses a smaller market than the currently approved indication for venous leg ulcers, so the incremental volume potential is small. Aside from new indications for Apligraf, the rest of the pipeline (e.g., Vitrix and the bioartificial liver) are YEARS away from the marketplace, if they get there at all. In the meantime, they will require many tens of millions of dollars to support clinical trials. ORG's problem is that it has big dreams but no money to fulfill them, along with a track record of disappointing results with Apligraf, which has been on the market for a year and a half, and is still selling less than 800 units per month. ORG needs to generate nearly ten times this level of sales simply to get to a breakeven position! Look for an announcement of dilutive financing in the next few weeks.