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Biotech / Medical : Chromatics Color Sciences International. Inc; CCSI -- Ignore unavailable to you. Want to Upgrade?

To: poodle who wrote (975)	2/8/1998 10:47:00 AM
From: JDAVID38	Read Replies (2) \| Respond to of 5736

Boy the quality of this thread had certainly deteriorated of late - "Did Centocor or Biogen's early 10Qs say they would go out of business if their products didn't work, or didn't they?" Give me a break. I guess nature abhors a vacuum, and the lack of announcements from the company has served as an entree to the naysayers. Fair enough. Time will tell. For what it's worth, I think CCSI is one of the worst short ideas I've ever seen. Like many immature life science companies, this one stands to have a binary outcome. If the technology doesn't work, the stock goes to a zero. If the technology works, AND there is a market for the product, AND there is a management to execute the business plan, this will be a HUGE stock. First - does the technology work? Or to put it another way, can the bilirubinometer accurately test for infant jaundice by skanning a baby's skin - as opposed to extracting blood? Six months ago, this could have been the subject of a lively scientific debate. Unfortunately for the shorts, the FDA resolved this question this past summer when it approved CCSI's product for marketing. Keep in mind that the FDA also explored the efficacy and replicability of the device CCSI will produce, and implicitly gave thumbs up on that too. Next - is there a market for the product? CCSI has placed the US market at rougly $400 million. I like that. A competitor, Spectrx said in its prospectus last year that the market was $350 million per year. Pediatricians I have spoken to say the number could be higher, depending on how the rembursements work with the various HMOs. I like that too (I should mention here that calling Spectrx a competitor may be giving the company a bit too much credit. Last I looked, SPRX had not received FDA approval for its product. As a matter of fact, last I looked it hadn't even filed its Phase 111 application. It's hard to get approval without that). WHat about management? Others have pointed out that Darby McFarland is "naive." Others have alleged worse. They couldn't be more wrong. Darby is an entrepeneur who carried this company on her shoulders through lawsuits with Avon, a divorce with her partner/husband, a 3,000 patient study at Mt. Sinai Hospital in New York, and FDA approval. Can she execute this ambitious business plan herself? Of course not. That's where Fred Frank, vice chairman of Lehman Bros. comes in. Mr. Frank is the preeminent health care banker on the Street. His accomplishments are well-known and have been detailed elsewhere on this thread. His job, and the company's been quite explicit about this, is to negtotiate a license agreement or sale with a major medical device manufacturer to market CCSI's product. Can this be all be a complete fraud, as some have implied? I suppose so, but given the participation of Dr. Meisels and Dr. Holtzman, the FDA approval and Fred Frank's involvement, the odds are pretty low (actually zero).