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Biotech / Medical : Theragenics (TGX) on the up and up -- Ignore unavailable to you. Want to Upgrade?

To: Ron Kline who wrote (757)	3/19/1998 10:54:00 PM
From: TJL	Respond to of 1055

NASI was stock of the day on Individual Investors Website. NASI market Cap. is 159 million, THRX market Cap. is 1 Billion. Earnings growth for NASI in 1998 will be over 200%. NASI is still a bargain at $38.00. NORTH AMERICAN SCIENTIFIC INC manufactures radioactive seeds for the treatment of prostate cancer North American Scientific Gets National Market Listing and Draws Upbeat Coverageÿ(3/19) North American Scientific (NASI) currently has two business areas, a core business of radioactive "reference" materials, which are devices containing radioactive sources used for medical and industrial measurement, and a new business of radioactive seeds, which are implantable pellets used for cancer treatment. Through its partnership with Mentor Corp. (Nasdaq: MNTR), a leading urology company, NASI markets Iodine-125 brachytherapy seeds for the minimally invasive treatment of prostate cancer. The excitement about NASI has less to do with its core business than with the company's recent entry into the brachytherapy market. On February 13, NASI stock moved to a new closing high of $29-1/2 per share on news that the company moved to NASDAQ from the OTC Bulletin Board and picked up "Buy" coverage from CIBC Oppenheimer. analysts John Calcagnini and Ryan Rauchrage. The analysts' recommendations were based on the strong growth prospects for NASI's IoGold seed for treatment of localized prostate cancer, the most prevalent form of cancer in men in the U.S., and the stock's valuation discount compared to competitor Theragenics(Nasdaq: THRX). Brachytherapy offers superior clinical and cost comparisons when compared to surgery for treating prostate cancer. It involves the temporary insertion of radioactive seed into cancerous tissue to destroy the cancer. The procedure requires only local anesthesia, takes two hours, and allows patients to return home the same day - saving them thousands of dollars for radical surgery and hospital recovery time. CIBC Oppenheimer estimates that the worldwide market for radioactive seeds, estimated at $63.5 million in '97, will grow to nearly $300 million by year 2000. North American is the third entrant in this rapidly growing market segment, competing with Theragenics and Amersham. Analysts Calcagnini and Rauch see a windfall opportunity for NASI as current demand from oncologists and urologists for seeds is outstripping supply, leaving the competition with backlogs in excess of four months. Though all three companies face manufacturing challenges, NASI has completed two manufacturing lines, is adding lines three and four, and plans additional lines for 1999. NASI's IoGold advantage, which is supported by urologists, is that enhanced visibility of the IoGold seeds makes for easier seed placement. Financially, North American Scientific is in good shape after having completed a private placement of 800,000 shares in November 1997 at $18 per share. Liquidity is not a problem, given that NASI has no debt and cash of $15 million. In addition, NASI has been profitable for every year since 1993. The added line of IoGold product expands NASI's business considerably. Calcagnini and Rauch estimate that EPS for fiscal 1998 and fiscal 1999 will come in at $0.30 per share and $1.21 per share respectively, a vast improvement over 1997's $0.08 per share. They forecast that 1998 revenues will increase to $7.3 million, more than doubling 1997 revenues of $3.4 million. NASI's stock currently trades at a steep discount to Theragenics. Calcagnini and Rauch have set a target price of $36 per share for NASI, reached by applying a 30 earnings multiple to their 1999 estimate of $1.21 per share. In comparison, Theragenics currently trades at 39 times earnings consensus estimates for 1999. Both analysts believe that NASI will be valued closer to Theragenics as the company gains share and capitalizes on the brachytherapy market's strong growth.