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

To: Quad Sevens who wrote (2971)	6/12/1998 12:10:00 AM
From: jpbrody	Read Replies (1) \| Respond to of 5736

Wade, I'd say you are close with those numbers. It's just about what Hambrecht and Quist has in their report on the bilirubin testing market for SpectRx. They use $2.00/test and 6 million tests per year. Here's the excerpt again from ( spectrx.com page 10) SpectRx receives an average of approximately $2.00 for each disposable. With a potential U.S. market of 6 million tests per year, the disposable product addresses a potential market of $15 million. The measurement instrument should sell to the end-user for around $4,000 and make up the bulk of revenues for at least a few years. Prices to SpectRx should be higher in Europe. In the United States, this product will save significant costs for the home-health providers who see most jaundiced infants, because they will eliminate the multiple visits required by the slower laboratory-based methods used today. Not sure why 6 Million x $2 = $15 million. If CCSI gets 50% of that market, that's $8 million/year. Assuming 100% gross margins, after they pay their other expenses (they lost $6 million last year) they might make $2 million. That would be about $0.15 per share. So even if they did that, right now they are priced at 50 times expected earnings. It seems like an awfully high multiple to give a company without a proven track record. You have to really expect to break to make money elsewhere somehow. I also think they will have a hard time keeping the disposable proprietary. Historically high margin (razor blade type) things bring about a secondary market. It happens with laser printer cartridges, razor blades, and I know it even happens with test reagents used in hospitals.