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Biotech / Medical : Paracelsian Inc (PRLN) -- Ignore unavailable to you. Want to Upgrade?

To: FreedomForAll who wrote (4239)	5/25/1999 6:44:00 PM
From: John H. Farro	Read Replies (1) \| Respond to of 4342

I'm not sure where to begin my report on the meeting. I guess there were about 30 shareholders present, but I didn't stop to count. Bernie's presentation was very smooth and informative. He was very likable and it was apparent that he had the best interest of the stockholders at heart. What follows is a mixture of some good and some not-so-good news. The good news clearly outweighed the not-so-good news in my mind and I left the meeting feeling very comfortable with my holdings in the company. First the not-so-good news: BioFIT certified products won't be on the shelves until sometime this fall. Paracelsian completed the development of five assays about a month ago (for Ginseng, Ginkgo, Echinacea and St. John's Wort) and it is now up to R.P. Scheerer to incorporate these products into gel caps. The bad news is that this is taking longer than expected. I was hoping that the products would be on the market by late spring or early summer. There is a silver lining however. Herbal product sales are seasonal and not much is sold during the summer. Winter is the peak sales season for herbal supplements and we should be hitting the shelves as demand picks up. The delayed introduction is also not a totally bad thing for another reason. A lot of other companies introduced their herbal products earlier this year. No single company dominates the market and no single brand name has won dominance over the others. Basically, all the other companies have been fighting it out in the marketplace without any clear winner. If BioFIT had hit the market earlier it is possible it could have been lost in all the hype and clutter of our competitors' product introductions. Other companies have already introduced their product into the market without producing a clear-cut winner. Hopefully, there will be fewer product introductions this fall. If that is the case then BioFIT may capture consumers' interest as being a "new generation" and better product. Imagine the following: There is a highly coveted piece of unoccupied land that several adjacent countries want to annex to their holdings. Perhaps the land has an oil field, or a diamond mind, or the fountain-of-youth, or maybe even a field of Andrographilis <g>. Suppose three of the adjacent countries spend vast amounts of money raising armies which they send to conquer the coveted land. But since all three armies invade simultaneously, none can conquer the land. Instead, the armies fight amongst each other, and destroy each other without producing a victor. When the smoke clears the three armies are gone and the fourth adjoining country, which had been sitting on the sidelines all along, sends in its army to conquer the land without interference from its three now-helpless neighbors. The country that sent in its army late won the war because the others had exhausted themselves early on. The preceding has been my analogy. If you think it is hype, then blame me. Don't blame the company. I freely admit that it is an exaggeration of what might happen. I certainly don't expect BioFIT to enter a market devoid of worthy competitors. I just exaggerated the situation for illustrative purposes to explain that a late entrant into the market could end up being a winner. I admit to looking for a silver lining here. I would have preferred it if BioFIT was on the market sooner. But we may end up better off in the long run if we don't have to contend with the hype of a lot of other product introductions. Two tidbits on the BioFIT program for you: 1) The five tests already developed cover the most popular herbal products on the market. St. John's Wort, Saw Palmetto, Ginkgo, Ginseng and Echinacea products make up 80% of the herbal market in the U.S. 2) One company in Canada and two companies in the U.S. will buy into the BioFIT program as soon as Scherer has products available. The delayed BioFIT product launch was the only negative of the meeting (and even that might not be wholly negative.) Now that the company has fully developed its BioFIT assays it is negotiating with other companies to use the assays for other products. Some companies my want PRLN to assay their raw materials and it may also be possible to use the assays to certify food and beverage products such as herbal soups or teas. If other contracts can be negotiated then it will make PRLN less dependent on Scherer for its survival. Bernie talked about the Ah Immunoassay after he finished discussing the BioFIT program. Their are 2000 incinerators in Japan which the government is mandating be tested for dioxins. This represents a $100 million/year market, and this figure is derived from just performing one traditional gas chromatography test per incinerator per year. There is a possibility that the government may want to have tests run more than once a year on the incinerators, which would greatly expand the market. In addition, there are 20,000 other sites (such as waste burial grounds) that may come under government environmental regulations requiring tests. Kubota intends to put together a consortium involving the government and other Japanese companies to help in its dioxin testing. I asked Bernie if Kubota's having been caught in a price-fixing scandal would end up hurting PRLN in any way. He said that he couldn't see anything that would hurt Kubota's ability to market our assay. Bernie was very upbeat and things are looking bright on the ImmunoAssay front. That is all I've got for now. There is definitely more to tell and I will try to post the rest of my observations later tonight. Robin