|From: gcrispin||10/15/2005 8:59:50 PM|
|The Clot Thickens|
By Mark Glassman
October 11, 2005
MEDICAL ADVANCES AND shifting allegiances are changing the face of thrombin, a naturally occurring enzyme that helps blood to clot. Aside from patients' health, at stake is a market that could reach $300 million by 2007.
One of the biggest players in thrombin is Vascular Solutions (VASC1), a Minneapolis medical-device company. It makes bandages incorporating the molecule that are used to seal punctures mostly resulting from catheter removals and certain surgical procedures. For the second quarter, 42% of Vascular's revenues came from the D-STAT Dry line of thrombin bandage products, says Tony Green, an analyst with Northland Securities, a Minneapolis brokerage. Moreover, D-STAT Dry sales surged 61% year-over-year, and the company's total revenues climbed 53% to $8.1 million.
"It's their single largest product line," Green says of D-STAT, "and it's driving growth." (Green doesn't own shares of Vascular Solutions; Northland Securities doesn't have an investment-banking relationship with the company.)
But Vascular's growth driver is in jeopardy. Bristol, Tenn.-based King Pharmaceuticals (KG2) is the only thrombin manufacturer approved by the Food and Drug Administration — and it's trying to raise its prices. King's contract with Vascular expired at the end of May. Vascular says it has stockpiled enough thrombin to last through the middle of 2007.
Meanwhile, Vascular has poured $6 million into a partnership with Sigma-Aldrich (SIAL3), a St. Louis biologics manufacturer, to gain FDA approval to make its own thrombin. If all goes well, Sigma will start supplying thrombin to Vascular by the first quarter of 2007. Under the exclusive arrangement, Vascular could also start selling the thrombin to other medical-device makers by late 2007, with Sigma acting as the contract manufacturer.
That would be bad news for King, which not only would lose a client but would gain a competitor. Thrombin-JMI, King's brand of the clotting agent, accounted for 11.4% of the company's total second-quarter revenues of $462.9 million. The $52.9 million in Thrombin-JMI sales represented a 67% year-over-year increase.
Advances in genetic engineering could add to King's woes. A new type of thrombin could quickly render the older molecule obsolete. King's Thrombin-JMI is derived from the blood of cows. Even after a rigorous purification process, it contains some additional cow-based proteins that occasionally cause allergic reactions in patients. In rare cases, patients can become anemic, complicating their recovery from whatever procedure called for thrombin in the first place.
"[Patients] can have antibodies to bovine-based thrombin, and that can lead to significant bleeding disorders," says Alvin Schmaier, a hematologist at the University of Michigan. "Even with purification from cow blood or human blood, you can still have contaminating proteins, so the best kind of agent to use would be a recombinant one."
Recombinant is pharmaceutical-speak for genetically engineered. Zymogenetics (ZGEN4), a Seattle-based biotech, is trying to create the first recombinant thrombin, called rhThrombin. Analysts say that unlike King's version of the drug, rhThrombin might not require a black-box warning on the label, the FDA's most stringent caution of a drug's potential side effects.
Edward Tenthoff, an analyst with Piper Jaffray in Minneapolis, is optimistic that there won't be a black-box warning. "This will be an important competitive advantage against Thrombin-JMI," he wrote in an August research note. "As a result, we expect Zymo will rapidly convert the surgical bleeding market, which we estimate could reach $300 million by the time rhThrombin is approved [in 2007]."
According to analysts, there have been some anecdotal accounts of patients vomiting during clinical trials of rhThrombin. But the connection between a topically applied biologic and nausea or vomiting is tenuous. Kevin Degeeter, an analyst with Dawson James Securities, a health-care research firm in Boca Raton, Fla., says, "It's pretty unlikely that you would have a systemic response like vomiting." Schmaier, the hematologist, couldn't explain how the treatment might have caused the vomiting.
Perhaps the only surefire way for patients to receive a dose of thrombin and not be at risk of a reaction is to use the clotting agent from the patient's own blood. Thermogenesis (KOOL5), a Rancho Cordova, Calif.-based biotech, makes a small machine called the Thrombin Processing Device, which can extract usable thrombin from 11 milliliters of a patient's own blood plasma. But the thrombin will last only four hours after extraction, and so the device is limited by a physician's ability to predict when the patient will need a clotter.
Considering this drawback, Steve Brozak, an analyst with WBB Securities, a brokerage in San Diego, says Thermogenesis won't be a major player in the coming thrombin wars. He caps the potential for the Thrombin Processing Device at $100 million a year. The device will not be approved in the U.S. until next year at the earliest. (Brozak doesn't own shares of Thermogenesis; WBB Securities doesn't have an investment-banking relationship with the company.)
The biggest winner? Analysts say Zymogenetics, because physicians are often quick to adopt recombinant products to replace animal-based ones — particularly animal-based products with known negative side effects. Moreover, the reduced chance of an allergic reaction could even expand the thrombin market; physicians might start to use thrombin on patients for whom they may have once had immunological concerns. One thing is for sure, however: As these thrombin companies jockey for market dominance, the battle will be bloody.
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|To: gcrispin who wrote (19)||12/23/2008 7:31:42 PM|
|From: Arthur Radley|
The chart on this one is looking good.....nice double bottom and volume activity over last few days has nearly tripled the norm.....and price is spiking high....sure would like to have one big winner in this horrible market..One can always wish!
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|From: Arthur Radley||12/31/2008 3:36:21 PM|
|Report out today from theStreet.com...merely something to consider and make own decision as to how this applies..|
We've upgraded Vascular Solutions (VASC Quote - Cramer on VASC - Stock Picks), which develops medical device for interventional cardiologists and radiologists in the United States and internationally, from hold to buy. This upgrade is driven by a few notable strengths, such as the company's robust revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
VASC Vascular's revenue growth has slightly outpaced the industry average of 15.6%. Since the same quarter one year prior, revenues rose by 17.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
Vascular has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, Vascular has a quick ratio of 1.67, which demonstrates the ability of the company to cover short-term liquidity needs.
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 11380.0% when compared to the same quarter one year prior, rising from $0.02 million to $1.72 million.
Net operating cash flow has significantly increased by 115.42% to $1.19 million when compared to the same quarter last year. In addition, Vascular has also vastly surpassed the industry average cash flow growth rate of 21.71%.
This stock has managed to rise its share value by 35.30% over the past twelve months. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
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