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To ALL: I am starting this board for a discussion of GSII-I see significant upside potential. GSII (General Surgical Innovations, Inc.) of Palo Alto is attractive based on fundamentals. GSII sells atraumatic dissection instruments for developing natural spaces in tissue to perform a wide variety of surgical procedures-minimally invasive surgery (MIS) seems to be the future in surgery. GSII's IPO last year one of the in the top 10 for Bay Area companies-raising 45MM plus. (See 1/12/96 SFChron. p. B9: 1) Heartport 105MM; 2) HMT Tech 84MM; 3) Cardiothoracic Systems 80MM; 4) Cardiogenesis 60MM; 5) Etrade 59MM; 6) Verilink 59MM; 7) CHPKF Software 58MM; 8) Cardiac Pathways 47MM; 9) Forte Software 45 MM; 10) GSII 45MM. Like all other MedDevice IPOs highlighted above, GSII got beat up last summer. Other MedDevice companies rebounded - GSII has lagged. I like GSII for following reasons: 1) It has lots of cash-45MM to 50 MM I believe. It is trading for only few $ over cash. 2) It is shipping products-I believe profitable enough so it will not have to deplete its cash. The other recently public MedDevice companies are exhausting their IPO money and will have to go out for additional capital. 3) GSII makes relatively low-tech (balloon dissection) products for many high volume procedures that will not go away-hernias (600,000/yr.) bladder neck (huge potential); vein harvesting (300,000 yr.). The total potential for all targeted procedures is tremendous. Plus, FDA approvals are quick 510(k)s instead of long-term PMAs. These factors differentiate GSII from other "higher tech" MedDevice companies that are hyped-especially the MIS bypass companies. E.g., HPRT and CTSI will no doubt allow a form of MIS cardiac bypass-but for how many TOTAL procedures? 10,000/yr? 50,000/yr? And when?-5 or 10 years from now? Plus, the MIS bypass companies seem to have little IP protection-the Major device cos. are going to jump into MIS bypass-no barriers to entry. 4) Johnson & Johnson has entered into a co-partner agreement with GSII for marketing and development. This tactic often leads to J&J acquiring the company-which acquisition would result in a premium to shareholders. J&J is the premier marketer in MIS surgery fields. 5) GSII has intellectual property to protect its field-seemingly strong. Their IP portfolio was strong enough to make J&J halt its development of similar products and co-partner with GSII. Ownership of barriers to market entry-what I always look for. 6) GSII products already fit into healthcare reimbursement codes. 7) Finally, the demand for products may be patient driven- e.g., a patient can have a bilateral hernia repair done (a permanent repair!) and return to normal activities-even sports-within a few days. Any hernia sufferers out there?-that's how I learned about the company. This should be a good investment-short-term or long-term-Warren Buffett style. Any comments out there? | ||||||||||||||
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