Competitive Technologies (NYSE Amex: CTT), a company with a groundbreaking chronic pain therapy system utilizing electrical impulses instead of narcotic painkillers, has been a disappointment to shareholders over the past year--until a few days ago.
Excitement reigned last year with many investors very confident after the company received 501-K clearance from the FDA to market the company's chronic pain management technology (known as Calmare TT) in February 2009. The bulls saw rapidly growing sales, the bears saw a longer road ahead, if not voicing outright skepticism on the efficacy of the company's technology.
But with the company's recent announcement that CTT just shipped 40 units of an 100 unit order to Europe (with the other 60 units scheduled to be shipped over the next 90 days) the time may be at hand for the company's stock to begin a sustained appreciation from a decline that challenged the confidence of even the most bullish.
Indeed, recent news that the company is presenting patient case studies from influential medical centers to physicians on May 17 precipitated a high volume price move of 35% on April 12. During the announced conference/presentation, physicians from Harvard Medical School, University of Miami Pain Center and University of Wisconsin Carbone Cancer Center and others will present patient case studies stemming from their use of this non-narcotic approach to treat various types of chronic pain, including severe pain from cancer and chemotherapy-induced peripheral neuropathy (CIPN), failed back surgery, phantom limb syndrome, as well as pain from shingles and a number of other chronic pain problems.
Typically, these patients have been experiencing unrelenting pain which has been resistant to other treatment methodologies, including the use of powerful narcotic painkillers that have been linked to adverse side effects. Chronic pain therapy is a multi-billion dollar industry with many unfortunate patients frustrated by ineffective narcotic painkillers and their accompanying side effects. A useful site for an overview of the technology is at calmarpainrelief.com, one of CTT's customers.
SIgnificantly, CTT also announced the formation of a Medical Advisory Board of noted physicians in the palliative care field.
Over the past 9 months, 11 institutional investors have increased their ownership of CTT to 12.1% of the shares outstanding (as of the 12/31 filing) with the recent "as of Mar 30" filing expected to show a substantial increase from the last institutional holders filing. One money management firm, the Prescott Group, increased their holdings by more than 100% in the fourth quarter of 2009, now holding over 740,000 shares. With only 11.024 million shares outstanding, the market cap of CTT is a modest $22.1 Million (as of April 14) and a public float of only 9.6 million shares.
What is expected out of CTT in the near future? The long-awaited results of a clinical study conducted by the Massey Center at the University of Virgina to determine the effectiveness of the bio-electrical modality incorporated in the Calmare system for the treatment of Chemotherapy-induced peripheral neurapathy (CIPN) is anticipated in the next few weeks -and there is increased confidence that the results are strong enough to warrant a peer-reviewed article to be published in a medical journal very soon.
Also, CTT had to acknowledge that their exclusive distributor for the United States were not selling the system. CTT fired the distributor and brought the selling function in-house with the hiring of a seasoned medical technology sales management veteran. Representatives are being signed up across the country --resulting in a recent announcement that an oncology practice that an oncology practice, with multiple US locations, is assessing the Calmare system in one of their clinics in Virgina.
The shift in CTT's sales and marketing approach is a positive development which has yet to impact US sales, but if the technology is as promising as the testimonials indicate, CTT could be booking very healthy quarter to quarter revenue growth in the immediate future, especially after more units are evaluated and purchased.
The cost of the Calmare system is about $50,000, a low enough expenditure to shorten the closing sales cycle in most clinics, hospitals and medical practices, yet provides CTT with a healthy gross profit margin. The company will not talk about what institutions they are talking to or what hospitals are currently evaluating the Calmare medical device, but it is speculated that the Veterans Administration (VA) and a number of teaching hospitals are using the technology on patients with intractable pain.
CTT has a close partner, GEOMC Co. Ltd. of Seoul, Korea, which has current manufacturing facilities capable of commercially producing 200 pain therapy medical devices per month. Both companies have agreed to expand production capacity to an increased production level of 600 units per month. GEOMC has invested over $3 million for the design, tooling and manufacturing facilities for the Calmare medical device.
Investors with an interest in emerging medical technology may want to monitor CTT for news. There is no lack of expected positive catalysts in the next few weeks. As demonstrated in the CTT's stock explosion in volume and price recently, the low public float and increasing investments from institutions contributes to pronounced price moves. With that volatility, comes opportunity to the investor and the trader.
Disclosure: Author holds a long position in CTT