Omrix is a commercial-stage company that aims to develop and market innovative biosurgical and passive immunotherapy products, utilizing its proprietary protein purification technology and manufacturing know-how. I am no expert in this field, and the extent of my knowledge in this comes from shows like St. Elsewhere, Trapper John, MD, and ER, but I do understand that when companies quarterly profits drop by 71%, there is a need to look out below.
Uncertainty regarding future shipments of Intravenous Immunoglobulin (IVIG) to an European Union country, as well as related unrecognized revenue, resulted in the company cutting its full-year product sales view. The company said it was facing administrative issues over about $3.0 million of IVIG shipments to the EU country, which it did not name. Omrix didn’t even know when it could record the revenue, or if it could even continue to sell the product in that country in 2007.
The company projects sales of $42 million to $47 million for 2007, which is down from its prior view of $50 million to $55 million. This is the second quarter in a row that the target has been lowered.
If the stock were to drop down, and start trading in the low to mid-teens, even with all this bad news, I think an opportunity would arise (as looking forward into ‘08, there is hope). CEO Robert Taub said,
I am particularly encouraged by the continued market penetration of Evicel in the US, which will be accelerated by the expected general hemostasis approval in the first quarter of 2008. Adding to the growth in our biosurgery platform is the anticipated approval of thrombin in September of this year.
Keep an eye on the stock. I would expect it to continue to trade lower, but if it were to hit the levels mentioned above, I think an interesting buying opportunity would be at hand.
Disclosure: The author’s fund has no position in OMRI as of August 9, 2007.