Phil Anthropy

5 Emerging Healthcare Stock Picks for 2008

I am interested in how OSUR was recommended as a pick, when there are several significant concerns that affect the company. Although this must be verified and is not to be taken as gospel, I understand that a supplier of one of their key component substances has stopped manufacturing that product, and that the company is looking for another supplier, although they may have found one by now. Their lawsuit about possible infringement or breach of contract with respect to their freeze off wart product doesn't seem to be moving very fast, and their bottom line has suffered in this sales area. Their insurance-based testing has not done well. Their principal hopes are a) expansion of government-funded HIV testing using their oral method; b) possible FDA approval of over the counter status for their oral HIV test. Even if they win in both these areas, there are no barriers to entry, as far as I know, for competitors offering similar tests. The Hep C and illegal drug tests do have upside potential, but both can be done as part of normal blood screening, and there does not appear to be the draw for these that an oral HIV test has. The FDA clinical procedures that go into application for the over-the-counter status are expensive, and take a signficant chunk of the company's assets to fund. There is promise in overseas use of their products, but I haven't seen the data on how expansion is going (new countries, expansion in existing countries, etc.). All in all, OSUR is a stock that, in my view, should be regarded as speculative. If over the counter status is approved, the stock could double overnight, but if not, then it may just be in for a long, slow ride downward. I think the fact that a large partner company could ignore contractual agreements with impunity and market a competing wart freeze product indicates to me that OSUR doesn't have the resources to protect its turf adequately, so even if it does get over the counter status for its oral HIV test, I don't know if it could stop another company from just selling the same product. These kinds of lawsuits take years to win, and OSUR doesn't have deep pockets. Disclosure: I haven't owned OSUR for several months. I have been in and out of it for several years in trades of relatively short duration. Nothing in the above should be taken as statements of fact, accusation or criticism against any entity.