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Suman Chatterjee
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Financial analyst-writer for the last 3 years. Writes for a number of financial publications including The Street, Motley Fool and Seeking Alpha. Completed his Bachelors in Business Administration (Finance) with GPA 3.0, currently pursuing Chartered Accountancy from ICAI, India. Specializes in... More
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  • Verisante Aura To Be Launched, Positive Outlook In 2012 0 comments
    Jul 31, 2012 1:05 AM | about stocks: CRA, PHMD

    Recently, an iPhone application has been released to detect skin cancer. All you have to do is to take 23 nude pictures of yourself. Although how viable this iPhone application will be is still under apprehension, skin cancer detection technology seems to be improving by the day.

    Two months back, Verisante (VRS.V)(VRSEF)(V3T.F), a leader in cancer detection technology, completed the designation and fabrication of the beta version of the Verisante Aura units. Today, it accepted the first two completed pre-production units from Starfish Medical Inc.

    Aura has been approved for sale in Canada, Europe and Australia. Verisante is continuing regulatory efforts to obtain approval to sell Aura in Mexico, Brazil and the United States, while also continuing the product development of its Core series of products. The Core series utilizes the same platform technology as the Aura™ for the early detection of cancers of the lung, colon and cervix.

    …and it seems Verisante is all set to capture the global market of skin cancer detection.

    How Serious And Grave Is The Situation?

    Melanoma seems to be the most common type of skin cancers, and according to the Melanoma Surveillance in the United States, from 1992 to 2006, based on data from the National Cancer Institute's Surveillance, Epidemiology and End Results programme that were available for about 14% of the population, the annual percentage change in the incidence of melanoma increased in both sexes and in all age groups (age ≥65 years, 4·6 in men vs. 3·8 in women). The annual percentage change in the mortality rate generally decreased in people younger than 65 years, but increased for older individuals (women 0·7 and men 6·6).

    Regarding the non-melanoma skin cancer, there have been 2,000,000 new cases and nearly 1,000 deaths this year.

    Why only USA? The curse of skin cancer is not confined only in US, but has significantly pervaded other parts of the world as well. In a recent study in UK, "there were about 480 50 to 59-year-olds diagnosed with malignant melanoma in 1981, but that figure soared to almost 1,950 a year by 2010". In 2010, 12,800 people in the UK were diagnosed with the disease compared with 12,100 in 2009. It seems that skin cancer is on the rise and that's applicable for all age groups.

    Skin cancer is growing at a rate of 10% per year. Perhaps that's the direct effect of global warming.

    …About the Investment Aspect of This New Innovation

    Before we speak of Verisante Aura, let's see what other companies are doing.

    MedX Health Corp (MDX.V), a global leader in developing drug-free, non-invasive therapeutics for tissue repair and pain relief, announced the acquisition of the FDA approved and Health Canada cleared SIMSYS-MoleMate Skin Imaging System, thus heading into the US and Canadian market in January 2011. It had already achieved much popularity in Europe, UK, New Zealand and Australia. It was launched around the fourth quarter of 2011.

    In June 2011, MedX Health acquired the worldwide assets of MoleMate and related products and sales of these products amounted to $254,815 or 29% of fiscal 2011 sales. Q4 revenues for fiscal 2011, the largest revenue quarter in over 6 years, were 51% higher than Q4 fiscal 2010, and MoleMate contributed over 60% of that total.

    Straying to another niche, PhotoMedex (NASDAQ:PHMD), in the skin repair and treatment industry, is already reaping huge benefits from their legacy products.

    Dr. Dolev Rafaeli, PhotoMedex CEO, commented, "Led by a 26% increase in consumer sales, the first quarter marks the third year of quarter-over-quarter double-digit revenue growth, an accomplishment we are very proud to note and one we expect to continue. We are planning to expand our reach for No! No!, Omnilux, Lumiere and LHE brands and other consumer products into new geographies throughout the coming year."

    On the other hand, let's take a look at the FY2011 annual report of Verisante (everything is expressed in Canadian dollars).

    Revenue dropped to $2,249 in 2011 from $11,409 in 2010. What happened to the business? When we look closely, we find that the gross profit margin is not affected that much. Is the company's edge in gaining profitable patents and products waning down?

    I see a pile of money stocked up, as much as $2.8mn, as cash and cash equivalents. The company has invested over $3mn in short term. Is it that the company is not being able to find suitable venues to invest in?

    But then again, the company data show around $2.5mn worth of intangible assets. I don't see how the company is utilizing all these up for maximum profitization.

    And now in the fourth quarter of 2012, the company is rolling out the Verisante Aura products. Looking at what the other companies in the niche are doing, I would say that Verisante is on the right path.

    Moreover, it is leaving no stones unturned to make Verisante Aura a success in the market. The Company has renewed its Collaborative Research Agreement (NASDAQ:CRA) with the BC Cancer Agency for another 13 months. Verisante will contribute approximately $250,000 over the course of the CRA to fund continued development of its Aura device for skin cancer detection and fund further research and development of the its Core device for the detection of lung, gastro-intestinal and cervical cancers.

    To conclude, 2012 is going to be a significant one for Verisante. Let's see how this company turns the curse of global warming into a boon for itself.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: market-outlook Stocks: CRA, PHMD
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