borisb

LifeCell: Promising Products, Tight Float (LIFC)

Worked on Lifecell during June. would like to add a few optimistic points.

#1) there seems to be some confusion about weither or not up coming competeting products are in fact “clones” from what i understand Tutogen efforts are derivative. also competiting products are no where near the “transplant” caliber because Lifecell has patented Cryogenic process the others may not use. Also, i know for a fact that Lifecell product is involved in R&D cocktails for next generation products with Stem cells, while Tutogen and the others are not.

2. i suggust going back and reviewing the way management increased guiadnace last quarter. the sales hike of 6% looks dull, but the cost controls suggust alot goes right to the bottom line. if sales guiance hikes another 6% in near future, then again profits may finally rock after being stalled for 12 years. Lifecell has under performed the T-Bill returns by 1/2 since 1992, for this the worlds largest tissue engineering firm or division.

2b. rich quarterly sales sequentials near $3-$4 million per quarter instead of near $2 million per quarter would help the shares advance at speedier pace. but it must be sustainable. they were quoted about greenfields of up to $500 million last summer in the Smart Money article.

3. Considering the stock chart was somewhat elevated near $32 recently and near $30 for past 2 months insider sales have been measureably tiny.

4. Lifecell was slammed to the $26s today a $6 dip and i am counting on a decent bounce. earnings report is in 13 days.

5. The current gross profits are about 70% but the pig tissue CGS supply is due in about 1-2 years. if effective this year would add 20-25 cents in after tax eps. would add 30-40 cents in after tax eps to 2007 figures. or company could use savings to price war clones from gaining traction.

6. Breast augmentation marketing is taboo because of the nature of tissue donors. But with pig tissue coming online, company palns all out marketing campaign.

7. new niche market for 2006 catalyst is trauma surgeries in the ER. nothing giant but another step forward!

My particulair curiousity with this is will current generation Alloderm product be able able to snowball into a $300-$500 million sales because of easy greenfield penetration, and what will the sales block be for the next generation alloderm product thats combined with stem cells for advanced tissue engineering products. is that another $200-$500 million sales block? If LIFECELL pulls in $1 Billion this way, would that company sell for about 5-10 x sales. A market cap of $5-$10 Billion vs. todays $900 million-ish? It looks fairly likely.

During 2003, the government of Austrulia set up at institute to develope stem cell products with $50 million grant and invited Lifecell’s Alloderm in on the R&D. at didnt mean much at the time because it wasnt clear how special is alloderm. Word has just come out in June 2006, by the leadership of the institute that Alloderm is being used in the nerve tissue products. what a special product. Tutogen and the wanna be clones just forget it.

the stem cell insititue in Australia is planning to use the alloderm acelluar matrix to be a foundation or mesh for the stem cells. so its the mother alloderm tissue with the small delicate stem cells insereted into the foundation. i assume next generation tissues might even include organs if they get the stem cells right. vascular grafts.

Lifecell has the same gross profits and similiar seqentials as Intuitve Surgical, and has multi application drivers as well. please the next gneration stem cell play. but the price to sales ratio for LIFC on last quarter revenue block is about 30x while it is about 55x on Intuitive Surgical. suggesting more room to upside.