Octagon Finds Medical Specialists
08/12/2005 12:00 am EST
James Oberweis is a specialist in small-cap stocks. His "Octagon Strategy" assesses stocks based on eight fundamental valuation metrics. Two stocks which recently passed his tests both operate in the specialty medical sector. Here's his review.
"Adams Respiratory Therapeutics (ARXT NASDAQ) is a specialty pharmaceutical company that currently markets two over-the-counter products under the Mucinex brand. The company expects to launch four additional products that are already approved by the FDA over the next two years. Mucinex has a dual-release formula that is specially made to loosen, thin out, and break up the mucus that causes congestion. In 2003, the FDA required rival products to receive FDA approval or withdraw from the market. Later that year, all competitive products were removed from the market. Mucinex is the only lasting congestion remedy of its kind.
"In November of 2004, the company launched a TV, print, and radio advertising campaign to build awareness of the Mucinex brand in the consumer market. It c ompleted its IPO on 7/21/05 at $17 per share. For the nine months ended March 31, 2005, sales increased 146% to $121 million from the same period of last year. Income before taxes for the nine months ended March 31, 2005 increased 108% to $39.6 million in the same period of last year. Clients of Oberweis Asset Management own 577,000 shares. These shares may be appropriate for risk-oriented investors.
"Adeza Biomedical (ADZA NASDAQ) develops women’s health products that help predict premature births for women at risk for pre-term birth and assess infertility in women with fertility issues. Its principal product is a patented diagnostic test—the Fetal Fibronectin Test— which detects the presence of fetal fibronectin in vaginal secretions during pregnancy. The test helps doctors predict the possibility of premature birth and can help improve the chances of the baby’s survival. The test itself utilizes a single-use, disposable cassette and is analyzed on Adeza’s patented system. Adeza also markets the E-tegrity Test, an infertility test that assesses the receptivity of the uterus to embryo implantation.
"In the company’s latest reported second quarter, sales increased approximately 33% to $9.6 million from $7.2 million in the second quarter of 2004. Adeza reported earnings per share of $.08 in the latest reported second quarter versus $.05 in the same quarter of last year. Adeza completed their initial public offering of 3.75 million shares on 12/10/04 at $16 per share. Clients of Oberweis Asset own 300,000 shares. These shares may be appropriate for risk oriented investors."