KOS: All the Right Things

01/09/2004 12:00 am EST

Focus:

James Oberweis

President, Oberweis Asset Management, Inc.

"Our favorite sector for 2004 is healthcare," says Jim Oberweis, editor of The Oberweis Report, whose top pick in 2003 was Able Labs, now up 56%. "Healthcare has a lot to offer, with demographics and political winds calling for change." Not surprisingly, his new pick is also a drug firm.

"KOS Pharmaceuticals (KOSP NASDAQ) is a specialty pharmaceutical company focused on the development of proprietary prescription products for the treatment of chronic cardiovascular and respiratory diseases. KOS introduced the first FDA approved once-daily form of niacin in Niaspan, and has brought to market Advicor, the first and only dual component therapy approved by the FDA for treating multiple lipid disorders. In addition, the company continues to break ground in other critical areas such as advanced respiratory research and gastric retention drug-delivery systems. KOS was founded in 1988 and has been growing by leaps and bounds ever since.

"We expect earnings to continue to grow at a rapid pace into the foreseeable future, and we’re in good companymanagement recently came out and significantly raised guidance for 2004. KOS has only a 3.5% market share right now, but management believes that share can rise to between 8% and 10% by 2007. This implies about $1 billion in sales in 2007, up from less than $300 million in 2003. We are still at the very early stages of an explosive growth story the company has little analyst coverage and has only been profitable for the past year. KOS Pharmaceuticals is doing all the right things in a market with huge potential. This rapidly growing small-cap is just beginning to get the attention it deserves."

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