Posted by VFC at Wednesday, September 29, 2010
Readers Respond: BIEL
A comment from a reader of VFC's Stock House page on Seeking Alpha:
I noticed that you follow BIEL. I would like to know if it is a scam. I can't understand why a life or death drug gets approved in 3 to 6 months and there electronic bandaid has yet to get a responce in over a year. It is being used in plastic surgery, been proven safe and effective, and seems to have good global sales. I am an amatuer at this, but it seems that this sould have been approved a long time ago. Any insight as to this companywould be greatly appreciated.
David
VFC's Take: I'll address this one point-by-point. BioElectronics has been the target of many attacks in cyber space over the past year, some of which question the company's legitimacy and even its very
existence. It's difficult, however, to consider a company that already has products selling on the international market a scam, especially when the products are gaining traction and distributorship on a signficant scale.
Regarding the 'life or death' drugs, those drugs should have priority over devices such as ActiPatch. Saving lives is what it should all be about in this sector - although we know that money often trumps moral - and drugs that save lives cannot be compared to 'convenience' products. The FDA also grants designations to certain drugs, such as Fast Track Status or Orphan Drug Status to hasten the timeline to approval. Those designations would simply not apply to a product like Allay or ActiPatch.
That said, I agree that there is no excuse for the FDA not having come to a decision in such a long period of time. The product is effective, provides a safer alternative to Tylenol and Ibuprofen - both of which are proving to have negative long term effects on the liver and kidney, respectively - and is already being used in the healing process for plastic surgery. It would seem that there's plenty of information out there to support the company's claims of safety and efficacy, but the biggest hurdle with BioElectronics, in my opinion, is beating the 'little guy syndrome.'
There's no doubt in my mind that if BIEL's products had been developed and marketed by a big player in the pharmaceutical market, or if the products were not in competition with big pharma, then they would have been approved long ago. While the FDA advertises itself as an apolitical organization, we all know that there is nowhere more political than Washington, DC, and those guys know the hands that feed them; in this case, the hand is big pharma. For years it's been a big struggle for the little guys in this sector to become successful. It's difficult enough for a small pharma or biotech to survive as it is just due to the rate of failure in the sector, but the FDA's love affair with big pharma is also a roadblock. What's ironic about this situation is that the little guys are working on cures and preventative medicines, while the big boys are working on treatments - because that's where the money is. Let's say it again - the big players want to treat you, not cure you. There's no money in a cure. A cure is a one-time payment, while treatment is a lifetime contract. They want you popping pills and heading to the clinic until you keel over.
Getting back to the subject at hand, BIEL's main problem right now is being a small player in a huge market dominated by the big boys. I'm a believer that good products will eventually win, but it takes time.
Dendreon's Provenge is a ground-breaker for cancer treatment, but look how long it took the FDA to approve that product? And during the course of the approval timeline, the Provenge saga was marred with financial conflicts-of-interest by FDA advisory board members and an obvious bias against the product and the company by the media, the markets and - it could be argued - by the FDA itself.
The point is, when a product like Provenge takes a back seat, we can't expect the ActiPatch, a product of a tiny, little known company, to get put on the front burner.
I think that eventually BIEL's products will see their day in the sun - with over-the-counter approval as a class II medical device here in the United States - but that time could come today, tomorrow, next week or next year. Truth is, I'm not complaining too much about the wait because I feel like investors are getting a pretty good deal with the stock right now, at a timewhen international growth is growing.
Many Americans are not internationally-minded and are ignoring the prospects for growth overseas, and that's a benefit to those who still want to load up now.
BIEL is no different than any other speculative stock, you've got to have patience. Is success a guaranteed eventuality? Of course not, but when this one runs, I think it'll run big in a short period of time.
A few years down the road - assuming US approval - and BIEL's technology could be a big player in a huge market.
Disclosure: Long BIEL.
