Biotech Values

[apljack]

Lifecell (LIFC) is a tissue processing co. specializing in providing surgeons with decellularized collagen intra/intercellular matrix for use in reconstructive surgeries. I have tracked LIFC since 2001, owned since 2003 (or 04) and have recently exited my position in favor of some more speculative positions. In at $4.49, out between $28-30.

LIFC is the leader in this industry, with projected sales as follows, per their guidance earlier this week:

"Full Year 2007 Financial Outlook

For the full-year 2007, the Company anticipates product revenues in the range of $175.0 million to $182.0 million and operating income in the range of $42.5 million to $45.0 million. The product revenue and operating income ranges are unchanged from the previous ranges communicated in January 2007.

Diluted net income per share is expected to be in the range of $0.74 to $0.78 compared to the Company's previous range for diluted net income per share of $0.73 to $0.77. The change is due to a reduction in the estimated effective tax rate for 2007."

http://biz.yahoo.com/prnews/070425/nyw027.html?.v=92

LIFC's flagship product is alloderm, a decellularized human skin product, collected from cadavers and initially processed in tissue banks across the country. LIFC's decellularization process appears to be superior to other co.'s with apparent receptor sites left in the collagen matrix which stimulate host stem cell repopulation. Alloderm is most frequently used in hernia procedures and is quickly replacing mesh products in the complex hernia arena. The alloderm matrix is tough, easy to use (per a surgeon friend of mine who is a big fan) and within several months becomes indistinguishable from host tissue. There are NO rejection issues. The product has been used in 700,000 plus procedures to date without any infection issues (unlike CRY). Recently, alloderm has entered the breast reconstruction market for breast ca survivors. The product is used as a sling in the recon of breast tissue. Adoption of this use has been rapid.

LIFC has been preparing for the release of Xenoderm, a porcine product similar to alloderm, and has announced that they will submit a 510K application in the next quarter or so. I am certain that they have plenty of science behind this and have already stated that surgeon are ready to use this product in the established applications as well as for several important cosmetic applications that are currently "off limits" for alloderm (because of the "frivolous" nature of cosmetic procedures), particularly breast implantation. This could drive sales well above $400 million and drive down overhead, yielding a VERY profitable picture for LIFC in 2008-2009.

I am looking to flip some of my more speculative gains back into LIFC if/when those position bear some fruit. I view LIFC as money in the bank.

Worth a look for the crowd here. Maybe Retiredtechie or Lumpy could give the same overview for Tutogen (TTG) the distant no. two in this space.

regards

aj