The stock has recovered a bit recently, and the volumes have been slightly better. It is up 464% on a ytd basis, and 393% up on 52 week basis. The main reason for the recent buoyancy is the merger with TransEnterix. The merger is expected to change the fortunes of the combined entity, especially in light of the $30 million raised by SafeStitch prior to the merger. The TransEnterix investors contributed two-thirds of this amount ($19.7 million), and Dr. Frost (along with other investors), invested the balance ($10.5 million). The combined entity is financially stronger than how the two companies were individually. Resources are extremely important for companies at the development stage, and backing of Dr. Frost gives confidence to the management. He is on the board of the combined company, and that may help it explore partnerships with others. Frost is known for exploring synergies between his companies. For example, the collaboration between OPKO Health (OPK) and Biozone Pharmaceuticals (BZNE) is likely to help both companies. Biozone owns the high potential proprietary drug delivery technology QuSomes, and OPKO has taken the license to test and use it for commercialization. The merger is expected to help TransEnterix develop its ability to bring flexible minimally invasive surgical technologies to the commercialization stage. The funds will help SafeStitch develop its robotic system SurgiBot and other products. Further, the two companies are expected to have synergies. The expected benefits of the merger will take time to translate into tangible results. The large up move in a short span of time makes the stock vulnerable to corrections due to profit booking. However, the support of Frost can take the stock much further than where it is right now. It may be good to tag along, but with a clear exit strategy in mind. The risks-reward is getting a bit unfavorable.
