I look forward to seeing the results of the Merck distribution of the beads. For Merck to pay a royality to CGNH for these improved beads, speaks volumes about the product since they already had a substantial share of the market. I suspect Merck believes these better beads will allow them to dramatically increase their market share. The adoption of beads by Merck's customers alone would result in a good return for the early investors in this company.
If the CGNH beads become the standard in a billion dollar a year market, look out! If Merck takes a 50% market share or 500 million, this results in 150 million in revenue to CGNH with only a small increase in expenses. If The result is even $2.50 a share in profit applying a modest p/e ratio for a growth company like CGNH of 20 brings us to $50 a share.
That brings us to the POC analyzer where FDA approval alone would cause a rapid appreciation of the stock price. This may happen as early as the spring.
While nothing is ever guaranteed when investing in a speculative stock like CGNH, I am willing to take the risk on this one.
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