I-Flow Corp., a Lake Forest medical device maker, recently got a taste of how analysts can ding a stock’s price.
I-Flow’s shares took a sharp hit earlier this month, falling 26% after an analyst with First Albany Cos. downgraded the stock to “neutral” from “strong buy.”
Late last week, I-Flow’s shares were trading in the $14 to $15 range with a market value of more than $300 million. The shares are off about 20% so far in 2005.
In a note, First Albany analyst William Plovanic said he downgraded I-Flow because he didn’t expect the device maker to meet its second-quarter revenue goals.
The problem, according to Plovanic, is that 44 sales representatives I-Flow hired late last year weren’t ramping up as quickly as expected.
Plovanic reduced his second-quarter revenue estimate for I-Flow’s regional anesthesia business to $12.4 million from a previous estimate of $13.7 million.
I-Flow’s main product is On-Q, which delivers anesthesia to a targeted area in the days after surgery.
Jason Kroll, an analyst with Roth Capital Partners LLC in Newport Beach, called I-Flow’s stock downturn a “buying opportunity.”
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I-Flow’s On-Q: alternative to post-surgery narcotics |
The “selloff in the shares of (I-Flow) was unwarranted,” Kroll said.
“Even if the company was to miss our (second-quarter) On-Q revenue projection by $500,000 to $1 million, the On-Q growth would still be substantial enough to justify our view that the shares are oversold at current levels,” Kroll said.
Kroll projects On-Q to have $12.9 million in sales in the second quarter. He said his “channel checks” indicate On-Q is being adopted in a growing number of surgical procedures.
The potential market for On-Q is $2.5 billion annually and only is about 3% penetrated, according to Kroll.
A Thomson First Call analysts’ poll expects I-Flow to post a loss of $1.3 million on $24.8 million in sales for the second quarter.
Analysts see a loss of $18.7 million on sales of $103.7 million for the full year.
In 2006, analysts expect I-Flow to post a profit of $6.4 million on sales of $133.6 million.
Allergan Investment Gets Funding
Vitae Pharmaceuticals Inc., a Fort Washington, Pa., drug company, has received $15 million in equity financing from its investors.
Allergan Inc., the Irvine-based drug maker, is one of Vitae’s investors.
In 2004, Allergan sold Vitae a series of drug compounds targeting cancer, skin disorders and cardiovascular disease.
Under that deal, Allergan received shares in Vitae, then known as Concurrent Pharmaceuticals Inc., as well as future milestone and royalty payments.
The drug compounds that Vitae bought from Allergan last year are derived from the Irvine drug maker’s retinoid program, which it had pursued since 1988.
At the time that Allergan sold the portfolio, Chief Executive David Pyott said that it decided to sell its retinoid research group and its patent portfolio to Vitae as part of its “ongoing portfolio management process.”
Vitae is working on drugs to treat high blood pressure and other cardiovascular disorders. The company said the latest financing was tied to the closing of a licensing and development pact with GlaxoSmithKline PLC.
GlaxoSmithKline and Vitae announced plans last month to develop and commercialize renin-inhibitor drug compounds.
Possible Stem Cell Eye Treatment
University of California, Irvine researchers discovered a molecular mechanism that could lead to stem cell-based treatments for eye disorders such as retinal degeneration.
UC Irvine professor Anne Calof and colleagues, in a study on laboratory mice, found that GDF11, a protein, controls a component of retinal cell differentiation during embryonic development.
If GDF11 can be manipulated to control cell development, “there is the potential for therapeutics to harness the power of the stem cells that already exist in the retina to replace any retinal cells that have been lost or injured,” Calof said.
“If so, we thereby may be able to cure visual disorders that result from loss of certain retinal cell types,” she said.
The National Institutes of Health and the March of Dimes Birth Defects Foundation funded the study. Researchers from the University of California, Los Angeles, and Baylor College of Medicine joined the UCI group.
UCI’s filed a patent for the use of GDF11 and related proteins and antagonists to treat retinal disorders.
Bits and Pieces:
St. Joseph Hospital, Orange, said that it completed a $20 million capital campaign that’s going toward part of the cost of its new hospital. The new patient care center, which has a total cost of $193 million, is set to have 240,000 square feet of space, 130 beds in its initial phase, 14 operating rooms and expanded surgical capacity. It’s slated for completion in 2007 MicroVention Inc., Aliso Viejo, received regulatory approval to sell its HydroCoil and MicroPlex devices, which treat aneurysms and other blood vessel-related lesions, from the Chinese government. MicroVention said the devices would be sold through Beijing Aidefan Medical Device Ltd., its Chinese distributor.
