More news out of EFSF this am on their newest product discovery. Just to review: Last week, EFSF announced a major breakthrough with a new application for Citroxin- their mold fighting product. In a clinical environment they proved Citroxin kills the highly publicized MRSA Staph better than the antibiotics currently used to treat it.
Today, just as the market opened, EFSF disclosed it has formulated a transdermal method for getting Citroxin into the blood stream. Transdermal does not work for all medications- molecule size has a significant effect on the compounds ability to actually get into the blood stream through the skin and be effective.
There are some questions that need to be answered. What is this new product’s path is to the store shelves? Does it require some sort of regulatory approval to be marketed, and what would be required to make the claim that it can be used to either prevent or treat MRSA Staph? My guess: EFSF will disclose its plan for a path to the store shelves over the coming weeks.
I was a bit disappointed last week when the market did not respond favorably to the revelation that EFSF had a potential all natural therapy for MRSA Staph. It’s a huge health issue, and a media darling. However, it’s another arrow in EFSF’s product quiver that could end up generating millions in sales under the right set of circumstances.
I believe investors are sending a loud and clear message to EFSF’s management- time to stop talking about products- time to start selling products. I’m sure management is listening and putting its best foot forward, but the market only appears to be ready to reward results.
Here’s the chart, and there’s not much to talk about:
As you can see, after having a rough summer in ’07, the stock has been grinding in the $.23 to $.26 range. It needs some kind of major catalyst to getting it moving back up the charts once again.
While it’s true that the company is far behind where we hoped it would be in their sales cycle, there are some positives I believe the market is overlooking. The stock has remained relatively stable in price over the last month against a backdrop of the overall market blowing its brains out- there’s one positive.
Secondly, their extensive portfolio of very exciting products suggests it is inevitable they will have some sort of big commercial win at sometime in the future- probably about when investors finally lose patience and throw in the towel (we might be there now).
Thirdly, I don’t believe the company gets much credit for their darn good financial condition against a backdrop of disappointing top line revenues. Based on early ’07 forecasts, Cinnergen, Cinnechol, and PurEffect should have both been delivering millions in revenues by now. They aren’t. Cinnechol isn’t even commercially available yet, and PurEffect is in the hands of marketing company CK41.
However, despite the less than stellar top line numbers, EFSF is generating enough sales to have the required cash in the bank, no debt, and loses have been minimized to a virtual zero. In fact, I wouldn’t be surprised to see the company turn a profit in the current quarter.
In summary, I believe EFSF is a heck of a good speculation right now. While the sales haven’t come in as expected, the risk profile has been reduced considerably by the near break even performance last quarter.
After the drubbing the markets have taken in the last month, this stock is probably poised for a rebound of some quality in the not too distant future. This is a great level for accumulation.
Comments and questions are welcome.