There’s another new penny stock-focused newsletter now, this one’s called Penny Stock Millionaire and it’s being run by Alex Koyfman, who is apparently the new guy at Angel Investing. And it appears they’re using the same copywriters on his stuff as they do for Nick Hodge’s blue sky speculations from his newsletter, so this one is catching the eye of a lot of Gumshoe readers.
The basic spiel is that Koyfman has found a seasoned company that has spent decades developing a new injection technology to replace the standard syringe, and that upcomign approvals for this technology — which is already in use for some indications — will make us rich. Assuming, of course, that we’re willing to shell out $299 for his newsletter.
So, we’re not going to do that — but we will read through the marketing hype and sift out the clues, and we’ll identify the stock for you. Then you can decide for yourself: is this really your last chance for 900% gains, as Koyfman claims?
Here’s how the ad gets our motor revving:
“As a child, you dreaded it.
“As an adult, you learned to accept it.
“Since the syringe’s advent in the 1850s, its glass and metal tubes have been replaced with plastics, and the needles have been made thinner, straighter, and more precise, but the basic design has stayed the same.
“There is a hypodermic needle, a tube, and a plunger… How much or how little pain it causes depends entirely on the hand of the medical professional making the injection.
“Too much tilt of the syringe after it’s entered the injection point, or too much pressure on the plunger too quickly, and a routine procedure can turn into agony — causing debilitating phobias for tens of millions of Americans…
“Phobias that often start with some of our earliest, most formative memories” …
“I’m going to tell you all about a company whose singular goal is bringing injection technology into the 21st century.
“It’s revolutionizing and re-inventing the syringe from the ground up, combining it with modern microprocessors to take human error out of the equation.
“You’ll learn about how this company has already made an impact with American dentists and how its medical injection devices are about to do the same with anesthesiologists and family doctors across the world.”
I’ve thankfully avoided that particular phobia (though if they take more than a few tablespoons of blood out of me I do get woozy), but yes, I have kids and I know they and lots of other people hate the idea of needles — particularly if they focus on it and build their worry as they sit in the waiting room. I don’t think it’s because the doctor or nurse is unskilled or causes an unmanageable amount of pain, it’s just that “no pain” is more appealing than “yes pain.”
So will this new system, whatever it is, get rid of that fear of needles?
He goes on to tell us that the problems with needles and injections are not the well-executed injections that are “barely perceptible”, it’s the ones that miss the mark, use the wrong angle, or push the drugs in with too much pressure that cause pain or, in the worst cases, abscesses or other infections — and, of course, there’s also the high number of “stick” injuries of both patients and medical folks before, during, after the injection, causing both simple puncture wounds and, on occasion, serious transmission of diseases like HIV or Hepatitis.
And then, as these teases have to do, they come up with a number that we can build our case around:
“According to the AMA, over $3 billion — that’s about 1/10 the GDP of Bolivia — is spent annually in the U.S. on the treatment of accidental syringe sticks.
“This cost is broken into two prongs, with $1.2 billion spent on follow-up treatment and, most frighteningly of all, $1.8 billion going to the treatment of diseases contracted during the injury….
“All in all, the cost is about $3,000 per incident — and 60% of those incidents happen after the syringe does the job it was designed to do.”
So that’s already got us focused on the $3 billion and the $3,000 per incident… but then he pulls out some bigger numbers to build the case:
“The Centers for Disease Control and Prevention (CDC) estimates that about 20% of Americans fall victim to influenza and flu-related complications each year…Are you getting our free Daily Update
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“This preventable sickness results in approximately 200,000 annual hospitalizations and 36,000 deaths…. with up to a quarter of them succumbing because they were too scared to get a simple shot.
“And that’s just the flu… Think of the consequences of a child not getting her hepatitis shots or missing a polio vaccination because of this fear.
“These effects are far-reaching and, aside from the human cost, put a major strain on the economy and our already overburdened health care system.
“According to IMS Health, the biggest provider of health care-related data and services in the U.S., a cost of $40 billion per year is created by patients delaying or refusing simple physician treatment procedures like IV muscular injections.”
I suspect there are a lot more folks “missing” their vaccinations for reasons much more malignant than fear of the needle, but we’ll let that go (is it time for our quarterly quibble about vaccines? Gosh, that would be fun!) But there are certainly real costs from avoiding injections, and from errors or accidents during injections.
But do me a favor, before I tell you the name of the company get those huge numbers ($3 billion and $40 billion and 1.3 million deaths a year) out of your head. The common approach of the teaser-spinner is to present a huge problem, a huge economic opportunity, and then focus down onto one company that has a (patented or unique or better) approach to solving the problem, and then we can just skate right along to “sure, this $50 million company is going to be selling into a $40 billion market! We’ll be gazillionaires!” What is so often ignored are the dozens of other early stage companies trying to solve the problem with their own new technology… and, of course, the mega-billion-dollar companies who currently dominate the industry and are obviously not ignoring the problem. Maybe this one’s great, you can decide that in a minute, but get the $40 billion number out of your head first.
So who’s the company? We scroll on down the spiel for a while, getting more tidbits like this:
“You may not have seen it yet, but in the next couple of years, you’re probably going to run into the technology I’m about to describe in the office of your own family doctor or dentist.
“It’s going to change everything about a process we all know so well…
“And we’ll have one of the most innovative small biotech companies operating in the U.S. today to thank for it.”
So by now, of course, we’re just quaking with anticipation as we wonder who, who, who could this “innovative small biotech” be?
Then we get the actual clues:
“The company doing this isn’t a giant at all, or even large. It isn’t multi-faceted or multi-interested.
“It is focused on one thing and one thing only: revolutionizing injection technology.
“Mind you, I really do mean revolutionizing. It isn’t just improving the design or adding a few bells and whistles and calling it new.
“What it has created is completely different… from the ground up.
“Yes, there is still a needle, but that’s where the similarities end.
“This company’s unique, patented, FDA-approved devices have as much in common with the traditional syringe as your smartphone has with the old rotary dial set you may have seen or owned decades ago….
“These devices are computer-controlled for maximum accuracy in delivering the medication, and they’re designed from the start to be fully compliant with federal OSHA regulations under the Needlestick Safety and Prevention Act.
“In short, no more accidental sticks… That benefit alone is worth $3 billion right there.”
Jeez, I asked you to ignore those huge numbers — then threw the $3 billion right in your face again. OK, go back to ignoring that. Whatever he’s talking about, it is obviously not the ONLY way to be compliant with the Needlestick Safety and Prevention Act.
And this technology is already in use, we’re told:
“There are patents, and several of this company’s devices already have FDA approval for sale in the U.S., with more in the pipeline.
“Right this minute, in fact, a small but growing percentage of medical professionals in the U.S. use these devices in their daily work routines.”
And the company is not a “flash in the pan” …
“it’s been around for more than 30 years — and it’s spent almost 20 of them as a publicly traded firm….
“This company is a world leader in its market, both in innovation and in reputation.
“It was founded to be such by people who themselves are world-recognized authorities in the business of designing, manufacturing, and marketing cutting-edge medical technology.”
And some more about the company:
“My favorite new biotech firm is having a banner year in terms of earnings, and yet its stock hasn’t responded the way you’d expect.
“It’s still about 20% down from 52-week highs — despite posting record earnings as of the last quarter reported.
“Moreover, company representatives recently stated that by their estimates, they’ve tapped just 5% of the potential market for their existing devices.
“Remember, the company is currently awaiting FDA approval on a whole new line of tools used for epidural and intra-articular injections.
“These devices will be used in a wide spectrum of surgical applications, including ophthalmic and neurosurgery — not to mention a long list of nonsurgical procedures, including childbirth.”
And he argues that the earnings could increase by 400% just by seizing 5% of the epidural market in the US (he says that’s a $1 billion market) … and that it will slowly take over the market as slow-to-change doctors and dentists accept the new technology over a longer period of time.
And it’s not just the US:
“Earlier this year, the Chinese equivalent of the FDA (appropriately named the CFDA) gave broad approval for one of this company’s flagship products — opening a floodgate of new revenue that we’ll see reflected in the balance sheets later this year and into 2015.”
And the reason to buy it now? He says it’s at the “magical point” where their R&D will finally pay off after regulatory approval…
“All in all, there are growth drivers in place that could see this company’s current market cap of less than $50 million increase by between 400% and 900% over the next two to four years as the available product line broadens and as more medical professionals and institutions adopt the technology.”
The few other hints include that the company has fewer than 25 million shares outstanding, so … OK, we’ll feed that into the Thinkolator and take you out of your misery. Just let it chew on the clues for a minute and, there! We can tell you that this is: Milestone Scientific (MLSS, trades over the counter)
And yes, Milestone Scientific has been around for a looooooong time, particularly for such a small company. They’ve been public for 20 years and around for longer than that, and they’ve been generating revenue for at least ten years (I didn’t go back further than that), and very gradually increasing that revenue over the years. 2013 was the first year that they reported a profit, of nine cents a share, but they have generally been within a stone’s throw of breaking even most years, so they haven’t really run through a ton of cash or had to dilute shareholders aggressively. Their only big stock offering in the last decade came last quarter, when they raised about $9 million — which would have covered their losses over most of the past 8-10 years. Otherwise, they’ve been pushing development partly through the use of some joint ventures, including one listed in Warsaw — you can get a little bit of a flavor of that by just scanning through their press releases, but I haven’t scoured the financial implications of those deals.
So this is a company that has essentially been wandering in the wilderness, making small sales and getting by, for more than ten years, developing their computer-controlled injection systems. The basic product is designed to sense the tissues being injected to make sure the needle is going to the right place, and without pain or error, and to inject the medication with a controlled and precise pressure and delivery.
Currently, their only marketed product is for dental anesthesia, they sell a control system and then the replacement handsets to dental offices through a distributor. It has growing revenue, but it’s still quite small potatoes — you can see it described on a “dental fear” website here. I guess it looks less scary than those big steel syringes my dentist uses, but he’s pretty good at not hurting me by injecting too fast — which is the primary advantage of these computer-controlled systems — and, well, it’s still a needle even if it looks a little less scary.
So I have no idea whether this business will begin to grow much more quickly in the near future — they’re trying to build it up and have rejiggered their staff a bit to push dental sales, but I have no idea how the cost compares to traditional anesthesia devices (it’s certainly more, I just don’t know how much more), and it seems completely unlikely that dentists would be able to charge insurance or most patients more for using this over traditional methods…. so I guess it comes down to how much patients like it, and whether keeping those patients happier is worth whatever the extra cost is, which is probably the kind of judgement that most dentists have to make about lots of new technologies, since my impression is that they’re not often as specifically constrained by insurance mandates or hospital/group decisions as non-dental doctors are.
This dental stuff isn’t going to make them or us rich, though, not at this rate — so the hopes are on the approval for and adoption of the intra-articular (for arthritis injections) and epidural applications. Those are certainly areas where precise location and pressure control seem like they’d be far more important than they are for a flu shot, and they have gotten CE Mark approval in Europe for both of those applications (FDA pending, I guess), but I’ve seen nothing about the economics of it — how much the systems cost, how they’ll convince orthopedists or anesthesiologists to adopt the new systems, whether they’ll end up being significantly better at preventing errors than traditional methods and whether insurance would therefore pay more for them, etc. Those are the things that I’d be thinking about when reviewing this company and digging through their filings.
And get the “needle stick” crisis out of your head, too — it’s real, but that part of it can be addressed dramatically more cheaply by simpler mechanical solutions and “safety needles”, retractable syringes and the like. Becton Dickinson (BD) dominates the hypodermic needle market, though there are also small guys like Retractable Technologies (RVP), and other injection technologies like pens and air-charged injectors for vaccinations from folks like Pharmajet or Fluzone that have smaller or no needles. The real market for this technology, in the near term, seems to be applications where the technology can help locate injections in extremely precise areas (competing in some cases with injections that are currently guided by ultrasound or other imaging technologies) or where it seems the body is extremely sensitive to fluid pressure, like in the mouth or joints.
But that’s my completely non-scientific assessment in a couple hours of scanning the company’s material… and the choice, of course, will be yours — it is, after all, your money. And it’s certainly quite possible that the attention brought by the teaser campaign (and amplified somewhat by the article you’re reading now) could impact the stock — if investors love the story, they can really move a stock like this that often trades only $20,000 or so worth of shares in a day, so don’t get enamored of it if it happens to move because of this attention. Stocks that jump up only because of newsletter ad campaigns tend to fall right back down in the following weeks or months if no fundamental news comes out to support the news (which, of course might not be the case)… you don’t want to be in a situation when you’re counting on continuing pushing from a newsletter editor or other pundits to support a stock (examples abound… Stellar Biotech, KLH.V, is one example from the same publisher — that one has been super-volatile for over a year on no real fundamental news, based largely on newsletter attention).
So do you think this company and their technology are on the verge of a brave new world in preventing “needle fear” and injection errors, and will that lead to a huge breakout for a tiny company that’s been very sleepy for a decade? Let us know with a comment below.