BioGlue is CRY’s cash cow. During CY 2011 BioGlue revenues were $49,455,000, COGS was $7,194,000, gross profit was $42,261,000, and the gross profit margin was an amazing 85%. This product line is amazingly profitable. Most of CRY’s EPS comes from this product line. I’m guessing that about 1% of the above sales may have been BioFoam sales.
In the USA CRY’s BioGlue patent probably has already expired. The patent expires in the rest of the world sometime during 2013. Recently CRY started selling BioGlue in Japan. It appears CRY is selling roughly $900,000 per quarter into the Japanese market. I would guess this represents about $0.05 EPS from the additional Japanese sales.
BioFoam and BioGlue seem to be related products; at least they seem to be dispensed from a similar syringe, although the chemistry may be different. So far BioFoam sales appear to be minimal.
At this time it appears likely that BioGlue/BioFoam revenues will grow slowly, perhaps 3% per year. I don’t think that any large company will target this market, because the market is too small. If BioFoam receives FDA approval, then sales of this combined product line may accelerate sometime in the future, but that’s a guess too.
CRY’s BioGlue/BioFoam market competition may ultimately come from Tenaxis. Tenaxis seems to have a somewhat similar product:
Tenaxis has a product called ‘ArterX Vascular Sealant’ that is presently in the process of seeking FDA approval. If FDA approval is granted, over time sales of ArterX might adversely affect CRY’s BioGlue/BioFoam sales and profitability. It would likely take a while though for Tenaxis to start selling ArterX in volume, and it would take time too to determine if the sale of ArterX would cross over and affect CRY’s BioGlue/BioFoam sales. If Tenaxis could ultimately generate substantial sales, it may have the potential to impact CRY’s BioGlue/BioFoam sales and thereby could possibly impact CRY’s profitability. In any event, I don’t see Tenaxis as an immediate threat to CRY, but this situation needs to be monitored.
Conclusion: For now I’m going to assume that BioGlue/BioFoam sales will grow slowly, perhaps in the 3% range per year, for the next three years. Even this slow sales growth increment should add $0.03 per year to EPS (over and above the bump from Japanese sales). If and when they get BioFoam FDA approval, the stock would likely jump a bit in the short term and then have to prove itself in the long term. At the present time, this product line is CRY’s crown jewel.
Note: This discussion represents nothing more than my own views and opinions. I am not representing anything here as being factually correct. You’re responsible for your own due diligence.
The key for all of us is to understand that we are still in the throes of a debt deleveraging cycle that first engulfed the housing and consumer sectors and is now attacking the government sector in country after country. It is not only Europe. China and the U.S.A. too. There is still far too much debt at all levels of society relative to the world's capacity to service it.
We have governments battling a debt deleveraging cycle of epic proportions, and by definition, these phases involve debt paydowns, defaults, and rising savings rates — a highly deflationary brew which is negative for stocks generally, and probably negative for CRY specifically.
CRY should be a buyer at $5/share. Nothing else to do with their cash flow for the next few quarters. Buy in treasury stock, and it they get a bounce in the market later sell some treasury shares in a non-taxable transaction petmitting them to re-liquify again.
Biofoam has only been on the market for about a year in Europe. CRY has a narrow approval for things like liver bleeding and I think but am not positive but gun shot type wounds where one has to stop the bleeding right now. I think the raw materials are similar to Bioglue but the products serve totally different markets.
Tenaxis is a competitor for Bioblue only. Last I looked that company which is a start up currently only sells to distributors in Europe as they don't have a sales force.
One of the reasons Perclot and Biofoam are important
Meant to say one of the reasons Perclot and Biofoam are important long term is they can be sold to large health care organizations in conjuntion with Bioglue as a product suite to cover all kinds of bleeding situations. So theoredically FDA approval of Biofoam and Perclot can drive Bioglue sales higher. From Cry's standpoint they would be able to sell best of breed products in all three areas giving them much more market power.
If it wasn't a good business to be in. I don't think J & J would have paid over 300 million for CLOSURE Medical Corporation in 2005. Ethicon/Derma bond had a recall in 2011, maybe it helped CRY's business a little?