Jim Cramer. Love him or hate him, he sure has his following.
Personally, I think Jim Cramer’s biggest strength is his unrelenting penchant for self-promotion. Regardless of whether the market is up or down... by God he’s gonna find a way to make you money!
Now… I think I’ve seem something, somewhere about someone who analyzed all of Cramer’s recommendations over the years and (supposedly) determined that if you had diligently followed Cramer’s recommendations, you wouldn’t have had to worry about the Stock Market crash of 2008… because you would’ve been broke long before then.
I don’t know if it’s true. Consider it another unverified tidbit among billions of other useless and irrelevant tidbits floating around the web.
However, I do give Cramer credit for pushing one rule that I believe. If you’re going to own a stock, own the Best of Breed.
What’s that mean? It's simple. Own the stock that’s the market leader in that business. Own the one with the largest market share or the fastest growth. Own the best.
Neoprobe (NEOP) is a tiny company in a tiny market segment. But guess what…? It’s also the Best of Breed in that tiny market of Gamma Guided RadioTracing Medical Devices (think Geiger Counter…).
Depending on which numbers you use (retail vs. wholesale), NEOP provides between 50% and 70% of the Gamma guided equipment sold every year, worldwide. They are the market leader. They are the Best of Breed.
To be sure, it's a small market. Analysts estimate the market to be $30,000,000 per year (retail). NEOP sells about $10,000,000 per year (wholesale prices) which is about $20,000,000 per year at retail prices. That market is poised to increase if several multi-year studies determine that SLNB should become officially designated as Standard of Care... but that's a whole 'nuther discussion for another Blog...
$10,000,000 in wholesale revenue doesn't seem like much, especially when compared to the two drugs in their pipeline… a potential of $370 million per year for Lymphoseek and $3.0 Billion for RIGS, they're two drugs in FDA Phase III clinical trials.
But being Best in Breed is important for several reasons.
First,being the market leader gives NEOP a stable revenue stream and the profits to cover its corporate overhead. That’s important. Most small biotechs have no income. While developing that first drug or product most other biotechs cover their overhead by constantly selling stock, diluting the stockholders along the way.
NEOP doesn’t have to do that. Sure, they raise cash through stock deals for R&D expenses... but developing drugs isn’t cheap. Neoprobe doesn't make enough to cover overhead AND develop their drug pipeline, so they do raise cash for specific drug programs. The difference is that NEOP can funnel ALL of that capital directly into drug development. It’s not wasted on salaries, rent and corporate expenses.
Here’s another benefit of being Best of Breed..... Brand recognition!
Lymphoseek and RIGScan CR are going to be two First-In-Class drugs. They will be introduced to hospitals that have never used them before. Sure… they will be great, lifesaving drugs… but they will still be new.
However, the name “Neoprobe” WON'T be new. More than 50% of the surgical hospitals in the U.S. already use Neoprobe products. They already KNOW the Neoprobe name.
A new drug developed BY Neoprobe for use WITH Neoprobe equipment that the hospitals already use is very likely to accelerate market penetration of both of our new drugs.
Oh yeah… consider our distribution partners, too. Johnson & Johnson (NYSE:JNJ) distributes Neoprobe's Gamma Guided equipment.
Cardinal Health (NYSE:CAH), the largest radiopharmaceutical distributor in the U.S., will be our distributor for Lymphoseek (and perhaps RIGS).
Both are also Best of Breed.
The club is pretty exclusive if you think about it. We are in good company. G’day…
DDbuyer
