No Blood, No Fasting, No Waiting
While we focus on resource stocks mainly at 321gold and 321energy, on occasion people contact me with other interesting stories. One such story was that of Theralase Technology (TLT-V) that I wrote about last year. The stock was $.34, went down to $.21 before climbing to $.78. Investors had the opportunity to buy cheap at $.34, cheaper at $.21 and take nice profits at $.78 or to sit in the shares.
That’s true of lots of stocks, resource shares or not. If a company is worth owning, it’s worth owning more when it gets cheaper. If you learn to take profits, you can actually make money. Most people don’t learn to take profits; they buy at tops and sell at bottoms. I hope 321gold readers are smarter than that. Don’t invest in anything without some sort of plan for if your stock goes up and if it goes down.
I got a call on Friday from Chris Moreau, President of Miraculins, Inc. (MOM-V) It was one of the more interesting pitches I have ever heard.
Their primary product is revolutionary. They own the rights to a machine that uses a frequency of light to fluoresce biomarkers in the skin to predict pre-diabetes and Type 2 diabetes. It’s totally non-invasive, no blood, no fasting, no waiting. The person being tested puts his/her arm on top of the machine, presses a button and 90 seconds later the machine gives a numeric score. Below 50 is good, above 50 says you need to see a doctor for a more invasive test.
The machine cost $40 million to develop. Johnson and Johnson tossed in $20 million; they understood just how valuable it could be. Miraculins bought all the rights to the product from the company that invented it because that company could invent but couldn’t figure out how to market.
Diabetes is a killer and an expensive killer. It is caused by the body not producing sufficient insulin to meet the needs of the body resulting in elevated blood sugar or the body not responding to the insulin produced. In the later stages of the disease complications include blindness, heart problems, stroke, kidney failure and erectile dysfunction. The arteries harden and many diabetes patients literally lose feet and eventually legs because of a lack of sufficient blood flow.
Miraculins began in 2002 to focus on identification and screening of proteins and peptides related to diseases. Originally the company wanted to provide products for the early detection of cancer. During the 1st financial crisis in 2008 the company realized they needed a real product they could market, believing their marketing strength was better than their ability to do R&D. In 2010 the company bought the rights to a product they named the PreVu® Non-Invasive Skin Cholesterol Test. They followed this in 2013 with the purchase of all rights to the Scout DS® Diabetes screening machine.
The US Centers for Disease Control believe that one in five Americans will have diabetes by 2025, and by 2050 the figure will be one in three. Some 80 million Americans are estimated to be prediabetic with 90% of those people not aware of their condition.
The American Diabetic Association suggests that diabetes costs about $245 billion in total for medical care, lost work and lost wages in 2012 in the US. Diabetes is difficult to diagnose by current screening with many patients untested and untreated due to their avoiding blood testing entirely.
According to a United Healthcare study the progression from prediabetes to full-blown diabetes results in a total cost of about $37,000 per year per patient.
People with diabetes have medical costs two to three times higher than those without diabetes. Direct costs for medication and supplies can range from $1,000 to $15,000 a year. But diabetes can be treated and controlled if caught early enough. That’s where Miraculins offers a revolutionary product.
The company has raised and spent $19 million in development and pre marketing. They have approval in Canada, Mexico and the European Union for distribution. They will make their submission to the FDA for approval in the US soon. In August of 2014 Miraculins announced a $90 million deal for distribution in China of the Scout DS Diabetes machines pending approval by the Chinese Food and Drug Authority.
Currently the diagnosis of diabetes doesn’t take place until 5-8 years after the initial onset of the disease when over half of patients have developed one or more complications. Current screening is both expensive and invasive requiring fasting, a visit to a doctor and blood tests. It’s a question of too little, too late.
Miraculins faces a marketing issue. If they succeed, the number gets absurd. 75 million Americans could use the screening for prediabetes. At $10 a pop you have a several billion-dollar company right out of the chute. The $90 million deal with China is just the start.
In November of 2014 Miraculins appointed Avo Photonics as the manufacturer for the Scout DS® Screening device. Avo developed and manufacturers photonics devices for medical, military and industrial applications. Now Miraculins must develop and test marketing channels. They have identified three channels so far.
I see pharmacies and grocery stores as being the markets easiest to tap into. CVS pharmacies have a blood pressure machine near the pharmacy section. Customers waiting for a prescription to be filled use it. I think it’s a great idea. It’s quick, it’s easy and people use it. They would do the same with anything that could test for prediabetes.
I can imagine that anyone using the Scout DS® machine and finding they have a prediabetes condition would feel a debt of gratitude to that store. I wouldn’t look forward to a diagnosis of diabetes but if I could take an under two minute test that would tell me my chance of developing it without doctors, blood or time wasted, I’d feel grateful.
Chris Moreau went to see a large corporation as part of his fund raising efforts and took one of the Scout DS® machines. One of the management team took him aside and asked, “Would you mind if we tested some of our people?” Chris agreed, dozens of workers at the company were tested including one who knew he had diabetes. The machine worked perfectly, the company invested and the staff was impressed.
Since the advent of QE by the Federal Reserve, there has been a migration of money from the TSXV into US Bonds, the S&P and the US Dollar. Juniors didn’t crash just because of gold and silver going down, all juniors were starved of money, their life-blood as mal-investments increased due to government tinkering with the financial system. This has led to the number of Americans on food stamps increasing to over 46 million citizens, record high bond prices along with new records in the S&P and Dow. Alas, it killed the junior market no matter how good the story.
Markets are turning. Money is starting to flow back into Canadian juniors. Miraculins will need the money to advance the marketing of the Scout DS® and the PreVu® Skin Cholesterol Test. With a market cap of just under $9 million, MOM seems pretty cheap. If you buy the story, you are buying the blue sky. I think the prediabetes-testing machine is nothing short of remarkable. The injection of $15 million upon approval for sale by the China Food and Drug Administration would give the shares a giant boost.
I liked it enough to buy some shares literally while I was on the phone with Chris Moreau. The downside is pretty limited while the upside is not. Success in marketing could create a billion dollar company. The only issue will be how many shares will they have when they get there.
Miraculins is going to advertise and I do own shares. Do your own due diligence.