Trimedyne Soars Again on New FDA Approval
Trimedyne Inc. shares popped up again Thursday, rising 34% on news that regulators approved use of one of its medical laser products for ear, nose and throat surgery.
The highly volatile biomedical stock jumped $2.25 a share in Nasdaq trading to an $8.875 close on high volume of 4 million shares.
Analysts suggested that the product approval will probably have little long-term significance for the loss-ridden company--and attributed the market’s strong reaction to speculators gambling on the stock’s price gyrations rather than the company’s fundamentals.
The stock’s movement Thursday barely echoed its staggering run-up in two days of trading last week on news that the U.S. Food and Drug Administration had approved another of its lasers for treating noncancerous enlargement of the prostate. The stock soared from a close of $3.44 a week ago Monday to a high of $16.25 the following Wednesday, the day when volume hit a whopping 18 million shares. The stock price dropped daily over the next five days to close Wednesday at $6.625, with volume gradually trailing off.
“Everyone I’ve talked to has just been amazed at [Trimedyne’s] trading volume,” says Mark Matheson, partner and senior analyst at Crowell, Weedon & Co. in Los Angeles.
Matheson is among analysts who consider the use of lasers for treating enlargement of the prostate a technology that’s becoming passe. And he figures opportunities for Trimedyne to sell more lasers for use in ear, nose and throat surgery are limited.
He described the stock’s move Thursday as “an instant replay of last week from the way the stock reacted.” But to analysts, the government’s approval of new uses for Trimedyne’s lasers “is a yawn,” he added.
James Kelly, Trimedyne’s chief financial officer, said the company believes the laser approved for ear, nose and throat surgery is superior to others on the market. He said it has patented technology that enables the doctor to “cut and slice through tissue” much faster than previous procedures. The company’s lasers are sharper than those of competitors that use a similar technology, he said.
Jeffrey Kilpatrick, president of Newport Securities in Costa Mesa, said Trimedyne’s stock seems overvalued. He noted that with 9.5 million shares outstanding, the stock’s total market valuation is about $84 million--a huge amount for a company that had sales of about $13 million last year and hasn’t made money in several years.
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Stock Shock
Trimedyne Inc.’s stock jumped 34% Thursday after the company received approval for additional uses of one of its lasers. It was the second time in 10 days the stock has undergone a dramatic surge based on such a government approval. Closing stock prices:
March 28: $8.78, Thursday’s close
Source: Bloomberg Business News
