NxStage Stock Plunges

Here's the most recent investment news I could find:

March 14, 2008

Microcap Featured in Dialysis Investing (XCR, NXTM, DVA, FMS, DCAI)

Xcorporeal, Inc. (AMEX: XCR) is a potential undiscovered gem in microcap and low-priced stock investing, and it is in the arena of kidney dialysis. This week's "INSIDE WALL STREET" segment in Business Week featured this stock, and this may be their most unusual pick in months with perhaps the greatest upside potential if it can live up to the hopes and plans.

This one has been under review for our "10 Stocks Under $10" weekly letter, although we have not yet added it to the list because of its performance and lack of history. Xcorporeal first came to us after it's Wearable Artificial Kidney (WAK) prototype device was featured in the December 15, 2007 journal issue of The Lancet, an influential medical journal.

It is entering a space dominated by public companies such as DaVita Inc. (NYSE: DVA), Dialysis Corp. of America (NASDAQ: DCAI), Fresenius Medical Care AG & Co. KGaA (NYSE: FMS), and Nxstage Medical, Inc. (NASDAQ: NXTM). Of the public dialysis companies, this is also the most risky stock of the ones we have reviewed in the dialysis companies.

It has a $55 million market cap and had about $20 million in liquidity as of September, 2007. With a $1.2 million estimated monthly cash burn rate on last look, it is obvious the company may have to do a securities offering again. It is still in the prototype stage as well. It has identified what it believes as a multi-Billion dollar opportunity, although from an analytical point the company could only expect to get a fraction of that down. This came public via a reverse merger in August, 2007, so it has limited history as a public company that so far has been an rewarding history after having raised over $29 million from two prior private placements. It moved to the AMEX on December 7, 2007, so it has an even more limited history as a listed company.

The Lancet noted, "WAK's clearance rate, if sustained and used continuously, could be more effective than conventional three times weekly or daily hemodialysis treatment. This proof of concept study also provides preliminary indications on the safety features of the WAK and permitted the patient to be ambulatory during treatment......The WAK is a battery-powered, wearable dialysis machine that will allow users to have their blood cleansed round the clock instead of being tethered to conventional dialysis machines, intermittently, for many hours."

The company also makes portable machines for in-home use and for hospital use, and its first FDA 510(k) filing is not currently expected until late in 2008 for hospital device and home dialysis device 510(k) is not currently expected until late 2009. The FDA decisions can not currently be considered as a given or an assured event despite preliminary positive study results.

DaVita Inc. (NYSE: DVA) is a large player in the field with a near $5 Billion market cap, and it is trading close to its 52-week lows. The other small cap play is Dialysis Corp. of America (NASDAQ: DCAI) has a mere $71 million market cap and it too trades close to its 52-week low. Fresenius Medical Care AG & Co. KGaA (NYSE: FMS) is a kidney dialysis company that provides dialysis treatment at its own dialysis clinics, as well as produces and supplies a range of machines and disposables. It was the one that acquired Renal Care Group. GAMBRO is the one that used to be public and is now private, was delisted from Stockholm. Nxstage Medical, Inc. (NASDAQ: NXTM) has a portable hemodialysis system for the treatment of end-stage renal disease and acute kidney failure in the United States; it has fallen by two-thirds over the last year and its market cap is $165 million.

Lastly, its management team and board members has an impressive roster of medical and financial professionals with public company and fund raising experience, so it doesn't look like a group of managers trying out their first public foray. After reviewing the company, we have classified this as one of the all or none opportunities with a long-term horizon before a pay-off can be expected. It is solely for pure risk-based capital that would have an expected return that either sees exponential gains or one that implodes. We'll be watching this one closely for some time to come.

http://www.247wallst.com/2008/03/microcap-featur.html