Two Less Followed Stent-Related Companies At Risk

There are two companies that are not as frequently referred to in stent-land, and depending on how you interpret today’s news that stents don’t improve lives any better than dugs alone could really bite into these company prospects.  The two companies are makers of the molecules that are used in drug-coated stents.  SurModics (SRDX) is the molecule maker for J&J (JNJ) Cypher stent; Angiotech (ANPI) is the molecule maker for Boston Scientific’s (BSX) Taxus stent.  Both of these could have severe risks to their business if the drug-coated stent business disappears.  The good news for the future of the companies is that they are not solely one-trick ponies and the molecules these companies are working on may have implications for many diseases that are both down the road and in the relatively near future.

These both have severe short interests now, and there is much talk that it is becoming harder and harder for funds to find shares that they can borrow for a short sale.  The short interest for March is not yet available on NASDAQ stocks, but the FEB07 short interest for SDRX was more than 5.7 million (33 days to cover, and 36% of the float).  SRDX was just started last week with an Underperform rating from Piper Jaffray.  ANPI has a lower short interest because its shares have already seen a major beating over the last three years.  It had grown from $10 to $25+ from 2003 to 2004, but now shares sit under $6.00.

SRDX is down almost 5% at $35.78, but it is amazing that the stock has held up as well as it has with a $28.52 to $39.81 52-week trading range.  Its market cap is $650+ million as of now and its balance sheet is in great shape.  For such a large short interest in the stock it is surprising that the open interest in its stock options is so small.  ANPI is down 7% to a new 52-week low at $5.62; and its 52-week trading range was $5.99 to $15.49.

Abbott Labs (ABT) is new in the stent arena, and it has under development a stent that dissolves throught time.  ABT is trading up nearly 6% at $56.97 today on good news that its Xience stent performs better than BSX stent, its trading range was $40.55 to $55.06 over the last 52-weeks.  J&J (JNJ) is trading down 0.7% at $60.09, and its 52-week range is $57.32 to $69.41.  Boston Scientific (BSX) shares are down 7% at $14.10, a new recent low under the $14.43 to $23.96 52-week trading range over.

Jon C. Ogg
March 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.