by Joe J.

NEOP has been publicly traded for 23 years. It has 50% market share in gamma probes, geiger counters that detect cancer during surgeries, so doctors can remove all the cancerous tissue. That’s the “razor”. It’s profitable, except for R&D expenses to develop the “razor blade”. Once you sell the razor, you make a killing selling razor blades for recurring revenues and earnings.

The razor blade is Lymphoseek, a compound that finds the sentinel lymph node during breast cancer surgery, so the doctors can learn if the cancer has spread. This rapidly growing procedure is much less invasive and less costly than removing 20 nodes, or axillary surgery, which removes the side of the breast and the gland under the armpit.

Currently, there is no drug approved to find the sentinel node, so a colloid compound, blue dye, is used off-label, and it’s not reimbursable, so hospitals eat $900 each surgery. Lymphoseek will be first-in-class drug, approvable, and only stays in the body 24 hours, vs. several days for the current drug. It was 99.5% accurate in Phase II trials, and is well into Phase III, which will be completed in 2008. Interim results are expected this quarter, which should really move the stock. Total market potential is $225M/year.

The Company will go from $7M in annual revenues to estimated $50M in 2010, and like all biotechs, the stock will move strongly in anticipation. 70% gross margins, a per-dose fee, and a 5 year contract locked up with the biggest oncology drug distributor in the U.S., Cardinal Health.

NEOP outsources sales, marketing, and distribution, so net profits will be super. Earnings will soar. With spectacular results in Phase II trials, and zero safety issues, there is a very high likelihood Lymphoseek will get approved, with sales starting in Q4-2009. The stock hit a high of $23 in 1996 when it was completing Phase III trials for RIGS, a drug which detects cancer during colorectal surgeries, but wasn’t approved.

Now RIGS is back in gear, due to start new Phase III trials in 2009, with a market potential of $2.5 Billion! Anticipation of it should drive the stock well over $5 and re-listing.