The Next Million-Dollar Penny Stock

• Report this Comment On February 24, 2009, at 2:37 PM, PauvrePapillon wrote:

  The essence of Peter Lynch’s “One Up On Wall Street” is that great portfolios are made not by slogging it out with low risk, low return, steady-as-she-goes plays but by swinging for the fences and connecting on a few homeruns - what he calls multi-baggers. The prime candidates for multi-baggers are early-stage companies, which have demonstrated a successful product or service on a regional basis and are now in the process of rolling their program out on a national or international scale and have for one reason or another been discounted or underestimated or just plain overlooked by Wall Street. Lynch argues that individual investors with expertise in some specialized area are often the first to spot such companies, hence, the title “One Up On Wall Street”.

  Based on this criterion, Accuray is a tailor-made, textbook example of the kind of giant-in-the-making that Lynch used to propel the Fidelity Magellan Fund to such a total portfolio return that $1,000 invested in 1977 was worth $28,000 by 1990.

  Accuray has a unique, proprietary, disruptive technology that uses a robotically-controlled miniature linear accelerator to aim and fire multi-collimated beams of radiation from both a variety of planes and a variety of angles within each plane. No other device can do this and it is the variety of both planes and angles that enables CyberKnife to deliver more radiation to the target and less to surrounding tissue. On top of this basic technological advantage, the company has also developed a system that allows CyberKnife to track, detect and correct for both patient and tumor movement in real time. Again, no other device can do this.

  Accuray really does have the goods. Unfortunately, for Accuray investors (at least so far) it is extremely difficult for the average person to visualize and understand exactly what it is that CyberKnife does and hence why it is so unique. This should not come as a surprise. It is a well-known axiom of real estate investing that the vast majority of new homebuyers have difficulty visualizing something as simple and familiar as the basic layout of a house even when they have artist renderings and floor plans to study. This is why developers are able to raise prices as soon as they have model homes for buyers to walk through. You can only imagine how much more difficult it is for the average person to visualize and feel confident that he or she understands a complex and esoteric technology such as CyberKnife and this has undoubtedly impacted Accuray’s share price.

  When the market (correctly) understood that CyberKnife was a truly unique and revolutionary technology, investors bid Accuray’s post-IPO shares up to an intraday high of $31.09 (9 February 2007). As Varian and others made repeated claims, in numerous press releases, interviews and conference calls, that their gantry-mounted machines could do the same thing as the robotically controlled CyberKnife, Accuray’s market cap shrank even though its economic fundamentals actually improved.

  On 6 December 2008, Accuray, finally, fired back with the release of two animated videos that effectively demonstrate what CyberKnife is and why it is fundamentally different from gantry-mounted radiation sprayers. You can see them for yourself at http://www.accuray.com.

  Since then, Accuray shares have gone up 16 percent (as of close of market Monday 23 February 2009) while Varian’s shares have gone down 15 percent with Tomo down 25 percent and ISRG down 27 percent against the backdrop of a NASDAQ index that has lost eight percent.

  The largest, but far from the only, market for CyberKnife is prostate cancer. There are approximately 200,000 new cases diagnosed each year in the U.S. alone. There are many treatment options. Urologists tend to try to steer their patients toward surgery because they make more money on this procedure but the side effects and complications (impotence and incontinence) are greatest with surgery. The biological failure rate as measured by PSA scores for CyberKnife is at least as good as surgery but the side effects and complication rates are orders of magnitude smaller. Urologists get paid for assisting with the treatment planning but they don’t make as much as with conventional surgery. There are other radiation players in the mix but none are as accurate as CyberKnife which can even deliver radiation in the same dosage and pattern as high dose rate brachytherapy (HDR) but without having to insert a probe into the rectum, a catheter into the bladder and 50 to 100 seeds via needle through the area between the penis and anus into the prostate.

  The bottom line here is that men who do their own research, and are not brainwashed by their urologist, choose CyberKnife. Further, if you go onto the numerous forums and read first hand reports from prostate patients, you find a level of satisfaction with the CyberKnife that is way above that of any other treatment option. The entrenched players are going to delay this as much as possible but the trend is toward CyberKnife and the reason for the trend is that CyberKnife really is the best option. Here again, Accuray really does have the goods. The question is not if this information is going to work its way into the market. It’s just a question of how long will it take and how fast will sales take off when it does.

  To get a sense of the intensity of this battle and how it is playing out, check out this article and blog from the Wall Street Journal

  http://blogs.wsj.com/health/2008/11/28/is-cyberknife-ready-f...

  Note: There are now 100 plus CyberKnife units in operation in the United States and 155 plus worldwide including installations in the UK, France, Germany, Spain, Italy, The Netherlands, Russia, Turkey, Japan, Malaysia, Thailand, Vietnam, South Korea, Taiwan and China.

• Report this Comment On March 02, 2009, at 11:09 PM, Karshish wrote:

  Thinking of cloud computing? Think of Autonomy Corp. (AUTN.L). It looks recession proof

• Report this Comment On May 15, 2009, at 10:48 AM, chopchop0 wrote:

  PauvrePapillon couldnt be further from the truth. It makes me wonder if he has any experience in the medical field at all.

  Surgery (radical prostatectomy) has one of the lowest re-imbursement rates out of all of the treatment options for prostate cancer.

  What urologists have been doing is working with rad oncologists to set up urorad practices to treat patients using varian machines.

  Cyberknife takes at least 1-2 hours PER TREATMENT. There is NO IMAGE GUIDANCE, unlike the Varian machine which has on-board CT capabilities.

  On top of that, very little data exists for using cyberknife in prostate cancer, and it is generally frowned upon by the medical community. Standard radiation therapy has 10+ years of data and a good track record with low complications.

• Report this Comment On May 15, 2009, at 10:49 AM, chopchop0 wrote:

  PauvrePapillon couldnt be further from the truth. It makes me wonder if he has any experience in the medical field at all.

  Surgery (radical prostatectomy) has one of the lowest re-imbursement rates out of all of the treatment options for prostate cancer.

  What urologists have been doing is working with rad oncologists to set up urorad practices to treat patients using varian machines.

  Cyberknife takes at least 1-2 hours PER TREATMENT. There is NO IMAGE GUIDANCE, unlike the Varian machine which has on-board CT capabilities.

  On top of that, very little data exists for using cyberknife in prostate cancer, and it is generally frowned upon by the medical community. Standard radiation therapy has 10+ years of data and a good track record with low complications.

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