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This article was originally published in The Gray Sheet

Executive Summary

COLLAGEN APPROVABLE LETTER FOR CONTIGEN BARD SUSTAINS STOCK REBOUND as the firm added 1-1/4 to close at 22-3/4 in over-the-counter trading during March. The 5.8% March improvement follows a fractional gain in February, making Collagen one of the few O-T-C-traded firms tracked on a monthly basis by "The Gray Sheet" to make at least some headway against the downward trend in the medical technology sector in recent months. The March advance was aided by FDA's March 19 letter designating the Contigen Bard urinary incontinence treatment device approvable ("The Gray Sheet" March 29, In Brief). The classification requires Collagen to supply the agency with some additional information on labeling, clinical data and postmarket surveillance studies. Collagen said in a press release that it is "working to finalize the response to the letter, which [it] believe[s] will lead ultimately to commercial launch." The firm will manufacture the product and supply it to co-developer Bard, which will then package and distribute it under an exclusive worldwide marketing license. Following FDA approval, Bard will conduct FDA-required physician training and then begin a full commercial launch. Of the 41 NASDAQ-traded medical device and diagnostic stocks tracked on a monthly basis by "The Gray Sheet," 16 issues advanced in March and 24 declined, while one issue, Centocor, was flat for the month. The 1.1% Index decline reflects an easing of the early year selloff of medical technology issues that resulted in double digit losses in each of the first two months of 1993. The NASDAQ composite gained 2.9% in March by comparison. The biggest gainer for the month was ADAC, up 141.9%, or 7- 5/8, to 13. The medical imaging and information products manufacturer executed a reverse three-for-one stock split on March 15 which tripled its share price. The firm hopes the split will "broaden the scope of shareholder interest in" ADAC's stock. The number of shares issued and outstanding was reduced to approximately 15 mil. from approximately 45 mil. Danek and Mentor both rebounded in March, up 16.1%, or 4-5/8, to 33-3/8 and 8.7%, or 1, to 12-1/2, respectively. The implant manufacturers were among the largest percentage losers in February (both down 25.8% for the month). Investors reacted very positively following Danek's March 29 announcement of a merger deal with another spinal implant maker, Rang-du-Fliers, France-based Sofamor (see story, p. 11). Four out of five laser issues on the Index also gained in March. Laserscope added 1-3/8, or 32.4%, to 5-5/8; Summit jumped 5- 7/8, or 26.4%, to 28-1/8; Trimedyne was ahead 1/2, or 7.1%, to 7-1/2; and Surgical Laser advanced 1/8, or 3.1%, to 4-1/8. Candela Laser was off 1-1/8, or 19.2%, to 4-3/4 for the period. Among issues with the biggest losses were Tokos, down 37.2% (4 points) to 6-3/4. Tokos continues to stumble due to lingering questions about the utility of home uterine activity monitors. On March 3, Dr. David Nagey, director of maternal-fetal medicine at the University of Maryland Medical Center, claimed at a press conference that "on the basis of a study conducted with 56 women, home uterine activity monitors do not result in fewer preterm births among women at high risk of delivering early," according to a Tokos release. Tokos disputes the findings. Ballard Medical dropped 6-7/8 (30.2%) to 15-7/8 with a four for three stock split effective March 1, the same day the hospital disposable product firm acquired all outstanding shares of Milpitas, California-based Medical Innovations Corporation for $12.5 mil. in cash reserves. MIC develops and distributes enteral feeding products. Datascope was also down 4-1/4, or 22.7%, to 14-1/2, partly due to a March 15 announcement that the firm expects earnings for the second half of the fiscal year to be flat ("The Gray Sheet" March 22, p. 21). The firm cited hospitals' plans to reduce inventories of its intra-aortic balloon catheters and a forecast by its Japanese intra-aortic balloon pump distributor that purchases will be reduced for the balance of the fiscal year.

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