John Kennedy, President and Chief Executive Officer of Viking Systems, Inc. (VKNG), talked to The Wall Street Transcript about his company. Click here to read the complete interview.

TWST: Let’s start out with a brief overview of Viking Systems, the company’s history, products, services and customers.

Mr. Kennedy: Viking Systems (VKNG) is a publicly traded medical device company headquarted in Westborough, Mass. We design and manufacture visualization systems for minimally invasive surgery. Our 2010 revenues were just over $8 million.

We have two types of products in our business. One is what we refer to as our OEM products, where we manufacture custom cameras, 2D cameras for large blue-chip medical device companies. Companies such as Boston Scientific, Medtronic, B. Braun, Richard Wolf would be the typical company that we would design and manufacture products under with their brand, in our factory. The other product line, the one we are most excited about, is our Viking-branded products. Last October, we launched a new 3DHD visualization system under the Viking brand at the American College of Surgeons’ annual meeting. This new product line is intended to replace the current 2D systems used by surgeons today. The Viking 3DHD Vision System enables the surgeon to view and work with the anatomy with a 3D view rather than being limited by their current 2D view. Up until now, the only 3D system available on a large scale had been with the Intuitive Surgical robotic system, the da Vinci. What we have done is deliver to surgeons a comparable standalone vision system. So rather than spending $1.5 million for the robot, they can have a very similar vision system for on the order of $100,000 to $150,000, depending on how the system is outfitted.

 Click here to read the complete interview.

Brian E. Stewart, President and Chief Executive Officer of Patient Safety Technologies, Inc. (PSTX.OB), talked to The Wall Street Transcript about his company. Click here to read the complete interview.

TWST: Please begin with a brief historical sketch of
SurgiCount Medical and what you’re doing at the present time.

SurgiCount Medical is the wholly-owned operating subsidiary of its publicly traded parent company, Patient Safety Technologies. I originally co-founded SurgiCount along with a surgeon, who also happens to be my father, back in the mid-1990s to address what was and still is one of the most common errors in surgery, retained surgical sponges. This preventable surgical error is estimated to happen one in every approximately 8,000 general surgeries, one every 1,500 intra-abdominal procedures. In fact, retained surgical sponges are the most commonly reported surgical adverse event reported by hospitals. Today, our core product offering, the Safety-Sponge System, has been successfully used in over 1.5 million procedures using over 36 million Safety Sponges, with no unaccounted for Safety-Sponges retained in cases where the solution has been used. We have effectively solved this issue for our user hospitals, which now includes over 65 government, teaching and community hospitals, including five of U.S. News and World Reports 2010-2011 14 “Honor Roll” hospitals, enabling them to provide improved patient outcomes, protect their staff and their bottom lines.

Click here to read the complete interview

Dr. Phillip Chan of CytoSorbents Corporation talked to The Wall Street Transcript about his company. Click here to read the complete interview.

TWST: Please start with a general overview and a history of the company.

Dr. Chan: CytoSorbents, formerly known as MedaSorb Technologies Corporation, is a critical-care focused medical device company using blood purification to treat life-threatening illnesses. Most of us know someone who has been hospitalized by a critical illness. It might have been from a severe infection like pneumonia, or a massive burn injury from a fire, or a traumatic injury from a near-fatal car accident, or possibly even from an H1N1 influenza infection last year. These are problems that are seen commonly in the intensive care unit today, but aside from antibiotics, the current standard of care for most of these patients is typically supportive care therapy, designed to keep the person alive, but not necessarily helping them to get better. Because of this, the mortality of these patients can be an appalling 30% or more. To put that in context, I always remember college orientation when our university president said, “Look to your left, now look to your right. One of you won’t be here in four years.” That’s a really scary statistic when your life is on the line. What we are trying to accomplish at CytoSorbents is to bring to market a new generation of what we call “active” therapies that are designed to target the underlying cause of why these patients die and why the mortality is so high. In particular, our flagship product is CytoSorbª, a highly efficient cytokine filter currently in clinical trials that’s designed to reduce something called “cytokine storm” that is a major cause of organ failure, infection and death in many of these critical care diseases.

 Click here to read the complete interview

Carl Pelzel, President and Chief Executive Officer of Depomed, Inc. (DEPO), talked to the Wall Street Transcript about his company Depomed, Inc. Click here to read the complete interview.

TWST: Depomed is a specialty pharma company that focuses on enhancing pharmaceutical products. But what exactly does that mean?

Mr. Pelzel: What it means is that we are a pharmaceutical company that has a drug delivery technology that’s unique to us, that can be used to develop unique products that have advantages for patients. Now, why is that relevant? Well, there are many pharmaceutical companies that develop brand-new products. For example, they will come out with a new chemical entity and a product that has to go through a lot of toxicology work from the FDA, and they develop the product from the very beginning. And that is very expensive, requires a huge infrastructure and is very risky because you don’t know when you develop such a product what the benefits are going to be. We’re different in that we have a drug delivery technology that takes the existing compounds and makes them better. We feel that model is better for us because we don’t need the huge infrastructure necessary to find new compounds. We don’t take on as much risk associated with the development of our compounds because we’re starting with a known chemical that has been used in humans for many, many years. That means we don’t have as many surprises. The other advantage is that we complete our development programs much faster. So we use this drug delivery platform to make products better, to get them through the FDA and to the market. The advantage is lower cost, lower risk, faster time-to-market and less uncertainty because we’re using compounds that have already been used in man. The downside is that we don’t have as much patent protection as you might with a new chemical entity.

Carl Gardiner has been a financial analyst for over 18 years, including eight years in investment analysis and management. Prior to joining Schafer Cullen Capital Management, he was an investment analyst and portfolio manager at two research-driven, value-oriented investment funds, Copper Arch Capital and North Sound Capital. From 1992 to 2000, he was a Director at Merrill Lynch, as an investment banker in New York and London. Mr. Gardiner began his career at Fox Asset Management, a value-oriented money management firm. He received a MA degree in International Economics from Johns Hopkins School of Advanced International Studies in 1992 and a BA degree with High Honors from the University of Virginia in 1989.

TWST: Would you be able to give us any examples of the type of companies that are like core holdings or new acquisitions?

There are far fewer of those just lopsided, obviously mispriced opportunities, so we are now back more into our normal mode of finding situations that are overlooked. In this vein, the last stock I’d mention is our most recent purchase, Omnicare (OCR). Omnicare trades at a little over 9 times 2009 earnings, with a $2.8 billion market value. Omnicare is the largest institutional pharmacy in the US, serving skilled nursing facilities and assisted living facilities, with a 50% share of this market. There are some interesting things going on at Omnicare that have great potential to boost returns over the next two to three years. Most importantly, having consolidated the industry, the company is finally taking advantage of its scale. Omnicare is nearly through an initiative to automate and centralize certain repetitive functions, so that it can downsize its over 200 regional pharmacies saving over $100mm a year in costs and freeing resource for customer retention activity. Omnicare has a number of other cost-saving initiatives underway as well. Finally, the wave of branded drugs going generic gives Omnicare a gross profit lift, and while this has been underway for the past few years, there is still some runway here.

Prashant Nair is a Mumbai-based Director and Analyst who covers the Indian pharmaceutical, health care and agrochemical sectors for Citi Investment Research.

TWST: Tell me about Dr.Reddy’s (RDY). What is it that you like about them?

Mr. Nair: Dr.Reddy’s is probably one of the best players in the global generics industry in our view, definitely one of the best players among the Indian generic companies. They have a very strong presence in the U.S. and in the Russia-CIS markets. They have a portfolio of products pending approval – not only plain vanilla generic filings, but also a whole lot of patent challenges and limited competition opportunities. So they have products that can help them gain more traction with the trade going forward. It’s a company that is fully integrated in terms of manufacturing, and therefore enjoys the cost advantage that Indian companies have been known for. But at the same time, they have now come to a stage where they have built a certain amount of leverage on the front end in some of the important markets. We think that going forward, this company will potentially grow much faster than most of its competitors in India.

Read more about Prashant Nair’s India Stock Picks in the current Pharmaceuticals Report.

Rik Deitsch, President, CEO and Director of Nutra Pharma (NPHC) talked to The Wall Street Transcript about his company Nutra Pharma.  Click here to read the complete interview.

TWST: Would you please tell us about Nutra Pharma?

Mr. Deitsch: Nutra Pharma (NPHC.OB), for want of a better term, is a biotechnology holding company. We seek out interesting concepts, drugs and devices in the biotechnology field, and we bring it into the Nutra Pharma family. We are especially good at finding diamonds in the rough – companies that are poorly managed and/or undercapitalized, and bring them competent management, qualified business plans and then necessary funding. Utilizing this strategy, we now have two divisions: ReceptoPharm is our drug discovery division and Designer Diagnostics is our medical device division. In ReceptoPharm we have drugs for the treatment of HIV, multiple sclerosis (MS), rheumatoid arthritis, adrenomyeloneuropathy (AMN) and pain. In Designer Diagnostics we have medical devices for the rapid isolation and detection of mycobacteria, which are bacteria that are very hard to culture and grow.

In the October 19 Biotechnology Report, Biotech industry expert Maged Shenouda discusses the outlook for the sector and for investors. Mr. Shenouda is an Executive Director in the health care group of UBS Investment Research, specializing in coverage of large-cap biotechnology companies. An Analyst since 1999, he joined UBS in 2004 from J.P. Morgan, where he had served as a Biotechnology Analyst since 2000. Mr. Shenouda earlier worked as biotech and European Pharmaceuticals Analyst at Bear, Stearns & Co., and as an Associate Pharmaceuticals Analyst at Solomon Smith Barney. Prior to that, he was a Management Consultant with Price Waterhouse, focusing on the pharmaceutical industry, and he served as a Pharmaceutical Sales Representative for Abbott Laboratories. Mr. Shenouda holds an MBA in marketing from Rutgers University and a B.S. in pharmacy from St. John’s University’s College of Pharmacy. He is a registered pharmacist in New Jersey and California.

TWST: What do you expect the sector to look like in five years?

 Mr. Shenouda: We probably will have fewer large-cap names. I think we’ll probably see some acquisitions – I think Biogen Idec (BIIB) is on its way to being acquired at some point, with Carl Icahn involved in the name as well and having put themselves on the block about a year ago. That seems to be a foregone conclusion now. But the big question is at what price will it be acquired? Then we could see maybe one other name going. With one or two names going away, the sector becomes a few large caps with most companies in the mid- and small-cap categories. We’re also going to see more and more collaborations between biotech and pharma and/or large-cap biotech.

Abbott Labs (ABT) recent acquisition of Solvay is a lead indicator for a new wave of acquisitions of Biotech companies by Large Pharmaceutical companies like Pfizer (PFE), Bristol Myers (BMY) and Novartis (NVS) according to Serge Depatie, portfolio manager for NatCan Investments.  One target that Mr. Depatie thinks will make a good acquisition is Orexigen (OREX) which is focused on obesity treatments.

As part of our recent Exclusive 70 page Biotechnology Report we spoke with David A. Katz and Steve Pisarkiewicz of Matrix Asset Advisors. Although they admit to being underweight in health care they have been adding some healthcare companies as of late;

Mr. Katz: On a relative basis, they are now starting to look a lot more attractive. The stocks we like are also businesses that are not going to be as punished by the Obama Administration’s healthcare program, but have been selling as if they were also damaged goods. So our focus has been on growing businesses that are not going to be dam­aged, yet we’re getting them at damaged prices. We’ve mentioned Zimmer earlier; another would be Genzyme (GENZ), which makes life-sav­ing drugs. Typically, ultra orphan products are fairly highly priced, but they save people’s lives. Genzyme’s a company that’s had some company-specific problems and manufac­turing problems and FDA issues, which has left it at about 14 times earnings, when normally it would sell north of 20 times earnings. We are confident that management has been beaten down so much that they are starting to do a better job. They will either produce, or market forces will move them to bring in a new management team. The price is simply too compelling. As we mentioned earlier, we’ve gone from significantly underweighted in healthcare to now underweighted, and our expectation is we will build some positions if the stocks remain at the current prices over the next few months.

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