The Valuation Game

The company's technology is validated by a distribution agreement with General Electric (GE Quote). According to KOOL's 10-K, the BioArchive System is an automated cryogenic system used in cell therapy to cryopreserve and archive cord blood stem cells for future transplant. At the time of the filing of its 10-K in September, Thermogenesis had sold 135 of the systems to major cord blood banks and stem cell research institutes in more than 25 countries.

The company is also working on wound care and sealant products based on its technology. From the 10-K , the CryoSeal Fibrin Sealant System is an automated system used to prepare an autologous hemostatic surgical sealant from a patient's own blood or from a single donor in about an hour. This product is expected to receive Food and Drug Administration approval in 2007. The company has a distribution agreement with Biomet (BMET Quote), a $10 billion medical device specialist, for this product.

Thermogenesis is also developing other products, such as a "thrombin processing device," used to isolate activated thrombin from the patient's blood or plasma. As stem cell therapies gain traction, the company's extraction and preservation tools should continue to experience tremendous growth. Viacell's cord bank is growing annual revenue at a 20% clip, and there aren't any approved treatments on the market. I assume that as treatments are approved, the number of cells on deposit and accompanying research will increase dramatically, as will the need for KOOL's products.

Thermogenesis is expected to reach profitability next year on a revenue increase of more than 100% to $48 million. With almost $40 million in cash and a $230 million market cap, this stock has plenty of room to grow.

Companies that provide tools for genetic analysis such as Affymetrix (AFFX Quote) and Applera (ABI Quote) have market caps in the billions. If stem cell research has the potential that some ascribe it, KOOL could be the way to benefit from the next big boom in medical technology and tools.

Please send in your stock ideas so I have something to write about in the coming weeks. Hope 2007 is prosperous for all.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Thermogenesis and Viacell to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.