Is It Finally Lifecore's Turn to Shine?

Also, a new online deal for Petsmart? And other online possibilities, probabilities and stupidities.
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Gibberish

Lifecore finally delivers but nobody cares:

For nearly 10 years

Lifecore Biomedical

(LCBM)

has been a woulda, shoulda, coulda kinda company. The big promote on the story, back in 1992, was that its formulation of hyaluronic acid, in gel form, to help surgical adhesions heal would be a big business.

With

Johnson & Johnson

(JNJ) - Get Report

as its partner, it seemed like a no-brainer, and early results looked good. But rather than seek full

FDA

approval, the company stunned the financial community in 1993 by saying its clinical trials were underwhelming and that it was going back to the drawing board to create a thicker gel.

"They came up with little different molecule that actually works much better," says Tom Gunderson, an analyst at

U.S. Bancorp Piper Jaffray

, who recommends the stock. "If not for that failure, I'm not sure this molecule would have been invented."

This time the results of clinical trials were fine, and on Monday the company said the FDA had accepted its application and had granted the company's request for "expedited review" of its hyaluronic acid. Lifecore's stock, which hit 30 in its go-go days, is up 17% since the latest news was announced, closing yesterday at 10.

Why so muted? Reality, Gunderson says, is that it's a tired story. And other forms of a similar product, such as an adhesion film from

Genzyme

(GENZ)

, haven't been hits in surgical suites. (Supposedly more cumbersome to apply.) But he raves about Lifecore's latest offering, which at first might be approved for gynecological surgery. But another possibility, abdominal surgery, alone represents a $400 million market, Gunderson says. And Johnson & Johnson, which will distribute the product, "has big eyes," he says. "They could see this used in many other types of surgeries."

What's more, he says, if the product is the hit he thinks it will be, it will be a hit at a company that's already in the black from its other products. The CEO was unavailable for comment.

Here's a bone:

I hear from a pretty good market source that

Petsmart

(PETM)

is working with an outside firm, most likely

idealab!

, the same company that helped

eToys

to create a major online presence. According to the source, the new entity would use the Petsmart name and would be merged with idealab!'s current

PetJungle.com

site. It would be similar to the alliance

Toys R Us

(TOY)

recently announced with

Benchmark Capital

, whereby Toys R Us created a separate online subsidiary. Couldn't get a hold of anybody at Petsmart, and an idealab! spokeswoman said she would look into it, but never got back to me.

Just a thought:

Don't overlook the possible importance of last week's announcement that

eBay

(EBAY) - Get Report

is buying bricks-and-mortar auction house

Butterfield & Butterfield Auctioneers

. As long as Internet stocks remain high, some folks think more Internet companies could do these kinds of deals to snare market share (and credibility) in their respective industries. A possible target, according to one of this column's sources, would be a chain like

Drug Emporium

(DEMP)

(which has indicated to investors that it's happy going it alone.)

It has only about 140 stores (plus franchises), but also has been building a fairly sophisticated, if not stealth, online drugstore operation. (It's stealth because the company, to its credit, has gone out of its way not to hype its online operation until it's fully operational.)

Through its stores, according to our source (who is long Drug Emporium), it currently does around 8.5 million prescriptions per year. If it marketed its online pharmacy to in-store customers, some would be likely to switch. Even if that number were a paltry 10%, that would be an instant, additional 850,000 customers for a fledgling online drugstore chain like

Drugstore.com

or

PlanetRx.com

.

Put another way, this source says, using richly valued stock to purchase a company like Drug Emporium would be a fast way for an online druggist "to become No. 1 right away." And, if the scenario were to play out, they wouldn't even have to spend bundles in cash to do a portal deal to get there.

Speaking of things online:

Why do New Yorkers insist on using

on line

to describe someone who is standing

in line

? Drives me karrazzzy!

Ah, but does he do windows?:

Please join me in welcoming

Mark Martinez

, who climbed aboard yesterday as my assistant. Mark, who is based in San Diego, was most recently an editorial assistant in the biz department at the

San Francisco Chronicle

. But before that he pretty much produced my old (and now very defunct) Bizinsider site on

America Online

(AOL)

. At

TheStreet.com

he'll be a second set of eyes and ears for this column and will actively be involved in reporting exclusively for this column. (In other words, if you get a call from a guy named Mark who claims to work with me, and he's got a San Diego area code, take the call!)

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

herb@thestreet.com. Greenberg writes a monthly column for Fortune and provides commentary for CNBC.