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How Hythiam Will Tackle Drink And Drugs

With alcohol and drug abuse continuing to be a nationwide scourge, some investors are hopeful that Hythiam's PROMETA may help curb the problem. Hythiam (HYTM) licenses PROMETA to treatment centers, managed-care providers, and government agencies. Using a combination of nutritional supplements and Food & Drug Administration-approved oral and intravenous medications, PROMETA can reduce cravings and promote abstinence, say analysts. Although still controversial, "early results from open-label studies and drug court trials have been overwhelmingly successful," says Ryan Daniels of William Blair, which has done banking for Hythiam. Daniels, who rates Hythiam a buy, says licensees and clinical researchers express "strong satisfaction with, and belief in, the protocol." Donald Hooker of UBS (UBS) (it did banking for Hythiam) says his buy rating, with a 12-month target of 15, is centered on "the clinical efficacy of PROMETA." Its stock doubled, from 4.77 in July to 10 on Jan. 12, before easing to 7.86 since the Feb. 27 market meltdown. "We are encouraged by the increasing evidence that PROMETA can change the paradigm of substance-abuse treatment," says Jack Silver, president of Siar Capital, which owns shares.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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