A Better Breast Implant

In the biotechnology sector, small niche companies are the norm. And they don't get much smaller or more specialized than Bioplasty. This 19-year-old manufacturer, which is based in St. Paul, Minn., specializes in plastic-surgery products. One of them is an improved breast implant called Misti Gold. The product has a major advantage over other implants because it doesn't obstruct X-rays. That makes it easier for doctors to diagnose tumors that may be growing behind them. About 150,000 women have breast implants each year, with a large and growing number doing so after mastectomies. And the number of breast-implant operations is increasing at the rate of 15% a year, notes veteran small-cap stock-picker David Alger, the manager of the Alger Small-Capitalization Portfolio mutual fund. The new implant, approved by the Food & Drug Administration in October, has a good chance of snaring a generous share of this market. Bioplasty also has high hopes for another biotech product--an injectable substance that combats urinary incontinence.

Bioplasty's shares aren't cheap. They're trading around 12, or 32 times projected earnings of 38~ a share for the fiscal year ending July 31. But Alger thinks 1992 earnings should top $1 a share. Assuming a p-e of 25, such earnings would mean the stock should double. That's the kind of rags-to-riches story another Alger--Horatio--would have loved.