A Rosy Diagnosis for Vysis

Vysis (VYSI ) has the distinction of being the first genomics company to turn a profit: This developer of DNA-based clinical products--which provide information on genetic diseases, including cancer--posted fourth-quarter sales of $6.5 million and earnings of $904,000, or 8 cents a share, compared with a loss of $1.5 million, or -16 cents a share, a year earlier. The stock jumped from 8 to 10 when the profit news came out on Mar. 1. But it later slid back, as biotech stocks took a market bruising.

Some big investors, however, are buying shares, now at 6.56, based on optimism over Vysis' diagnostic product called PathVysion HER-2. It is used to determine which breast-cancer patients are most likely to respond to Genentech's Herceptin. Vysis and Genentech have jointly filed for FDA approval of the product. "FDA approval will position Vysis as a key participant in a $50 million market," says Vysis CEO John Bishop. One money pro thinks the stock could hit the mid-20s with FDA approval. Analyst Ron Opel of H.C. Wainwright expects the go-ahead this year. Money manager Carl Gordon of OrbiMed Advisors says the product is superior to other diagnostic aids and is "the most exciting product" for Herceptin. Based on his optimism on PathVysion and Herceptin, he thinks Vysis is way undervalued.

By Gene G. Marcial

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