A little-known company with no Wall Street following, New York Health Care (BBAL ) shares have been active: They jumped from 2 in early July to 3.28 on Aug. 6. The reason: The company's Bio Balance unit has a proprietary product, Probactrix -- an oral liquid formulation -- that was effective in curbing AIDS-related diarrhea in a clinical study. As a result, Chief Operating Officer Dennis O'Donnell says the company will explore a prescription drug for AIDS-related diarrhea. It is developing treatments for other gastrointestinal disorders, including Crohn's disease. Orton Chen of RedChip Research notes that Probactrix is approved as an over-the-counter drug in Russia and as a food supplement in Israel. He says Probactrix will benefit from the recent focus on irritable bowel syndrome and antibiotic-associated diarrhea, which afflicts AIDS patients. O'Donnell notes that diarrhea will affect most of the 1 million Americans living with HIV. Chen says the stock deserves a p-e ratio of 35 -- in line other profitable biotechs. His target price: 8, based on his forecast that New York Health Care will earn 12 cents in 2004 and 36 cents in 2005.
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