Knobias Clip Report (10-19-2007)

Submited From Knobias ClipReport

PURE: Shares Spike on Recent MRSA Infection Reports

Friday’s session saw a fairly gross trading day with Google being one of the lone bright spots in the market. Honeywell, 3M, and Caterpillar collectively helped the Dow to close at its lowest point of the day, down over 370+ points. Contributing to the unrest was another record day from crude which broke through the $90 a barrel level.

Next week, earnings and oil should decide whether the market will continue this downward path or bounce off its 50 day moving average.

One of the small caps that weathered the overall down day to turn in another 52 week high was Pure Bioscience (PURE). Highlighted a few weeks back before their 3rd quarter earnings release, the name has since seen a rally from the $3.50 range to a close over $7 on Friday.

PURE Bioscience (PURE) develops and markets technology-based bioscience products that provide solutions to numerous global health challenges. PURE's proprietary high efficacy/low toxicity bioscience technologies, including its silver dihydrogen citrate-based antimicrobials represent innovative advances in diverse markets and are a leader in the global trend toward industry and consumer use of "green" products while providing competitive advantages in efficacy and safety.

The Company’s patented silver dihydrogen citrate (SDC) is an electrolytically generated source of stabilized ionic silver. SDC destroys bacteria by disabling proteins and halting metabolic and reproductive functions. SDC is colorless, odorless, tasteless, non-caustic and formulates well with other compounds. As a platform technology, SDC is distinguished from competitors in the marketplace because of its superior efficacy, reduced toxicity and the inability of bacteria to form a resistance to it. It also offers 24-hour residual protection against standard indicator bacteria.

In June, the Company announced their 3rd quarter earnings that showed revenue traction for their SDC-based products internationally. Revenues for the quarter were $132,379, an increase of approximately 200%, as compared with $44,314 in the same quarter of the prior year.

Even though the Company has yet to receive approval from the FDA to market the SDC products domestically, they have continued their research and testing and even completed a 20-fold capacity expansion of their SDC production facility which increased their annual SDC revenue capacity from $11 million to more than $250 million. They also added a new automated blending and packaging operation to provide a cost-effective, quick turn around alternative for smaller distributors.

But even with the continued expansion, the main catalyst is the GMP suite becoming certified, which is a requirement for them to be able to manufacture SDC as an active pharmaceutical ingredient. The Company noted that they expected to have that certification soon.

Shares have spiked the past few days on large amounts of volume. Causing the increased attention were the reports that the number of severe infections caused by MRSA were higher than previously believed and the bacteria now kills more Americans than AIDS. MRSA is a form of Staphylococcus Aureus, or Staph infection. MRSA is a medically resistant form.

Methicillin Resistant Staphylococcus Aureus (MRSA) has come into the news recently from the death of students along the east coast over the past few weeks. The death of young people with normally healthy immune systems is always cause for concern, though media reports have exploited the bacteria as a nationwide killer, when in reality, its not as disconcerting as other many other medical problems.

The Company touts their SDC products as being a solution to the current epidemic, though many other household cleaners can produce similar results. Never the less, the Company has reported that the Tulsa County Jail completely eliminated Staph infections, including MRSA, during the first 14 months of use of the product since its introduction in August 2006. Independent lab studies of the EPA registered product document that SDC kills MRSA within two minutes. Prior to use of PURE's SDC-based disinfectant, the facility experienced, on average, 12 cases of Staph infection every month.

With such positive results from the Tulsa County Jail, the SDC product is certainly something that could provide huge revenue growth with pharmaceutical approval, but with the speculative buying from the recent news reports surrounding MRSA and the connection traders are making with the product causing valuations to soar, the name may be a bit risky at these levels. In any event, investors would be wise to watch.



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