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[IP] Big Things Could Be Ahead for MiniMed
Wednesday November 1, 6:00 am Eastern Time
Big Things Could Be Ahead for MiniMed
By Philip Fine, fund manager
The management team of Philip Fine, Christopher Ely, and David Smith has
guided Loomis Sayles Aggressive Growth (Nasdaq: LSAIX - news) to the mid-cap
growth category's top percentile during the trailing three years through
October 30, 2000. This success has come as a result of owning fast-growing
technology and health-care picks with experienced management teams that have
niche positions in their industries. Today, Fine discusses one such stock,
MiniMed (Nasdaq: MNMD - news).
Why Fine Likes MiniMed
``MiniMed is a great example of the kind of franchise company that we find
attractive. As growth investors, we look for companies whose products or
services have leading shares in large and growing markets; that have strong
proprietary technology; a robust business model that leverages that
intellectual property; and an experienced management team with a financial
stake in the success of the company.
''A leader in the design and manufacture of external infusion pumps and
disposables for the delivery of insulin, the company has revolutionized the
management of Type I diabetes. This is obviously a huge market, with
approximately 1 million Type I diabetics in the United States alone.
``MiniMed has more than an 85% share of the core pump market. In addition, it
is rolling out an implantable pump (similar to a pacemaker) and has received
FDA approval for a glucose sensor or monitoring device that would provide a
feedback loop to the delivery mechanism. Together, the new pump and sensor
would approximate an artificial pancreas.
``MiniMed has a strong intellectual-property position, with more than 100
issued U.S. and foreign patents. The company has shown consistent top-line
growth of 40% or more during the past five years, based on a strong recurring
component, with gross margins in the mid- to high- 60% range. Revenues in the
September quarter were a touch light, and the stock has pulled back a bit,
providing new investors with an attractive entry point.
''Finally, and perhaps most important, the company boasts a seasoned
management team. CEO Al Mann has founded and sold six companies and owns
almost 30% of the stock.``
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