Posted on 05/22/2007 10:53:21 AM PDT by BGHater
Shares of VeriChip Corp., which makes implantable locating and identification devices, soared Friday on reports the company's VeriMed identification chip will be used for consenting Alzheimer's patients at a Florida adult care facility.
The stock gained $1.17, or 27 percent, to reach $5.50 in afternoon trading. Shares have traded between $4.27 and $6.99 over the last 52 weeks.
The VeriMed chip, approved by the Food and Drug Administration in 2004, is only part of the company's business. Revenue mainly comes from what are called active radio frequency identification devices, such as bracelets placed on both mother and newborn child while in the hospital to avoid mix-ups and even kidnappings. The company also sells devices used to track patients with dementia.
But the company is now making a large investment of time and money on its passive technology, or the VeriMed chip, with the view that it could become part of total care for patients with chronic conditions. Unlike the active technology, the chip, implanted just beneath the skin on a patient's arm, is dormant until scanned using a hospital-based reader to extract the medical data. The chip costs about $200 to install, plus between $20 and $80 annually, depending on the amount of information on it.
It is not yet covered by insurance carriers, something the company hopes to achieve as it continues to collect ongoing post-approval studies and opinions by third-party advocates, such as the National Kidney Foundation.
Meanwhile VeriChip has been installing the scanners free, leaving hospitals with only the expense of training staff. In all, 130 hospitals are using the technology, with 600 having signed on for installation. The markets mostly impacted are Boston, northern New Jersey and Washington D.C.
"It's the proverbial chicken and egg," said Scott Silverman, VeriChip's chief executive officer. "If the hospital doesn't have the scanners, there's no reason to get a chip."
But the campaign to build use of the technology is primarily word-of-mouth. The company's distributor is offering "starter kits" to physicians, which include the scanner and 10 chips, as part of its campaign to build up use. The goal is for those physicians to recommend the chip to high-risk patients, those that are likely to show up at an emergency room unconscious, making the data on the chip the only fast way to pull up medical history.
"VeriMed is hard to budget," Silverman said. "Clearly we're making the investment there."
He hopes the company can turn a profit with the VeriMed business by 2009.
"Ultimately, you have to have a lot of doctors embrace this," said David Sterman, senior analyst Jesup & Lamont Securities Corp. "Its unclear to me still how to make that happen and how large the market will be."
Merriman Curhan Ford senior analyst Kevin Dede sees the technology as being most valuable in an emergency room setting, but said it is difficult to forecast how it might fare in the market because the infrastructure is still being set up.
"You can't run a train unless you have the tracks built," he said in a phone interview.
He estimates the eventual patient market for the system could include 45 million people, with conditions ranging from coronary disease to diabetes. Meanwhile, he forecast revenue in 2007 of $30.3 million.
Yeah, “chip” the vulnerable that can’t speak up for themselves or if they do, no one will listen to them.
I’ve been wondering how long til this technology was applied to Altzheimer patients.
It makes sense...the problem is it won’t stop there.
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