Customer Service 1 (888) 261-2693
Advanced Search

Tracking Down the Superbug

By Rob Fannon, editor Phase 1 Investor
Friday, July 27, 2007

Alexander Fleming discovered the first antibiotic – penicillin – in 1928.
 
A dozen years passed before drug companies could sort out large-scale production. Then, within months of the lucrative product launch, doctors observed bacterial strains resistant to the new drug.
 
And thus, the wicked cycle of antibiotic research began – discover a new antibacterial drug, only to witness resistant bug strains shortly thereafter.
 
Even as the world's antibiotic arsenal has grown substantially, more than 70% of bacterial culprits behind hospital infections are resistant to treatment. These infections account for 90,000 deaths per year, resulting in excess costs of $4.5 billion, according to the Centers for Disease Control and Prevention (CDC).
 
The most deadly infections are from the so-called "superbug," also known as methicillin-resistant staphylococcus aureus or MRSA. MRSA infections are deadly in about 30% of cases.
 
In the early 1970s, MRSA infections represented only 2% of hospital infections in the U.S. Today, that number has jumped to more than 60%.
 
One recent study concluded that about 50 of every 1,000 patients admitted to U.S. hospitals were MRSA carriers. MRSA infections cost about $40,000 per patient to treat. So clearly, it's in the economic interests of the hospital to catch MRSA carriers sooner than later.
 
But right now, the U.S. does not mandate such active surveillance programs. In countries like Denmark and Canada, where these mandates exist (and the tests have been commercially available), MRSA prevalence rates have been held down in the single digits range.
 
It's very likely, as this epidemic crisis escalates, the CDC will implement both mandatory reporting and surveillance programs for all health care facilities. The problem is that, right now, MRSA diagnostic tests can't deliver results for two to three days. Such delays can be deadly as carriers travel freely within the hospital before results are available.
 
That's about to change...
 
The FDA recently cleared a rapid-detection test for MRSA, that uses only a nasal swab and can provide results within hours. Even at $25-$30 per test, the savings for hospitals will be huge if screening every patient that comes in prevents just a few infections.
 
That's why I'm sure that the superbug legislation will be a windfall for the two companies that offer these rapid-detection tests...
 
And the bounty won't be limited to these two... Medical diagnostics is a booming industry. Diagnostics play a key role in the emerging trend of preventive medicine. Advances in molecular biology and genetics have created huge numbers of more sophisticated diagnostic tests.
 
Early disease detection means better outcomes... and cost savings for hospitals and insurers, who will be quick to adopt the new technology. Early investors in the makers of this new wave of products stand to make huge gains.
 
Good investing,
 
Rob Fannon




Recent Articles
Market Notes
UltraShort Real Estate ETF soaring in the real estate stock collapse.
 
The latest victims... WCI Communities, D.R. Horton, USG, Wachovia, Toll Brothers, Hovnanian, and Bear Stearns.
 
Shoemaker Crocs at all-time high... now a $4 billion company trading for nearly 50 times earnings and eight times sales.
 
"Fear Gauge" (VIX) spikes to 22... highest level in 13 months
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%