Corporate Webpages Mela Sciences Inc.
Jefferson Research and its "Sonar Reports" has been a feature in
most of Zenith's stock review articles in the "Research"
sections. Often this organization's recommenations contradict
conclusions by most others. We began to wonder about it a bit,
and decided to try to locate a stock that Jefferson "really
liked" to test it out a bit. Jefferson didn't make it easy, as
there is no summary location, and we had to simply review stock
after stock, beginning to suspect that Jefferson didn't like
anything! But then we landed on Mela Sciences, Inc. (MELA)
which Jefferson really liked, giving it their highest possible
rating, so we decided to review the company to see what
Jefferson liked. As a result, we are getting very skeptical
about Jefferson Research, but it is too early to count them out.
The stock Jefferson landed on was at times considered a penny
stock with a high volume, Electro Optical Sciences, Inc. (EOS) The company
started out with some products like dental decay detectors which
apparently weren't doing too well. Then it decided to put most
or all of its eggs in one basket and concentrated virtually
everything on one product, a melanoma (skin cancer) detection device.
It received approval for sale in Europe, but still awaits FDA
approval for sale in the U.S., even though EOS was U.S. based. In February,
2010, the company changed its name to Mela Sciences, Inc.,
(MELA) in order to reflect its concentration in the skin cancer
detection business and its one major product, the "MelaFind" device.
The European approval caused its stock to shoot up, and the FDA
to issue rumblings related to eventual favorable findings. The
urgency of a need for the device was helpful as many doctors are
unable to tell the difference between malignant and
non-malignant skin cancers and so tend to "over-operate" to
remove these problems. MelaFind could help avoid that.
Jefferson rates the company as having very strong financials and
strong in every other category although it has yet to show a
profit and is continually floating new issues to bring in
capital to support the company and diluting stock share value.
The ups and downs of the FDA approval process often makes one
wonder if FDA officials might be corrupt somewhere with advance
knowledge of pronouncements that could send shares of a
one-product company like Mela soaring or crashing. They have
shown the potential to have stock share price double or halve in
one day.
The device is no cure for cancer, but early detection that it
could promote would decrease the number of deaths due to
melanoma which can be stopped if found early enough. So in a
sense, Melanoma is curable, but at the same time is responsible
for at least 80% of all skin cancer deaths.
In 2010, lawyers representing class action lawsuits were lining
up at the door of the company, but the "charges" seemed pretty
vague to us. They claimed Mela MAY have issued false and
leading statements regarding the potential for their MelaFind
device, after the FDA released a statement that sufficient
studies had not been conducted regarding MelaFind's accuracy
rate. That vague statement alone caused a 54% drop in Mela
stock share price in one day. Shortly thereafter, an FDA panel recommended
approval of the device and the stock soared 109% on one day. So this stock is
extremely risky and subject to every whim and fancy of the U.S. FDA.
The FDA maintains another clinical trial which could take
another 180 days is required while the company claims the FDA
violated a binding protocal agreement outlining what would be
required for clinical trials which the company says have been
completed, at least for restricting the use of the device to
trained dermotologists.
Perhaps it was best expressed by one news organization that stated,
"The FDA has created a Mela-drama!" Negative statements issued
one day, positive the next, and on and on. But when Europe
moved ahead on the device, it put a lot of pressure on the U.S.
FDA to "stop screwing around."
So to quote a Las Vegas notariety, "You pays your money and you
takes your chances." But this seems a little inconsistent with
Jefferson Research's normally-conservative stance and its
glowing report on a company for which much
data is not even available inside that Jefferson Report.
It gets "strong earnings" rating and has yet to show a profit!
Even if FDA approval is granted, it has yet to find U.S. customers.
Perhaps the absence of data somehow skewed the
highly-computerized Jefferson Report into the extremely
favorable column.
Obviously, if some company finds a cure for cancer, its stock
will soar. MELA gets about as close to that as one can get for
one particular form of cancer by early detection.
In fairness to Jefferson Research, if one goes by recent stock
performance and forgets all the internal prejudices, its share
price jumped at least 15% in the last few days with a fair
amount of insider buying.
10-13-2011: Mela Sciences Inc. (MELA): Pressure Mounts on FDA To Approve Their One Major Product
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Bond Issue |
Zenith Index |
Under current market conditions, a Zenith Index Score of 1.20 or above is required for a positive rating on this factor. 1.21 -1.30 is considered acceptable, 1.30-1.40 is consider strong and > 1.40 is considered exceptionally strong. Accounting statements in this section often contain mistakes, especially in earlier years' totals, but data is deemed sufficient for us to give a rating. More accurate financial statements follow in the next section.
MELA Sciences, Inc. (MELA ) Sector: Healthcare
50 South Buckhout Street Industry: Medical Instruments & Supplie
Suite 1 Exchange: Nasdaq
Irvington, NY 10533
MELA Sciences, Inc., a medical device company, focuses on the design and
development of a non-invasive, point-of-care instrument to assist in the
detection of early melanoma. The company-Ęs principal product, MelaFind,
features a hand-held imaging device that emits multiple wavelengths of
light to capture images of suspicious pigmented skin lesions and extract
data. This product uses automatic image analysis and statistical pattern
recognition to help identify lesions to be considered for biopsy to rule
out melanoma. It consists of hand-held imaging device, which employs high
precision optics and multi-spectral illumination; database of pigmented
skin lesions; and lesion classifiers, which are mathematical algorithms
that extract lesion feature information and classify lesions. MELA
Sciences submitted the MelaFind pre-market approval application with the
U.S. Food and Drug Administration (FDA) in June 2009 and is under review
at the FDA. The company was formerly known as Electro-Optical Sciences,
Inc. and changed its name MELA Sciences, Inc. in April 2010. MELA
Sciences, Inc. was founded in 1989 and is based in Irvington, New York.
Last Trade: 6.21 52-Week Range: 8.32 - 1.75
Trade Date: 10-12 Avg. Volume: 868,244 Shares
Index Membership: Employees: 42
Corporate Governance:
Audit (Low Concern), Board (High Concern), Compensation
(Medium Concern), Shareholder Rights (Low Concern).
EPS: -0.79 Dividend Amount: $ 0.00 Yield: 0.00%
Ex-Dividend Date: N/A Mkt Cap: $ 156,880K
Payout Ratio: 0.00%
Last Split Factor (new for old): N/A Split Date: N/A
Key Statistics:
Enterprise Value: $ 124,570K Revenue (ttm) : $ 0K
Gross Profit: $ 0K
Earnings before Income Tax, Depreciation and Amortization: $ -19,790K
Enterprise Value/Revenue (ttm): 0.00 Revenue per Share: $ 0.00
Enterprise Value/EBITDA (ttm): -6.29 Qtrly Rev Growth (y to y): 0.00%
P/E Ratio (fwd projected): 0.00 P/E Ratio (current): 0.00
P/E Growth Ratio (5 yr expected): -0.16 Operating Margin: 0.00%
Price/Sales Ratio: 0.00 Profit Margin: 0.00%
Price/Book Value: 6.39 Book Value: $ 0.90/sh.
Return on Assets: -48.62% Net Income Avl to Common: $ -20,030K
Return on Equity: -81.33% Diluted Earnings/Share: $ -0.79
Qrtly Earnings Growth (yoy): 0.00%
Balance Sheet Items : Cash Flow Items (ttm):
(most recent qrtr) (trailing 12 mo.)
Total Cash: $ 20,940K Operating Cash Flow:$ -19,310K
Total Debt: $ 0K Lvgd Free Cash Flow:$ -13,590K
Total Debt/Equity: 0.00
Total Cash/Share: $ 0.83
Current Ratio: 17.28
Share Statistics: Stock Price History:
Shares Outstanding: 25,260K Stk 52-Week Change: -12.86%
Float: 24,840K S&P 500 52-Wk Chng: 2.20%
Sh. Short % of Float: 15.60% 50-Day Moving Avg: 3.52
Short Ratio: 4.60 200-Day Moving Avg: 2.98
% Held by Institutions: 35.10% Beta: 0.30
% Held by Insiders: 4.56%
Analysts' Estimates: Cur. Qtr Next Qtr Cur. Year Next Year
___________________________ Sep 11 Dec 11 Dec 11 Dec 12
Average Earnings Estimate -0.24 -0.24 -0.87 -0.83
Average Revenue Estimate 0M 100M 10M -0M
Factors Comparing This Company to Its Industry Leader (1.0 = Average):
Long Term EPS Growth Rate (5 yr): 40.750 EPS Growth (Qrtly YoY): 0.000
PEG Ratio (ttm, 5 yr expected): 3.791 P/E Ratio (ttm): 0.000
Revenue Growth (Qrtly YoY): 0.000
Annual Income Statements: All numbers in thousands)
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Total Revenue 0 0 0
Cost of Revenue 0 0 0
Gross Profit 0 0 0
Operating Expenses:
Research & Development 11,497 10,950 12,508
Selling, General & Administrative 8,738 7,631 5,766
Non-Recurring Expenses 0 0 0
Other Operating Expenses 0 0 0
Total Operating Expenses 0 0 0
Operating Income or Loss -20,235 -18,581 -18,274
Income from Continuing Operations:
Total Other Income/Expenses Net 312 129 669
Earnings Before Interest & Taxes -19,923 -18,453 -17,605
Interest Expense 0 0 0
Income Before Taxes -19,923 -18,453 -17,605
Income Tax Expense 0 0 0
Minority Interest 0 0 0
Net Income from Continuing Op.s -19,923 -18,453 -17,605
Non-recurring Events:
Discontinued Operations 0 0 0
Extraordinary Items 0 0 0
Effect of Accounting Changes 0 0 0
Other Items 0 0 0
Net Income -19,923 -18,453 -17,605
Preferred Stock & Other Adjustmnts 0 0 0
Net Income Avail To Common Shares -19,923 -18,453 -17,605
Quarterly Income Statements: All numbers in thousands)
Period Ending Jun30,2011 Mar31,2011 Dec31,2010 Sep30,2010
Total Revenue 0 0 0 0
Cost of Revenue 0 0 0 0
Gross Profit 0 0 0 0
Operating Expenses:
Research & Development 2,621 2,576 3,220 2,937
Selling, General & Adminis. 2,208 2,393 2,386 2,033
Non-Recurring Expenses 0 0 0 0
Other Operating Expenses 0 0 0 0
Total Operating Expenses 0 0 0 0
Operating Income or Loss -4,829 -4,969 -5,606 -4,970
Income from Continuing Operations:
Total Other Income/Expenses Net 19 27 281 15
Earnings Before Int. & Taxes -4,810 -4,942 -5,325 -4,955
Interest Expense 0 0 0 0
Income Before Taxes -4,810 -4,942 -5,325 -4,955
Income Tax Expense 0 0 0 0
Minority Interest 0 0 0 0
Net Income from Continuing Op.s -4,810 -4,942 -5,325 -4,955
Non-recurring Events:
Discontinued Operations 0 0 0 0
Extraordinary Items 0 0 0 0
Effect of Accounting Changes 0 0 0 0
Other Items 0 0 0 0
Net Income -4,810 -4,942 -5,325 -4,955
Preferred Stock & Other Adj.s 0 0 0 0
Net Income Avail To Common Shs -4,810 -4,942 -5,325 -4,955
Annual Balance Sheets: All Numbers in Thousands
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Current Assets:
Cash & Cash Equivalents 30,521 29,673 15,070
Short Term Investments 0 0 391
Net Receivables 0 0 0
Inventory 0 0 0
Other Current Assets 524 665 376
Total Current Assets 31,044 30,338 15,836
Long-Term Investments 0 0 0
Property, Plant & Equipt 2,074 1,572 643
Goodwill 0 0 0
Intangible Assets 71 83 95
Accumulated Amortization 0 0 0
Other Assets 338 48 45
Deferred Long Term Asset Charges 62 86 0
Total Assets 33,589 32,127 16,620
Current Liabilities:
Accounts Payable 1,656 1,778 1,467
Short/Current Long Term Debt 0 0 0
Other Current Liabilities 30 33 64
Total Current Liabilities 1,686 1,811 1,530
Long Term Debt 0 0 0
Other Liabilities 0 0 0
Deferred LT Liability Charges 104 0 0
Minority Interest 0 0 0
Negative Goodwill 0 0 0
Total Liabilities 1,790 1,811 1,530
Stockholder Equity:
Misc. Stocks Options Warrants 0 0 0
Redeemable Perferred Stock 0 0 0
Preferred Stock 0 0 0
Common Stock 25 22 18
Retained Earnings -99,143 -79,220 -60,767
Treasury Stock 0 0 0
Capital Surplus 130,916 109,514 75,846
Other Stockholder Equity 0 0 -7
Total Stockholder Equity 31,799 30,316 15,089
Net Tangible Assets 31,728 30,233 14,995
Quarterly Balance Sheets: All Numbers in Thousands
Period Ending Jun30,2011 Mar31,2011 Dec31,2010 Sep30,2010
Current Assets:
Cash & Cash Equivalents 20,943 26,041 30,521 35,756
Short Term Investments 0 0 0 0
Net Receivables 0 0 0 0
Inventory 0 0 0 0
Other Current Assets 934 368 524 393
Total Current Assets 21,877 26,409 31,044 36,149
Long-Term Investments 0 0 0 0
Property, Plant & Equipt 1,827 1,937 2,074 2,235
Goodwill 0 0 0 0
Intangible Assets 65 68 71 74
Accumulated Amortization 0 0 0 0
Other Assets 338 338 338 338
Deferred LT Asset Charges 62 62 62 62
Total Assets 24,169 28,814 33,589 38,858
Current Liabilities:
Accounts Payable 1,237 1,637 1,656 1,776
Current Portion LT Debt 0 0 0 0
Other Current Liabilities 29 37 30 30
Total Current Liabilities 1,266 1,674 1,686 1,806
Long Term Debt 0 0 0 0
Other Liabilities 0 0 0 0
Deferred LT Liab. Charges 121 113 104 78
Minority Interest 0 0 0 0
Negative Goodwill 0 0 0 0
Total Liabilities 1,387 1,787 1,790 1,884
Stockholder Equity:
Misc. Options, WarrantS 0 0 0 0
Redeemable Perferred Stock 0 0 0 0
Preferred Stock 0 0 0 0
Common Stock 25 25 25 25
Retained Earnings -108,894 -104,085 -99,143 -93,818
Treasury Stock 0 0 0 0
Capital Surplus 131,651 131,087 130,916 130,767
Other Stockholder Equity 0 0 0 0
Total Stockholder Equity 22,781 27,028 31,799 36,974
Net Tangible Assets 22,716 26,959 31,728 36,900
Annual Cash Flow: All Numbers in Thousands
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Net Income -19,923 -4,942 -17,605
Operating Activites:
Depreciation 553 314 1,170
Adjustments to Net Income 718 847 0
Changes in Accounts Recv'bls 0 0 0
Changes in Liabilities -125 281 233
Changes in Inventories 0 0 0
Changes in Other Op'ing Actv's 0 -292 -2
Total Cash Flow fr Operations -18,820 -17,303 -16,205
Investing Activities:
Capital Expenditures -1,044 -1,251 -313
Investments 0 397 1,334
Other Cash Flows fr Investing 0 0 0
Total Cash Flows fr Investing -1,034 -854 1,021
Financing Acitivies:
Dividends Paid 0 0 0
Sale or Purchase of Stock 20,702 32,760 11,057
Net Borrowings 0 0 0
Other Cash Flows fr Financing 0 0 0
Total Cash Flows fr Financing 20,702 32,760 11,057
Effect of Exchange Rate Change 0 0 0
Change in Cash & Cash Equiv.s 847 14,603 -4,127
Quarterly Cash Flow: All Numbers in Thousands
Period Ending Jun30,2011 Mar31,2011 Dec31,2010 Sep30,2010
Net Income -4,810 -4,942 -5,325 -4,955
Operating Activites:
Depreciation 137 147 156 143
Adjustments to Net Income 564 171 77 275
Changes in Accounts Recv'bls 0 0 0 0
Changes in Liabilities -408 -12 -120 128
Changes in Inventories 0 0 0 0
Changes in Other Oper'g Acts 0 164 -26 -120
Total Cash Flow f Operations -5,075 -4,472 -5,237 -4,529
Investing Activities:
Capital Expenditures -23 -8 9 -416
Investments 0 0 0 0
Other Cash Flows fr Investing 0 0 9 0
Total Cash Flows fr Investing -23 -8 18 -416
Financing Acitivies:
Dividends Paid 0 0 0 0
Sale or Purchase of Stock 0 0 -22 15,386
Net Borrowings 0 0 0 0
Other Cash Flows fr Financing 0 0 7 0
Total Cash Flows fr Financing 0 0 -15 15,386
Effect of Exchange Rate Chg 0 0 0 0
Change in Cash & Cash Equiv. -5,098 -4,480 -5,235 10,441
MELA MELA Sciences, Inc. [Indices near +3.0 or near zero,
or < zero bear special attention.]
P/E Ratio Tests:
Current P/E Ratio < 28? 0.0000 P/E Ratio > 5? 0.0000
P/E Ratio Vs Growth Rate: -2.4800 Forward P/E Ratio < 28? 0.0000
Sales Tests:
Price/Sales Ratio < 2.3? 1.0000 Inventory/Sales < 5%? 1.0000
Sales < $1 billion? 1.0000 Operating Margin < 7.5%? 0.0000
Balance Sheet Tests:
Debt/Equity < 0.40? 1.0000 Long-Term Debt Service: 3.0000
LTD Being Reduced? 1.0000 Short-Term Debt Service: 3.0000
Current Ratio > 2? 3.0000 Working Capital >= 1.5? 0.1157
Leverage Ratio < 20%? 3.0000 Debt / Assets < 1? 1.0000
Quick Ratio > 1? 3.0000 Inventory Turnover > 1? 1.0000
Shares Out Decreasing? 1.2000 Market Cap.> 1.5 Billion? 3.0000
Profit Margin > 7.5%? 0.0000
Income Tests:
Dividend Yield > 2.0%? 0.0000 EPS Annual Growth > 10%? -0.4800
Enterprise Value/Revenue: 0.0000 EPS 5-yr Growth > 20%? 0.0000
Enterprise Value/EBITDA: -0.8986 EPS Growth Consistent? 1.2000
EPS Qrtly Growth > 10%? 0.0000 Collection < 45 days? 1.0000
Rev. Qtrly Growth > 15%? 0.0000 Gross Pft/Cur. LTD < 1? 0.0000
EPS Annual Growth > 10%? -0.4800 Borrowing Int. Rate< 6%? 1.0000
Stock Performance Tests:
Volatility > 25%? 3.0000 % Held by Insiders < 5%? 1.0965
Beta > 1.25? 0.2400 % Held by Institut. < 50? 1.4245
50 Da MA > 200 Da MA? 0.2609 % Held by Institut. > 30? 1.1700
52-Wk Change vs. S&P 500: 0.1467 Short Ratio > 5? 0.9200
Price/Book Value < 3? -2.3900 Short % of Float > 20? 0.7800
Return on Assets > 17%? -2.8600 Average Volume > 100,000? 3.0000
Cash Flow Tests:
Oper. C.F. > Lever'd C.F: -1.4209 Positive Free Cash Flow? 0.0000
Positive Oper. Cash Flow? 0.0000 Price to C.F./sh. Ratio: -0.8246
Cash Flow / Assets >.10? -3.0000
MELA MELA Sciences, Inc. Overall Zenith Index: 0.6163
Financial Statements |
Financial Ratios |
. . . . . . . . . . . . 1 = Highest , 10 = Lowest
Market Grader |
Market Grader has no report on this particular stock.
Intrinsic Value (DCF) |
Intrinsic Value by Discounted Cash Flow Method:
Intrinsic Value (PEG) |
Intrinsic Value by Projected Earnings Growth Method:
Stock Scout |
We find "Scout" to be a bit biased toward the high end, so anything under a 6 is considered a negative, 6 and above, positive.
Projected Earnings |
Research Reports |
Analysts' Opinions |
Insider Activity |
Institutional Activity |
Institutional Orders to Buy or Sell:
Sentiment |
Zenith uses the "sentiment" score above or below 50 to award a positive or negative point in the Decision Matrix.
Short Interest Ratio |
As the short interest rises as a percentage of average daily share volume (Days to Cover), this is considered a measure of negative sentiment. Similarly, a decrease in that percentage is considered positive sentiment.
Stock Report |
Management's Discussion of Results of Operations Excerpts |
Moving Average Chart |
Right Time Study |
Channeling Potential |
The summary below includes a value for `Degree,' which refers on a
scale of 1 to 10 the range of a channel in the period under consi-
deration compared to the total range of price movement. It also looks
for the last closing price to be within the channel, otherwise zeroed.
The `Index' is the `Degree' weighted for volatility. Generally, the
the higher the index, the more suitable is the stock for trading as
a `rolling stock' between channel high and low points.
Results for Mela Sciences Inc.:
Symbol? MELA
Total Months Available: 71
Months in Cycle? 4
Months Covered by Periods: 12
Period 1 Period 2 Period 3
H1 L1 H2 L2 H3 L3
8.32 2.51 3.97 2.22 6.20 1.75
RANGE = 8.32 TO 1.75 Close = 6.21
CHANNEL = 3.97 TO 2.51 Degree = 2
Volatility = 23.51% Index = 4
Intraday Chart |
20 Days:
Stock Fetcher |
Point & Figure Chart |
Wall Street Analyzer |
Marketspace Chart |
Time Series Forecast |
Neural Network Prediction |
"Neurostock" can only track long trades. Therefore its performance, as tracked by itself on stocks which are consistently falling, may not appear as good as it could if each "sell" signal were a "short sale."
Ultimate Trading Systems |
The "ultimate systems" are inconclusive, giving no clear confirmed signals.
The corresponding trades for the above chart are shown in tabular form below.
Recommendation |
| Factors | Weighted Points |
|---|---|
| News | + 1 |
| Comparison | - 1 |
| Industry | - 1 |
| Bond Issue | 0 |
| Zenith Index | - 1 |
| Non-GAAP vs. GAAP Earnings < 1% | + 1 |
| Cash Flow | - 1 |
| Ratios | - 1 |
| Market Grader | 0 |
| Intrinsic Value DCF | - 1 |
| Intrinsic Value DDM | - 1 |
| Stock Scout | - 1 |
| Projected Earnings | - 1 |
| Research Reports | - 1 |
| Analysts | + 1 |
| Executive Perquisites | + 1 |
| Insider Activity | + 1 |
| Institutional Activity | - 1 |
| Management Reporting | + 1 |
| Short Interest | + 1 |
| Sentiment | + 1 |
| Standard & Poor's | 0 |
| Moving Average | + 1 |
| Right Time Study | + 1 |
| Stock Fetcher | - 1 |
| Point & Figure | + 1 |
| Wall Street Analyzer | - 1 |
| Marketspace Chart | + 1 |
| Time Series Chart | + 1 |
| Neural Network | + 1 |
| Stock Options | + 1 |
| Ultimate Trading Systems | 0 |
| Total | + 2 |
Place 4,615 shares of Mela Sciences, Inc. (MELA) on the Active List.
