VeriChip (Nasdaq:CHIP) shares are up about 200% on news that the company has licensed a patent for an H1N1 "triage detection system."

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I have no position in VeriChip, but only because I could not locate shares to short.  The hype simply doesn’t add up.  H1N1 will be a big problem this winter, but there is no reason to believe that a usable test based upon the license will be developed, approved and commercialized in that timeframe.   From the facts available today, it looks like H1N1 will be a distant SARS-like memory before the licensed products ever hit your doctor’s office.

But let’s give VeriChip the benefit of the doubt.  VeriChip says that the test can be used for other viruses besides H1N1, including MRSA.  So let’s assume that there will be some market for a viral test product once it is finally commercialized.  Why do investors believe that VeriChip will be able to successfully market the product to doctors and hospitals?  The company’s history does not warrant this confidence.   Buyer beware, especially at these prices.

Have a different view?  Please leave a comment.

DISCLOSURE:  No position.

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