Singapore Zhengjie Zhuo (65) 64167812 zhengjie.zhuo@clsa.com 2Q08 Results 12 November 2007 Please see important notice on last page Page 1 of 2 2Q08 results

CLSA boss: Wake up you chinaman! Our asset management team focking miss the whole chiong with CE almost in the bag now and you better give a low TP and spread it far and wide so we can enter cheap again you idiot!  

Zhengjie Zhuo: Yes Boss!!! 

Biosensors announced a loss of US$11m for 2Q08, bringing 1H08 losses to US$3m, after recognising a one-off exceptional item of US$15m for the previous quarter.

Unsurprising results

Product revenues grew by 10% - critical care products (15%) and interventional cardiology (8%).

Starting this quarter, Biosensors has classified sales of traditional interventional cardiology products and drug eluting stents (DES) into a single product segment. We think this reduces transparency.

Sales of bare metal stents increased in the Japanese markets, but DES sales declined.

Licensing revenues were not material.

Gross margins decreased overall. For critical care products, it was due to restructuring of manufacturing activities in Asia, and for interventional cardiology products, it was due to higher provisions for inventory obsolescence and product returns.

Developments

Biosensors is still awaiting approval for CE Mark for Biosensors.

The company made three significant transactions in the quarter.

First, Biosensors completed the acquisition of 50% of JW Medical Systems, which will be accretive to operating results, given that revenue range is US$35-40m, and profit before tax margin is ~40%.

Biosensors also acquired certain businesses from a leading medical product distributor in Indonesia, which allows the company to have a direct sales presence for its products in Indonesia.

Finally, the company signed a MOU with PT Kimia Farma, a state-owned healthcare company in Indonesia to distribute the Company?s current coronary products to more than 390 government hospitals and to eventually localise the manufacturing of the Company?s bare-metal stents and assessory products to serve that market.

While these developments are overall positive, we believe that the key drag to the business is the prolonged delay of CE Mark regulatory approval for BioMatrix.

Until then, we remain our SELL call on Biosensors with a TP of S$0.76. 

***I feel CLSA's TP for one year later at 76cts is ridicious. One year from now, CE in the bag, FDA IDE in the bag, Biomatrix captured 3% of global DES, JWMS making at least US$25m for 2008 and BIG will unlocked JW's value adding another 50cts per share to BIG's shareprice, massive LEADERS trial will show solid conclusive evidence that Biomatrix is globally the best DES. More milestone payments of about US$20m coming in from licensees: Terumo for their Japan and CE approval, Devax's and Xtent's CE approval and FDA IDE. Devax will be listed by then BIG owns 5% in both Xtent and Devax with additional 5% options in both companies to purchase at a low price. Xtent and Devax's share price will soar after their own CE and FDA IDE approval.  If BIG is not bought up by JNJ or other DES major players, i think i should be trading about $2 one year later. This CLSA Chinaman analyst know nuts about BIG's proprietary IP and patents. Even if all the 4 stent majors combine and spend hundreds of millions(USD) also cannot come out something close to what BIG has achieved in clinical result performance. BIG is clearly on the way to become a global DES major player.