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Biosensors

Is Biosensors a good buy?

Pardon me but are some of you falling in love with this stock?

More to come from Biosensors every week at "Mind & Body" section Straits Times

investor ( Date: 11-Sep-2008 22:08) Posted:

Looks like Biosensors is advertising agressively their Bio-matrix DES with its bio-degradable polymer, as well as the results of the Leaders Clinical Trial.

There is a full page advert in the weekly 'Mind Your Body' supplement that comes with the Straits Times every Thursday, on their DES.

I quote from their CEO Michael Kleine in the Advert - 'We know a lot of larger companies are now working feverishly trying to come up with biodegradable polymers. he says. We think this is just the first in a series of studies that will ULTIMATELY CONFIRM our technology as the NEW INDUSTRY standard"

I wonder whether they are also advertising as agressively overseas in Europe as they are doing in Singapore ?

For info - Not a call to buy/sell.

Cook's Paclitaxel drug eluting stent (polymer free) sounds like Axxion DES from BIG which also uses Paclitaxel drug (polymer free) and whats so great about it? Paclitaxel drug is toxic by nature and out-dated liao. No way can compare with top limus drugs like Biolimus, Everolimus & Sirolimus.

BLOOMINGTON, Ind., Sep 10, 2008 (BUSINESS WIRE) -- Cook Medical has completed enrollment in the first international clinical trial of a first-of-its-kind drug-eluting stent designed to treat arterial blockages outside the coronary arteries. The 420 patients enrolled in Cook's randomized trial of its Zilver PTX Drug Eluting Peripheral Stent include peripheral arterial disease (PAD) patients treated in Germany, the United States and Japan.

"This is a landmark day for Cook Medical. Completing enrollment in this international trial puts us ahead in the race to bring the benefits that drug-eluting stents have brought to millions of patients with coronary heart disease to the even greater number of patients suffering from peripheral arterial disease," said Rob Lyles, global leader of Cook Medical's peripheral intervention business unit. "Based on preliminary results, we anticipate that the Zilver PTX Stent will be found safe and effective by the world's medical regulatory bodies, and we expect to put this uniquely advanced medical therapy into the hands of the world's physicians in the near future." In many cases, PAD patients who have been treated with balloon angioplasty and stenting experience restenosis, or renarrowing of the arteries, over time and must undergo more invasive treatment such as bypass surgery to restore blood flow to key arteries. The Zilver PTX trial (www.zilverptxtrial.com) was designed to determine whether the combination of Cook's Zilver stent and a paclitaxel coating will keep peripheral arteries, specifically the superficial femoral artery (SFA), open over time.

"I am honored to have been selected as global principle investigator of the clinical evaluation of this device," said Michael Dake, M.D., Professor of Radiology, Internal Medicine and Surgery and Chairman of the Department of Radiology at the University of Virginia Health System. "The Zilver PTX stent could become a breakthrough device in treating peripheral arterial disease with the potential to improve the quality of life of millions of patients suffering from this increasingly common disease. I commend Cook Medical for its commitment to bringing this important technology to the market, and hope that the positive early results we've document are reflected in the study's final data." Cook has enrolled an additional 780 patients in the European Union, Canada, and Korea in a clinical registry to evaluate the safety of the Zilver PTX device.

Those data have been used for a submission in Europe for CE Mark approval to market the device there, with additional regulatory submissions pending in additional markets. In addition, the revolutionary stent already has regulatory approval for commercial use in New Zealand, Hong Kong and Singapore, where it has been used to treat patients suffering with PAD.

"Bringing together converging technologies, like medical devices with pharmaceuticals in the case of Zilver PTX, is a critical step in developing new advanced medical devices to treat many large, unique patient populations," added Lyles. "At Cook, we are continuously driving to improve the quality of patient outcomes." Cook Medical's Zilver PTX, a self-expanding nitinol stent, uses a proprietary, polymer-free technology to coat the device with paclitaxel, an antiproliferative drug that has been used successfully to reduce the risk of renarrowing of arteries following angioplasty in coronary disease patients. Cook's unique ability to adhere the drug to the stent body without using a polymer may be a major clinical advantage, since it eliminates the risk some patients may face due to allergic reactions and other potentially poor outcomes that may be associated with the polymer coatings used on the current generation of drug-eluting coronary stents. Cook licenses the rights to use paclitaxel on peripheral stents and other non-coronary medical devices from Angiotech Pharmaceuticals of Vancouver, British Columbia, Canada.

Preliminary findings presented by Dr. Dake at the Society for Vascular Surgery (SVS) meeting in June revealed clinical improvement in patients treated with the Zilver PTX, excellent stent durability (i.e., fracture resistance), high rates of event-free survival and freedom from target lesion revascularization. This preliminary information suggests no safety concerns, and promising effectiveness results, Dr. Dake reported to his medical colleagues at the SVS event.

Peripheral arterial disease (PAD) affects blood vessels that lead from the heart to other areas of the body, such as the legs, feet and kidneys. When these blood vessels become blocked due to the build-up of fatty deposits, blood circulation is restricted. Untreated, PAD results in pain when walking and can lead to gangrene and amputation. The condition is widespread worldwide, with few interventional medical treatments available to address the buildup of atherosclerotic plaque within the artery that restricts blood flow.

About Cook Medical Cook Medical was one of the first companies to help popularize interventional medicine, pioneering many of the devices now commonly used worldwide to perform minimally invasive medical procedures. Today, the company integrates minimally invasive medical device design, biopharma, gene and cell therapy and biotech to enhance patient safety and improve clinical outcomes in the fields of aortic intervention; interventional cardiology; critical care medicine; gastroenterology; radiology, peripheral vascular, bone access and oncology; surgery and soft tissue repair; urology; and assisted reproductive technology, gynecology and high-risk obstetrics. Founded in 1963 and operated as a family-held private corporation, Cook is a past winner of the prestigious Medical Device Manufacturer of the Year Award from Medical Device & Diagnostic Industry magazine.

For more information, visit www.cookmedical.com SOURCE: Cook Medical CONTACT: Cook Medical David McCarty, 812-339-2235, ext. 2387 Global Director of Public Relations, Cell: 812-322-1805 dave.mccarty@cookmedical.com or Racepoint Group Dana Gulick, 781-487-4673 Cell: 908-763-2575 dgulick@racepointgroup.com Copyright Business Wire 2008 -0- KEYWORD: United States

Looks like Biosensors is advertising agressively their Bio-matrix DES with its bio-degradable polymer, as well as the results of the Leaders Clinical Trial.

There is a full page advert in the weekly 'Mind Your Body' supplement that comes with the Straits Times every Thursday, on their DES.

I quote from their CEO Michael Kleine in the Advert - 'We know a lot of larger companies are now working feverishly trying to come up with biodegradable polymers. he says. We think this is just the first in a series of studies that will ULTIMATELY CONFIRM our technology as the NEW INDUSTRY standard"

I wonder whether they are also advertising as agressively overseas in Europe as they are doing in Singapore ?

For info - Not a call to buy/sell.

NextVIEW Real-time News

DJ MARKET TALK: Biosensors Flat; Downtrend Ending - AmFraser (2008/09/11 15:56PM)

0756 GMT [Dow Jones] Biosensors (B20.SG) bucks falling market in decent volume; shares currently flat but hit S$0.545 (+2.8%) earlier vs FTSE ST All Share index down 2%. AmFraser says technical analysis suggests stock may have bottomed out, "Biosensors shows signs of ending long downtrend with strong base around 50 cents portending a less volatile recovery in weeks ahead." Says series of higher or unchanged lows since 1st week of September indicates that selling pressure should ease going forward, enabling stock to recover at slow but sustainable rate in weeks ahead. Sets first target at S$0.57, 50% retracement of recent rebound from S$0.46 to S$0.685; next target at S$0.60, a 61.8% retracement. (KIG)

 
Contact us in Singapore. 65 64154 150; 
MarketTalk@dowjones.com

(END) Dow Jones Newswires

September 11, 2008 03:56 ET (07:56 GMT)

AK dun know what to do liao. May be wait until both PM, not fr the South, being replaced loh.

BIG!!!!!!!!!!!!LAI LO!!!!!!!!!!!!!!!!!!!!!!!!

CHEONG!!!!!!!!!!!!!!!!AR!!!!!!!!!!!!!!!!!

This week's online poll in crtonline.org.

Do you believe that bio-degradable polmyers have an advantage in a DES ?

Yes 70.51 %

No 29.49 %

For info. This online poll is probably triggered by the Leaders Clinical Trial which compared the Biosensors biodegradable polmyer DES against the J&J Cypher DES with a permanent polymer.

BIOSENSOR INTERNATIONAL GROUP LTD (CitiGroup Smiths Barney Equity Research House):

We rate Biosensors shares Buy / Medium Risk (1M) with a target price of S$1.13. A takeover scenario for Biosensors is plausible, in our view, as large med tech companies might find the group attractive if it can secure approvals for its products.We have lowered our target price from S$1.28 to S$1.13 following the change in the terms as we had valued the royalties from Terumo on a DCF basis. With a reduced royalty payment under the new terms, the value of the future royalties was reduced :

Company description

Biosensors designs, develops, and markets medical devices used in interventional cardiology and critical care procedures. It is focused on securing approval for its proprietary drug-eluting stents (DES) system, which incorporates its proprietary bioresorbable polymer, its proprietary limus drug (Biolimus A9), and its own S-stent and delivery system. Biosensors has also licensed components of its DES to partners like Terumo, Xtent and Devax.

 Review of terms with Terumo result in US$40m upfront payment — Following the launch of the Nobori stent which uses Biosensors technology, Terumo has revised its licensing agreement with Biosensors on payment of an upfront fee of US$40m.

 Original terms were based on high percentage of revenues achieved by Terumo — Biosensors will under the revised terms agree to a lower royalty payment from Terumo with the upfront payment. Management however indicated that the revised terms are still very attractive for Biosensors.

 Target price reduced to S$1.13 — We have lowered our target price from S$1.28 to S$1.13 following the change in the terms as we had valued the royalties from Terumo on a DCF basis. With a reduced royalty payment under the new terms, the value of the future royalties was reduced.

 Maintain Buy — With the cash infusion, Biosensors will have additional funds to fund its marketing plans for Biomatrix and continue with its on-going R&D.

Investment strategy

Biosensors is an independent drug eluting stent-manufacturer, with secured approval for its flagship DES product BioMatrix. We estimate the current global stent market at about US$6bn. We see room for new entrants such as Biosensors to take market share. We rate Biosensors shares Buy / Medium Risk (1M) with a target price of S$1.13. A takeover scenario for Biosensors is plausible, in our view, as large med tech companies might find the group attractive if it can secure approvals for its products.

Valuation

Biosensors has two profit streams - the DES business, and the base interventional and critical-care business. As such we use a sum-of-parts valuation to derive our target price of S$1.13. The interventional and criticalcare business has been steady, generating annual revenues of US$20m and growing at about 15% pa. Comparable companies are valued in the US at 2-3x revenue. We use the mean price-to-revenue multiple of 2x, valuing the business at US$56m. We estimate that revenues from Terumo should start contributing to Biosensors from FY10E. We discount the revenue streams using a discount rate of 20% to factor in the high forecast risks for future revenue streams.

We arrive at a valuation of US$64m for the Terumo alliance. We use a standard start-up high growth med tech formula - taking the first year of substantial earnings and discounting them back to the current year. We apply a multiple of 30x on its DES earnings to reflect the high expected growth as sales ramp up post FY2009. We further discount this valuation to present value using a discount rate of 15% to factor in the high forecast risk. This works out to a value of US$640m for the DES business. We value its JW Medical Systems based on a conservative PE of 15x (based on peg of 1 as we conservatively assume a growth rate of 15% per annum over the next few years). This translates to a value of US$270m. Our sum of parts valuation translates to a value of S$1.5b or S$1.13 per share.

Risks

Although Biosensors shares is rated High Risk based on our quantitative riskrating system, which tracks 260-day historical share price volatility, we rate the company Medium Risk following the receipt of CE Mark for its Biomatrix DES. Our forecasts are subject to the group successfully receiving approval and commercializing its products in its target markets. With high margins in the DES business, the market leaders could potentially pressure new entrants by using aggressive pricing strategies.

Such a strategy would limit the potential returns of new entrants and impede the commercialization of competing products. The presence of new players could result in a highly competitive pricing environment. While the group has a traditional interventional and critical-care business with annual revenues of US$20m, the group has little experience in marketing and distributing DES. Failure to execute a successful marketing strategy would put our estimates at risk.

Biosensors may be exposed to product liability claims based on the use of any of its products, or products incorporating its licensed technology. Litigation regarding patents and other intellectual property rights is common in the pharmaceutical and medicaldevices industries. Biosensors may pose a competitive threat to many of the incumbents, which may try to prevent the group from commercializing its drugeluting stent products by using patent litigation or other means. Any of these risk factors could impede the stock from reaching our target price.

***************************************************************************************************

ANALYSTS CHART COMMENT ON BIOSENSOR LTD (S$0.52) : DMG & PARTNERS SECURITIES RESEARCH HOUSE - 09/9/2008

In an earlier report, we mentioned that the rally Biosensors (BIG SP) had been experiencing was losing steam. After hitting our former resistance level at the 0.645 mark, share price then began losing ground as it closed at 0.52 during the end of the previous week.

We now believe that the correction period is already over and that price action is poised to recover. The 14-day ADX has started turning downwards, an indication that the present downtrend is weak.

Furthermore, share price had rebounded nicely after it had touched the lower bollinger band at the 0.505 mark and we have identified this as part of our 0.495 – 0.505 support level.

Meanwhile, should this current rebound continue, initial resistance residing at the 0.555 level may cap further upside. In the event that this barrier is broken, the 2nd resistance is seen at the 0.605 – 0.615 area as derived from the technical gap.

OCBC Research 09/09/2008, Kelly Chia

Good showing at clinical conference

Positive LEADERS trial. Last week, Biosensor’s LEADERS clinical trial results at nine months succeeded in showing that it was non inferior (of equivalence) to the J&J Cypher sirolimus-eluting stent in terms of the primary end point of cardiac death, myocardial infarction (MI), and targetvessel revascularization (TVR). The lead investigator indicated that the results can be representative of “real world” settings, as the trial recruited “all-comers” (real world patients with minimal exclusions). In an unprecedented occurrence, the results were published online simultaneously in Lancet, a world renown high impact scientific journal.

A SYNTAX error? The SYNTAX trial showed that stents were not statically equivalent to bypass surgery for complex left main and multi-vessel disease cases. But until recently, tackling left main disease was “taboo” for stenting, and the vast majority of multi-vessel disease cases were sent directly to surgery. However, clinicians now see the results as a further option to the painful process of bypass surgery for serious cases like left main-stem and multi-vessel situations. It was stressed that stenting was hardly done for left main-stem and three-vessel disease before, and now there is data that shows some safety profile for stenting vs bypass surgery.

Risks still remain.

Clinical trial analysis

Positive LEADERS1 trial. Biosensor’s LEADERS clinical trial results at nine months succeeded in showing that it was non inferior (of equivalence) to the J&J Cypher sirolimus-eluting stent in terms of the primary end point of cardiac death, myocardial infarction (MI), and target-vessel revascularization (TVR). The lead investigator Dr Stephan Windecker (Bern University Hospital, Switzerland) indicated that the results can be representative of “real world” settings, as the trial recruited “all-comers” (real world patients with minimal exclusions), including those with multivessel disease and those who had previously undergone revascularization procedures. In an unprecedented occurrence, the results were published online simultaneously in Lancet, a world renown high impact scientific journal.

One and only… so far. In meeting its primary end point for this ninemonth period, the BioMatrix DES became the only DES (Drug Eluting Stent) to date that showed equivalence to the industry leading Cypher DES with a 1700 patient base that was quickly recruited in another unprecedented time frame of only six months. Medtronic had attempted a similar comparison(ENDEAVOR III trial) but did not meet its primary end point at nine months and with a smaller trial with 425 patients.

Setting the trend in clinical studies.

What about late stent thrombosis? Another concern was that the trial still showed a “relatively high” rate of stent thrombosis for both Cypher and BioMatrix. We are of the view that this was expected as patients recruited were sicker and 81% of those implanted with either DES were off-label uses. We are also hopeful of better indications for this condition as more follow up is done with the BioMatrix DES, as it is now effectively converted to a BMS (with typically lower thrombosis rates). The conversion of the DES into a BMS is possible as the BioMatrix was coated with a biodegradable polymer. The polymer breaks down after six to nine months, and the rationale for the biodegradable polymer is to reduce the risk of late stent thrombosis. Presently, even clinicians do not know the real cause of late stent thrombosis, but one of the explanations is a hypersensitivity reaction to the polymer.

Why only non-inferiority?

SYNTAX and its implications. Boston Scientific (BSX) announced its 12- month data from the SYNTAX trial, which compared percutaneous coronary intervention (PCI) using the TAXUS® Express2™ Paclitaxel-Eluting Coronary Stent System to coronary artery bypass graft (CABG) surgery in the most complex patient groups. The trial indicated that DES are statistically inferior to bypass surgery for the primary composite end points. However, the combined rate of “hard” end points (death, heart attacks and stroke) were no different between the two trial groups and secondary-end-point findings, showed a statistically lower risk of stroke among patients with stents but a statistically higher need for re-intervention.

Delving deeper into the data

A team choice. Dr Petr Widimsky (Charles University, Prague, Czech Republic) indicated to publications like Heartwire that both the surgeons and cardiologists can be happy about the SYNTAX results. “Surgeons, because they have shown that surgery is slightly better, and cardiologists, because they’ve shown that cardiology is not worse for hard end points,” he said. He also indicated that the key message for practice goes two ways. One: the importance of a ‘heart team’ for these types of patients, involving cardiologist and surgeon, to discuss the patient’s options. The second message is that patients should be involved themselves. Because if there are two options that are basically equal, the patient should have the right to decide: it is his chest that will be cut open, or he will likely be coming back for a repeat procedure.

J&J in bypass surgery.

We postulate below what the conversation between a doctor and his patient may sound like. We reiterate that the conversation below is intentionally dramatized to highlight the radical differences in choosing stenting vs. bypass surgery.

Patient: Hi Doc, you’ve checked me out. Give me my options.

Doctor: Your heart needs quite a lot of work with a number of clogged arteries. I give you two options. The first is to go for stenting. It’s a fast procedure. You do it today and you can head home tomorrow because it’s minimally invasive. We’re only going to make a small cut at your thigh. However, you might need to come back to see me again for another procedure because the stents might not hold your arteries open for a long period of time.

Patient: Doesn’t sound too good but not too bad either… though I would like to see you the next time in another setting other than your clinic… And the second option?

Doctor: Well, you could also do a bypass surgery. It’s historically shown that the results are more durable but it’s going to be painful. You will be anesthetised as we will be opening up your chest and may have to stop your heart and put you on an artificial heart and lung machine while taking a redundant vein out permanently from your leg to replace the clogged up arteries in your heart. You’ll probably need to stay about 1-2 weeks in the hospital and will only regain relative normalcy of independent lifestyle about 3-6 months later.

Patient: ?!?!?

Doctor: But like I said, chances are, you likely won’t need to see me again for another procedure in the foreseeable future. So what’s your decision?

More data to prove DES safety. In late June 2008, Dr David Malenka et al published a report in the Journal of the American Medical Association that analysed a total of about 67,000 patients that received BMS and DES in the ratio of about 60:40 respectively. The analysis concluded that over a two-year follow-up period, repeat revascularisation procedures were lower in DES patients vs. BMS patients. There were no differences in rates of death or heart attacks between the two groups. This clearly shows that DES, when used with appropriate caveats (anti-platelet treatment), has net benefits when compared with associated risks (i.e. late stent thrombosis).

Following COURAGE

Competitor analysis

Competition still hot. We managed to interact with most of the major competitors in the stent business and came away with various impressions: Johnson & Johnson (Cordis). This camp was affected the most by the LEADERS trial results. Industry talk indicated that there was a general concern about the good data and the technology surrounding BioMatrix especially in comparison with the market leading albeit much older Cypher DES. In an effort to boost its revenues, J&J recently obtained new regulatory clearances for its Cypher stent in the EU. However, its DES innovation pipeline continues to be relatively thin, with only the new Presillion BMS and ongoing trials for its recently acquired Conor Medsystems’ stent system which is not available for sale.

Medtronic and Abbott. Continues to push ahead with its 2nd generation DES (albeit with non-biodegradable polymer) in an effort to secure market share. Medtronic’s ENDEVOUR DES managed to secure about 20% of the US market since its launch in Feb 2008 while Abbott’s Xience V DES launched in May 2008 is hoping to secure 30% of the US market by 2010. Our interactions with representatives of these two companies were forthcoming, indicating a certain level of confidence in their companies’ products.

Boston Scientific and Hexacath. These were the last of the 2 companies that we tried to interact with. However, we found their representatives to be relatively stand-offish and overly defensive about their products’ future. We postulate that it might be an indication of its lack of response in product pipeline in this tough stent market.

Fertile grounds to boom.

Mergers and Acquisitions trend

Medical Device M&A trends still healthy.

M&As still at good valuations.

State of the market

Worldwide demand. There are many estimations of the coronary stent market by various agencies and companies but a conservative average would indicate that the worldwide coronary stent market would amount to US$4.8-5b in 2008, as compared to approximately US$5-5.5b in 2007. The estimate for drug-eluting stents is expected to represent about 80% of the dollar value of worldwide coronary stent market sales in 2008, similar to 2007.

Driving factors.

Retarding factors. The recent uncertainty regarding the safety and efficacy of DES, as well as the increased perceived risk of late stent thrombosis following the use of DES, was and is still the main reason for a slow down in the worldwide DES market size as compared to prior years.

Redeeming data. However, more data (like those presented at ESC 2008) addressing the risk of late stent thrombosis and supporting the safety of DES systems appear to have had a stabilising effect on the declining demand, as cardiologists regain confidence in this technology. There are evidences from the other DES manufacturers that indicate the penetration rates for DES have been increasing, in conjunction with better data demonstrating long term safety of this medical technology.

DES is here to stay.

Key Risks

Bigger companies have stronger balance sheets. All of the big four stent companies are significantly bigger and have a much wider and established marketing presence in all geographies. Biosensors continues to acknowledge their smaller size and will compete on strong clinical data vs. pure marketing based events.

They have bundling capabilities of products. Larger companies have a larger slew of cardiovascular products and can offer a stronger proposition of a one-stop-shop for medical centres with volume and diverse product bundling with discounts.

Research grants for clinical centres and to PIs. It is common practice for medical companies to sponsor medical suites, hospital facilities and research grants to clinicians. This can be a very strong incentive for clinicians to take up their products vs. Biosensors which possesses limited bandwidth in this aspect.

5th to market. Although BioMatrix shows non-inferiority to the market leading stent, it is still 5th to market. We are of the opinion that clinicians have indicated that they will take it up when there is competitive pricing or superior services rendered (e.g. reliable supply chain).

Price wars. Despite strong competition, the larger companies may be able to embark on a price war to starve out smaller companies like Biosensors.

Contract manufacturers. Despite being strongly vertically integrated in terms of possessing control of its own IP, we think that Biosensors’ reliance on its sub contractors for some portions of its manufacturing can be a point of weakness. Biosensors has indicated that it has been rationalising its supply chain and has put in place a spectrum of back-up subcontractors to ensure sustainability of its operations.

Overall, future looks good.

EARNINGS FORECAST

Year Ended 31 Mar (US$ m) FY07 FY08 FY09F FY10F

Revenue 34.4 44.3 134.3 190.9

Gross profit 14.3 20.6 92.2 117.1

Operating expenses -54.5 -57.6 -69.4 -74.5

Operating profit -40.3 -37.0 22.8 42.7

Finance income/expense, net 1.9 -0.6 -0.6 -0.6

Joint Ventures 0.0 4.4 2.9 0.0

Others 3.3 6.7 -4.5 0.0

Pre-tax profit -35.1 -26.4 20.6 42.0

Tax -1.2 -3.6 -13.2 -7.1

Minority interests 0.0 0.0 0.0 0.0

Net profit -36.3 -30.0 7.4 34.9

Dividend 0.0 0.0 0.0 0.0

EPS (US$ cents) -4.0 -2.9 0.6 2.9

Fully diluted EPS (US$ cents) -4.0 -2.6 0.6 2.9

EPS growth -52.8% 35.8% 123.7% NM

Analysing the various industry interactions and data, we are positive on the overall future for Biosensors. More newsflow at TCT 2008 in Oct 08 will help provide greater visibility to Biosensors’ end users, the clinicians. As long as Biosensors’ cost cutting and sales/ marketing execution continue to be on track, we are confident that they will be able to meet guidance and become a rising force to be reckoned with in the DES world. Maintain BUY with fair value of S$1.02.We are convinced that the DES platform and technology is here to stay, despite the recent negative publicity, due to a real clinical need that is currently most effectively addressed by stent placements. Biosensors’ thesis on “evidence-based marketing” with good clinical data is in sync with our thoughts on taking on the larger and more established DES players in the market. With the positive LEADERS trial results, this put its BioMatrix DES in strong contention to challenge the other stent manufacturers.We believe that the market size is driven primarily by a number of factors, namely: 1) The number of Percutaneous Coronary Intervention (PCI) procedures performed; 2) The number of stents used per procedure; 3) ASP of DES and; 4) The DES penetration rate (a measure of the mix between BMS and DES used across procedures). Increases in these factors will serve to drive the demand of the overall stent market.Based on purchase prices revealed to date by Levin Associates and Walden, a total of US$85.6b was committed to fund the second quarter’s M&A activity. The technology segment naturally enough captured the lion’s share with US$80.7b, leaving the remaining US$4.9b to the services segment. This amount represents a 210% QoQ increase over 1Q08’s US$27.7b, and a 40% YoY increase over the US$61.3b in 2Q07. From a quick scan of the medical device segment, we found that average valuations ranged from 0.8x to 29x Sales with an average of 3-4x Sales. We note that most of these companies have yet to generate any meaningful bottomline.Health care merger and acquisition (M&A) activity proved to be quite robust during 2Q08, despite the turmoil we are seeing in the financial markets. Though not completely insulated from the surrounding economy and its influence, the health care M&A market appears to run on an internal logic of its own and to have access to sufficient capital to make it happen. Bolstered by the announcement of 100 deals in the month of June alone, a total of 265 transactions were posted in the 13 sectors of the health care industry in 2Q08. As Exhibit 3 shows, the overall number of deals represents a 19% QoQ increase over the 223 deals in 1Q08 and a 5% YoY increase over the 252 deals in 2Q07. The four main technology sectors together account for 155 deals or 58% of 2Q08’s total deal volume, with the nine services sectors posting the remaining 110 deals (42%).We think that Biosensors is inch perfect in the DES space, especially with its recent CE mark inducing intense interest from the clinical community. As can be seen from VHA’s Goodroe data in Exhibit 2, the utilisation of DES in stenting cases seems to have started its turn around in Dec 07 as more positive clinical data presented highlighted the case for using DES vs. its low risk. Although this is US data, we deem that the Rest of the World will mimic this trend as the US continues to be a trend setter in the medical device space. Biosensors remains one of the only companies in this technology space that operates in a low cost base along with fully owning the entire pipeline of Intellectual Property ranging from its delivery system to the biodegradable polymer and proprietary drug Biolimus A9. Even Boston Scientific has to license its Paclitaxel drug from another listed Canadian company Angiotech.1. A follow-up Quality-of-Life (QOL) analysis of the COURAGE trials have indicated that benefits of intervening with stents dwindle after about two years to equal that of optimal medical treatment. Delving deeper into the study, we note that the stents used were primarily BMS and thus contributed to the lacklustre performance of the stent group as compared to medicine group. Clinicians have noted that a stronger result by the stent group would have been achieved with a greater usage of DES. Though the ongoing discussions seem competitive initially, we are of the opinion that the two methods of treating stable Coronary Artery Disease (CAD) will eventually move from being competitive to being complementary, bringing about better defined guidelines for intervention with stents.While clinicians were still deliberating over the SYNTAX results, a second trial comparing stenting vs bypass surgery was also released at the same congress. This time, the stent used was J&J’s market-leading Cypher stent. Unlike SYNTAX, this was limited to diabetics only with multi-vessel diseases. Though the trial eventually only recruited 510 patients (600 planned) indicating that it was “insufficiently powered”, the preliminary results indicated that there was no differences in its end points. This directs us to the possibility that the industry-leading Cypher stent may be a good substitute to bypass surgery. Should the LEADERS trial continue to show good follow-up results, we can correlate that the BioMatrix stent can also be a good substitute.. Although the test for non-inferiority was not met, tackling the left main disease in the heart was “taboo” for stenting, and the vast majority of triple vessel disease cases were sent directly to surgery. However, clinicians now see the results as a further option to the painful process of bypass surgery for serious cases like left main-stem and three vessel disease. It was stressed that stenting was hardly done for left main-stem and three vessel disease before, and now there is something that shows the same safety profile for stenting vs bypass surgery.Clinicians have questioned the value of noninferiority studies when comparing these next-generation stents and their older predecessors. However, superiority studies typically require much larger patient base loads. We believe that Biosensors had to balance incurring minimal costs to achieve maximum impact and thus went with a non-inferiority study. With the interest that has been generated within clinical circles, we believe that this has created a positive momentum to better its market visibility and should translate to stronger sales. Moreover, this was a head-to-head against the market-leading DES in the industry. In a certain sense, proving equivalence could imply being in top league technology status with Cypher.The LEADERS trial is the first randomized trial in DES to enrol “all-comers,” avoiding the traditional route of testing the new device in “vanilla cases” such as non-complicated patients with simple lesions. This has led to only limited labelling and unpleasant surprises of unanticipated events when the technology is approved for use in “real world” settings where “off label” uses are common. This trial can set the trend for regulators to consider similar approaches for future trials. Still some murmurings. Despite the good results, the main concerns were that data was only nine months old and more needs to seen in the future follow ups. In Oct 08, Biosensors will be announcing its one-year follow-up results at another key clinical conference, TCT 2008, providing adequate news flow for the company. Total follow-up is expected for five years, and the investigators hope to be able to answer the question about the potential benefit of eliminating the polymer, such as reductions in the risk of stent thrombosis or different durations of anti-platelet therapy.We are aware that Biosensors still face risks with bigger companies like J&J, Medtronic, Abbott and Boston Scientific as they have 1) stronger balance sheets; 2) Capabilities to bundle and discount products; 3) Capabilities to give big research grants for clinical centres and to clinicians and; 4) Able to embark and sustain a price war. Overall, future looks good. Analysing the various industry interactions and data, we are positive on the overall future for Biosensors. More news flow at TCT 2008 in Oct 08 will help provide greater visibility to Biosensors’ end purchasers - the clinicians. As long as Biosensors’ cost cutting and sales/marketing execution continue to be on track, we are confident that they will be able to meet guidance and become a rising force to be reckoned with in the DES industry. Biosensors reported a good set of 1Q09 results with revenue growing 303% YoY to US$58m while net profit rose 107% YoY to US$16.5m. Maintain BUY with fair value of S$1.02.

Thanks EK . Hahaha I like the reply on anything to do with "marrying" is risky

Anything to do with "marrying" is very risky... Smiley

Beloved alright, a married deal is not a good news for a counter.

It creates a sell position (probably on borrowed stocks) and then the seller will slowly

depress the price to liquidate position at will. If married deals are done at the higher price,

the seller gets better edge to come out with a big clean profit.

If the married deal is done at the low, then the seller will sell further if prices move up.

The whole thing is a trick of the trade for their profits and short term retail investors are the silly guys who pay for it.

allright ( Date: 08-Sep-2008 15:49) Posted:

A married deal just done for a million shares at .53. So is this good news or bad news?

neither of them, looking at the real transaction vol. if u buy DJ tonite up, then your choice liao, for short term.

A married deal just done for a million shares at .53. So is this good news or bad news?

dun worry, it is my favourite. I shall return to meet up with hima, to cherish the good time, old days.

Cheers.

The market has indeed been very bad.. Biosensors has actually performed very well as a company and has delivered on their forecast etc. Share price is totally different and the market is unpredictable. Look at many of the other companies....had excellent results but the share price plunge because of weak market

eh, relax lah people.

market so heated already, what's the point of raising one's own blood pressure?

regardless of my personal opinion on this counter, i'll note this about bengster: he's always been factual, he's always cited sources. And yes, he may be overenthusiastic, but he's also said to buy at your own risk, isn't it? No one has the power to force another person to buy/sell; and each investor is ultimately responsible for himself/herself.

If you buy just because you read one post on a forum, and then the counter goes down, whose blame is it really?

and can we just make the observation that the ENTIRE market is tanking; so really, a biosensors fall isn't out of the ordinary here. Don't gotta kill the messenger.

cool it, folks. Let's keep things friendly. :)

Hi, Bengster,

I believe you have the resources and knowledge to do what you aspire..and that soon some suitors might find BIG attractive, if they have missed it somehow. May be it is a good thing to contact this Shionogi & Co and invite them to read this forum, to be aware of it. I am sure if they find BIG too cheap, they will buy for many reasons and we shall all stroke our tummy! Haha.

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Is Biosensors a good buy?