Biosensors   

Is Biosensors a good buy?

 Q1 result come out Credit Sussie will say target price going back above 1.10!

 

 

DJ MARKET TALK: CS Cuts Biosensors Target, Keeps Outperform (2008/07/17 09:06AM) 0106 GMT [Dow Jones] STOCK CALL: Credit Suisse cuts Biosensors (B20.SG) target price to S$0.90 from S$1.10; maintains Outperform rating. Broker puts recent share price underperformance down to worries Chinese government likely to block Shandong Weigao''s sale of 50% stake in JW Medical to Biosensors. Says, "we believe the market may have overreacted;" potential rejection of deal should not affect estimates, which assume Biosensors'' ownership of JW Medical stays at current 50% level. Adds, launch of company''s flagship Biomatrix drug-eluting stent should be on track even without Weigao deal. But turns more cautious on near-term ramp up of Biomatrix sales in Europe, Asia. Cuts FY10, FY11 earnings estimates by 65%, 53%, respectively, which leads to lower target price. Maintains positive rating; says positive trial results may serve as near-term catalyst for share price. Shares closed down 2.0% at S$0.485 yesterday. (KIG) Contact us in Singapore. 65 64154 150; MarketTalk@dowjones.com

 

there was some shortist at p broking trading hse still open position,,,,,,,,,,i think bb still colleting at tis point,,,,,,,soon they will take action ,,,,,,,,,,,so buy ur limit and hope tis point is turning point,,,,,,DOW JONES show bad time gone,,,,,,,and oil start shrt down,,,,,,,,,,,shining day coming,,,,,,,hope tis will lead the BB to take action,,,,,too bad my q buy tis few day didnt done,,,,,,,let see,,,,,,,,,

 

bengster68      ( Date: 14-Jul-2008 11:06) Posted: We can see that the recent resurging demand of DES could be due to the reduced impact of blood clot scare that the media has overplayed since Barcelona May 2006. DES players fought back with trials claiming DES is actually better than BMS. It is silly to revert back to using BMS. Recent pick up of DES use in USA market (up by almost 10% in 4 months) is most likely due to Endeavor's FDA approval. I expect to see even stronger pick up in DES demand over the whole of 2008 and 2009, possibly around 80% (demand up by another 15%) by end of 2008 because of Xience's recent FDA approval. Xience and Endeavor are touted to be safer than older generation DES like Cypher and Taxus and should rekindle the demand for DES. There should be a strong resurgence of using these 2 newly approved DES instead of BMS and older DESs over the next few years. JNJ's new Cordis Group President Seth Fisher (took over Rick Anderson... i heard he kena sacked by JNJ HQ) said earlier this year that DES demand will growing at 1% a year at best. I think Seth Fisher can eat his own words now. Over the past 4 months the USA market for DES has turned upwards strongly at almost 10% growth and Asia DES market is experiencing huge exponential growth. He could be down playing JNJ's recent poor DES performance and recent Conor takeover misadventure in stent business. He could also be calling a bluff signal to BIG that JNJ is not really interested in stent business but in fact they are very desperate for BIG. Life is always a like Hollywood in USA. JNJ already made billions from DESs and was once the DES king. I don't think JNJ will allow their stent division to fall from formerly The Number One DES Player to zero. DES is still a highly lucrative medical product with current yearly global sales of US$5.4B and now growing back strongly again. How can JNJ afford to ignore this large market? bengster68      ( Date: 14-Jul-2008 00:28) Posted: http://www.crtonline.org/flash.aspx?PAGE_ID=5587 The percentages reported are number of DES used in stenting procedures. Eg, in March 2008, the figure was 66.9% for DES. That means 33.1% of people choose to use BMS. I am surprised by the resurging demand of DES which is much sooner than what most people in the DES industry expect.  There is a distinct uptrend in DES usage in recent months for USA market. The DES market is clearly growing back after the recent late-thrombosis scare. With newer DES like Endeavor and Xience entering the USA market, i think the DES market has a good chance to recover back to almost the previous peak usage. Of course Biomatrix is the best answer to late-thrombosis scare because it has absolutely zero cases of occurance and reverts back to BMS after 6 months due to its biodegradable polymer. Looks like JNJ is the only player left out in this regrowth of DES demand. At least BSX still has got "Promus" to Chiam See Tong.

 

I think costs relating to LEADERS trial could be very minimal for Q1 FY2009 because it is the stent implant and surgery cost portion that is the heaviest and most likely these costs are already expensed off in late FY2007 and FY2008. I hope taking end-point measurements and statistic data tabulation at 9 months of the RCT shouldn't cost a lot.   

 

4m USD is my estimation of Nobori sales(15m) royalty and 2m is revenue recognition of  40m over 5 years per quarter. Hope they recognise 8m at this quarter as the operatiing cost is high for Q1 due to leaders trial and restructuring cost.

 

US$4m could be royalty from Nobori CE market sales. US$2m plus US$4m equals US$6m from Terumo. If BIG decide to book the US$8m in Q1, add the estimated Nobori sales royalty of US$4m, then the figure will be US$12m.

I think if BIG wants to go conservative, they will just book US$2m per quarter recurring for 5 year period. CWWAN's estimated figures could be quite accurate.

 

Why is licensing 6m? additional 4m from where?

cwwan1      ( Date: 16-Jul-2008 14:40) Posted:   High Revenue US(m) Cost of sales(m) Gross Margin(m)   Critical care 2.75 2.04 0.72 26% Cardiological 5 2.10 2.90 58% DES 25 7.50 17.50 70% Licencing(4m+2m) 6 0.00 6.00 100%   38.75 11.64 27.12 70% This is my estimation ONLY based on pass history and biomatrix sales(hear say selling like hot cake). There will still be contribution from JV JWMS which could be around 3m USD not part of the revenue calculation above. Not a buy call

 

	High Revenue US(m)	Cost of sales(m)	Gross Margin(m)
Critical care	2.75	2.04	0.72	26%
Cardiological	5	2.10	2.90	58%
DES	25	7.50	17.50	70%
Licencing(4m+2m)	6	0.00	6.00	100%
	38.75	11.64	27.12	70%

This is my estimation ONLY based on pass history and biomatrix sales(hear say selling like hot cake). There will still be contribution from JV JWMS which could be around 3m USD not part of the revenue calculation above. Not a buy call

 

For PR image sake they should do that. I hope they book the US$8m in Q1 man......... at least can show investors in P&L numerical form BIG has clearly turned-around and is profitable now.   

 

In your earlier postings and I think Investor's postings you guys mentioned that 2m pro-rated booking of the terumo licensing will be done in Q1. Actually for tax-benefit purposes, I think it does not make any difference if you book 2m in Q1 or the whole 8m in Q1. Right? If BIG can do this, they should book the 8m in Q1 first and then count on the projected increasing sales to cover their figures from Q2 onwards. In other words show a turn around right from Q1.. 

Comments?  

bengster68      ( Date: 16-Jul-2008 13:29) Posted: BIG could have booked Terumo's US$40m profit immediately. The US$40m is not paid over a period of 5 years at US$8m cash per year. The US$40m cash is already fully paid and in BIG's bank account already. The profit is already locked in and cash fully received. They are accounting it over 5 years for tax planning purposes. But they didn't realise that shorties will still scare people by shouting "BIG is still a loss making company, no fundamentals" but it fact they already made US$40m cash profit this year. Will the largest Japanese medical device player pay you US$40m cash for nothing? If most of the property / construction companies can report profit on revaluation of property assets (non-cash item), this company is freaking conservative to report lesser profit but the cash is already fully received. If BIG want to recognise US$40m cash profit immediately also can. Nobody can fault them. The money is in the bank, the profit should be recognised. But they chose to put it as "pre-paid income". For PR sake, they could have recognised it immediately and set the record straight that BIG is already profitable inside their P&L. But they chose tax planning priority over PR image. With US$90m cash in bank now and Biomatrix commercialised, it think their cash level should be healthy. China JWMS subsidiary is already a cash cow money printing machine. Plus, no more costly clinical trial R&D cost after LEADERS trial. After human resource restructuring, operating costs will be further contained. BIG will not go into USA market (another round of very costly clinical trial) but will license it out to preserve their cash level and focus on gaining market share in Europe and Asia. Business wise, that is a good move. Make the money first. Prove that Biomatrix can sell very well and gain DES market share first. Like that can get better valuation for Biomatrix's USA licensing deal. The USA licensing deal should involve at least US$100m cash paid upfront. If LEADERS results are good and Biomatrix's CE markets sales are very strong, BIG will be in a very strong position to ask for very good terms for Biomatrix USA territory licensing deal.

 

BIG could have booked Terumo's US$40m profit immediately. The US$40m is not paid over a period of 5 years at US$8m cash per year. The US$40m cash is already fully paid and in BIG's bank account already. The profit is already locked in and cash fully received. They are accounting it over 5 years for tax planning purposes. But they didn't realise that shorties will still scare people by shouting "BIG is still a loss making company, no fundamentals" but it fact they already made US$40m cash profit this year. Will the largest Japanese medical device player pay you US$40m cash for nothing? If most of the property / construction companies can report profit on revaluation of property assets (non-cash item), this company is freaking conservative to report lesser profit but the cash is already fully received. If BIG want to recognise US$40m cash profit immediately also can. Nobody can fault them. The money is in the bank, the profit should be recognised. But they chose to put it as "pre-paid income". For PR sake, they could have recognised it immediately and set the record straight that BIG is already profitable inside their P&L. But they chose tax planning priority over PR image.

With US$90m cash in bank now and Biomatrix commercialised, it think their cash level should be healthy. China JWMS subsidiary is already a cash cow money printing machine. Plus, no more costly clinical trial R&D cost after LEADERS trial. After human resource restructuring, operating costs will be further contained. BIG will not go into USA market (another round of very costly clinical trial) but will license it out to preserve their cash level and focus on gaining market share in Europe and Asia. Business wise, that is a good move. Make the money first. Prove that Biomatrix can sell very well and gain DES market share first. Like that can get better valuation for Biomatrix's USA licensing deal. The USA licensing deal should involve at least US$100m cash paid upfront. If LEADERS results are good and Biomatrix's CE markets sales are very strong, BIG will be in a very strong position to ask for very good terms for Biomatrix USA territory licensing deal.

 

***Lawrence: The CNA news revealed that they have scaled down the US operations - what is the reason for this? Do they have the US FDA approval to sell the stent, or still awaiting approval?

If they are already approved for US sales, perhaps BIG can go for a US listing, so that they get better recognition from investors via better share prices.

***Bengster: They scaled down USA office because thet intend to license out Biomatrix USA territory. However, R&D base in California will remain as that region is the best DES R&D base globally. I heard Biomatrix already passed FDA Master Drug File for Biomatrix's drug safety issues. However, i believe there could be business politics / collusion to further delay Biomatrix's IDE by the lobbying of powerful medical device MNCs in USA. This is like another CE delay thing repeating again. Biomatrix is a very big threat to them as obviously Biomatrix is the best performing DES.

All of Biomatrix production will be done in Singapore. Singapore plant has current capacity to produce 10,000 units biomatrix a month and recently BIG put up a lot of job advertisement for more production personnel. I think their business could be much better than expected. BIG said that the current Singapore plant capacity can be further expanded to 20,000 units per month. BIG said that they do not intend to have another Biomatrix production plant in China. However, if Biomatrix can get China approval by end 2008, i think it makes sense for them to produce in China as the import tax for foreign DES is very heavy (i think its 40% tax for those made in USA).

BIG should have been listed in USA. Not many investors here understand the value of top class clinical results, proprieatry IPs and patens here. It was the most powerful man in Singapore that convinced BIG to list here in SGX instead of in USA to become the "poster company" to fly the "knowledge-based economy" flag high here in Singapore. Freaking bad move to list here man. Plus poor IPO management, poor syndication, poor investor/public relations made things even worse. SGX said they want to attract more biotechs start-ups to list here. I guarantee you it will be a flop. BIG was a very late stage best stent developer, attracted multiple licensing partners - very important step for biotech/biomed companies (Guidant, Terumo, Xtent, Devax, JWMS), can commercialise their flagship product and their DES product is clinically proven to be the best globally beating rivals by very wide margins. If such a biomed company's share can still be so unappreciated here, it seriously think the rest of biotech start-ups don't freaking stand a chance here in SGX. BIG will be the last of such company ever to be listed here. Unless BIG is bought over by a medical device MNC at huge takeover premium and make everyone here jaw drop by the stunning takeover valuation of how much such top class biomed companies are really worth, then the market will really be educated and interested invest in such biotech/biomed stocks in future. There are many biotech/biomed companies that are listed around the world but BIG is definitely one of the strongest i have seen fundamentally, a low hanging fruit waiting to be plucked, a very foreseeable exit for investors via M&A. It will happen, just a matter of time. After LEADERS results you will see the M&A negotiations officially start. It will happen faster than most people will expect because BIG is the last worthwhile M&A target in DES industry (it terms of trial results, proprietary IPs, patents) and also the best stent developer in the DES industry

 

I think over the next few quarters JNJ's USA market will be hit very badly by Xience/Promus. Easily drop about 20% per quarter. In Europe, Asia (China), JNJ's market share will be taken away by BIG's Biomatrix and EXCEL DES. JNJ's overseas market share will drop as well. By end 2009, JNJ's leading position in Japan market will be toppled over by Terumo's Nobori DES. Currently JNJ has global market share of 34%. I believe by end 2008, JNJ could be left with 25% global market share (Xience FDA approval), end 2009 15% global market share (Nobori Japan approval and further loss of market share in Europe and Asia caused by Biomatrix and Excel), end 2010 below 10% global market share. From hero to zero......... 

 

Johnson & Johnson 2Q Coated Stent Sales Fall 11%, July 15, 2008: 01:28 PM EST

Sales of Johnson & Johnson's (JNJ) drug-coated stent heart devices, which are under pressure from increasing competition, fell 11% in the second quarter from a year ago amid a decline in market share and falling product prices, the company said Tuesday.

The slide came despite overall signs of stabilization that J&J saw in the turbulent coated stent market.

In the U.S., sales of J&J's Cypher stent slipped 20% to $167 million, compared with the same period last year, the company said in its second-quarter earnings release. Sales in the U.S. declined slightly from levels seen in the first quarter.

J&J is facing fresh competition in the U.S. market from Medtronic Inc. (MDT) and Abbott Laboratories (ABT), although the latter company's device wasn't approved in time to impact second-quarter U.S. sales. J&J doesn't have a new coated stent of its own in the U.S. to combat the new arrivals.

J&J estimated Cypher's U.S. market share at 36%, down from 43% in the first quarter and from 46% in the second quarter last year. The company pegged the slide to Medtronic's entry into U.S. market in February.

Shares of Medtronic were recently up 1% to $52.40.

J&J estimated that its share in international markets, which have had more competitors for a longer period of time, declined to 34% in the recent quarter from 38% a year ago.

J&J's coated stent sales in those markets declined $7 million to $227 million, with the slide softened by the impact of favorable foreign currency rates. Excluding this impact, worldwide coated stent sales were down about 18% in the second quarter, Louise Mehrotra, J&J's vice president of investor relations, said on a conference call with analysts.

The Cordis business posted sales of $852 million in the quarter, even with year-ago results, with help from favorable currency rates. U.S. sales for Cordis declined 12.3%.

Drug-coated stents are tiny metal devices used to prop open clogged heart arteries. They use medication to combat renarrowing, which is a more common problem with older and less expensive bare-metal stents.

The $4 billion global market for coated stents took a severe hit in 2006 when safety concerns arose regarding first-generation devices. Though such worries seem to be abating, which could fuel a rebound in coated stent usage, J&J may sit on the sidelines during a recovery as new stents in the world's largest market - the U.S. - jockey for market share.

J&J did see signs of stabilization in the rate of coated stent usage, and also a slight increase in stent-related procedures following a marked downturn last year triggered by a study questioning the need for such procedures in certain patients. A reduction in prices for coated stents offset those improvements, Mehrotra said.

Specifically, U.S. prices of $1,940 per device were down 11% from a year ago, and down about 2% from the first quarter, she said. Prices declined internationally as well, but that impact was offset by gains in currency rates.

J&J and rival Boston Scientific Corp. (BSX) split the U.S. market for years, but are now facing competition from Medtronic and Abbott, which garnered Food and Drug Administration approval earlier this month. The Abbott stent is viewed on Wall Street as a potential market leader, while the Medtronic device got off to a stronger-than-expected start.

Boston Scientific also sells the new Abbott stent under a profit-sharing deal, giving Boston Scientific a hedge of sorts against any declines for its in-house product, the Taxus stent.

Overall, J&J posted an 8% rise in second-quarter net profit, helped by strong consumer product sales and gains elsewhere in its Medical Devices and Diagnostics business. Shares of J&J were recently up 2.2% to $67.88.

 

 

To elaborate more on my previous statement. Although, it is more important for mgmt to focus on the business than the share price, it is equally important for the mgmt to be pro-active and to engage the shareholders and to be very transparent in the transmission of timely information to shareholders. Especially in the current climate of uncertainty, where share prices of most stocks are dropping, it would be nice to see let's say monthly sales figures of the bio-matrix, the progress of the JWMS acquisition, etc.(provided that it is not detrimental to your own competitiveness against other rivals) THe very medically-savvy investor like Bengster, can probably 'see' beyond the current carnage as a 'buying opportunity', whereas the average investor will probably have to deal with fear and uncertainty, because of their 'LACK of KNOWLEDGE and CONFIDENCE' in the medical products that Biosensors is selling. And finally, shareholder value comes from a successful business, and then the share price goes up to reflect the intrinsic value of the business - (In other words, dont put the cart before the horse) Some passing thoughts - NOT a call to buy/sell

 

New Term pls help me with the abbrev...

 

What does "bb f gg" means?

louis_leecs      ( Date: 15-Jul-2008 08:56) Posted: a lot shortist have to give out,,,,,,,my ah moh remiser say they are in the hot oil ball,,,,,,,,,,bb f gg loogliao,,,,,,,,,see the good show,,,,,chhheerrrrrrrrs,,,,,,,,,,,,,,,55cts must see first ,,,,,

 

Mebbe because BIG's timing is usually 'suay'! Dont understand why.


 

Vested. **Neck overstretched and abit frustrated**

 

Right! Directors want their share prices to rise, but the opposite force always do them in!

 

Focus on the business should be the MAIN FOCUS of the board of directors. But the sad truth is all boards of directors of all listed companies throughout the world focus only on ONE thing: 

TO INCREASE SHAREHOLDERS' VALUE, which means the share price lah!