Biotech 2010 DH

(DIA - Dia-B Tech Ltd.)
This company developing diagnostics, pharmaceuticals and treatments for diabetes listed in January 2005. The company has no significant income other than grants and prices had fallen 63% in 2005 suggesting that listing was premature. However there have been speculative jumps in November 05, June 06, November 06, March 07 and November 07 during a period of continuing decline. Prices down 56% in 2006 but even in 2007 with two unexplained speculative rises. Market cap of $2 million was recently boosted by fund raising and speculation but pricing down 80% in 2008 with survival of company in question. Company looking for new business and speculation about this has raised prices 100% temporarily in 2009. This culminated in announcement in February of acquisition of Pallane Medical, a viral diagnostic technology company. Prices up 27% in 2009. Underwriter failed to provide funds leading to breach of underwriting agreement and termination of share sale agreement. Company is currently considering options with suspension of shares, total changeover of Board and additional fund raising. Name changed to Pallane Medical in November 2009. (21/11/09)

ELX - Ellex Medical Lasers Ltd.
Ellex disappointed the market in FY2004 and FY2005 due to problems in the target markets and declining profitability. The company has now shifted focus from OEM to controlling distribution specifically in the ophthalmic laser market. This involved short term costs and loss of profitability with a view to improved long term profitability. The company has been undervalued by the market despite having good technology, significant revenues and exports. The current market cap of $17 million is ridiculously low on the basis of fundamentals now that revenues are up significantly and profitability has returned. We expected that there would be price increases in 2008 following the current downturn now that the company is buying distribution companies to improve market presence and US companies to increase market spread (up 106% in 2006 but down 6% in 2007 and down 88% in 2008 due to a double downwards revision in sales projections, replacement of CEO and cash flow problems as customers reduce demand). Despite the downward revision in sales projections but increased sales as indicated by last financials, this company is substantially undervalued. Prices increased 80% in 2009 and this was expected to continue with significant international market penetration announced but uncertainties about continuing bank support have tempered expectations for price increases as well as some softening of sales projections. There has been a 10% inclrease in 2010. Initially there was a fall in 2010 as a result of GFC but improving financials suggested there would be an increase in prices during 2010 with gradual opening of market in US and this appears to be occurring. (18/8/10)

FER - Fermiscan Holdings Ltd.
Company investigating the detection of breast cancer through an apparent change in the structure of hair samples. Even if the test works (other research groups have not been able to confirm the findings apparently due to different sample preparation protocols), there will be questions about specificity, timeliness and cost which could affect the degree of commercialisation. As a result, the current market cap of the company is reasonable at $4 million with speculation driving prices (up 50% in 2006 following listing at end of October 2006, down 2% in 2007, down 80% in 2008 and down 85% in 2009). In April 2009, merger proposal between Polartechnics and Fermiscan announced with a significant fall in price and this proposal was not concluded when the expert's report found that the proposal was neither fair nor reasonable. There was a limited recovery in value with commencement of precommercial trials in Australia and turnover on the Board. However, significant losses have led to review of strategy by new Board, sale of Breast Cancer Clinic at significant loss and potential for sale of Fermiscan technology. The litigation against the inventor of the technology failed and failed again on appeal with significant costs to the company which was then forced into voluntary administration. The administrator has sold the IP of the company for a negligible amount, has wound up subsidiaries and the company shell remains. Administrator appears to be no longer in place and company is under advice of two accounting companies which are restructuring the Board, putting in place funding for clinical trials and seeking reinstatement to the ASX. (31/8/10)

FLS - Fluorotechnics Ltd.
Fluorscent compound developer listed end October 2008 seven years after establishment. Gaining income from intenational licensing as well as sales from companies in Australia, US and Germany. Needed to ramp up sales to justify high initial market value but more than halving of projections for FY2009 has led to short term declines (down 60% in 2009 to market cap of $12 million). There has been a further 69% decline in 2010 to $6 million. This company is looking vulnerable despite international spread and several rights issues due to markedly reduced sales projections. (2/9/10)

(FYI - Freedom Eye Ltd.)
Previously called Solbec Pharmaceuticals Ltd, the company began 2004 optimistically, but during the year interest gradually declined bottoming in October before there was an 80% jump associated with overpromotion of preclinical laboratory results. The company had set itself the target of negotiating a licensing deal by March 2006 which passed without comment and the share price gradually declined (down 44% in 2005, down 54% in 2006, down 13% in 2007 and down 71% in 2008). The company had a market cap of $1 million following fund raising and the company decided to diversify by acquiring a Malaysian based eye surgery business and renaming company Freedom Eye Ltd in December 2008. Prices rose 30% temporarily in 2009 but are now down 40% (market cap $3 million) following a decision not to proceed with the Malaysian acquisition and offloading of Coramsine technology as well as departure of CEO. Company currently raising funds to look for new business which appears to be in the mining industry with an option to acquire a uranium project and this became the basis of the new business with a change of name to FYI Resources Ltd in February 2010. (4/2/10)

GBI - Genera Biosystems Ltd.
Melbourne-based start up commercialising diagnostic and other tools listed in Jun 2008 and shares promptly fell 40% and eventually 52%. However, there was a 231% increase in 2009 associated with positive trial results and adoption of the test by a key pathology laboratory chain in Australia as well as TGA approval. Revenues are still meager and market cap of $29 million is high despite new developmental agreements negotiated (down 41% in 2010). (2/9/10)

GEN - Genesis Research and Development Corporation Ltd.
Since listing eight years ago, shares in this company have fallen over 95% indicating that early expectations have not been met. The share price fall has been very constant, including a 54% fall in 2005: there was some stabilisation in 2006 (up 20%) and 2007 with a late fall (down 27%). There has been a further 65% fall in 2008 and14% in 2009. The market cap of only $1 million is significantly less than the investment made and equivalent to the cash reserves. The resolution of litigation by ArborGen provided additional funds as did the sale of BioJoule but lack of payment and potential litigation regarding BioJoule is a significant weakening factor. The company needs to improve revenues, reduce costs, raise more funds and provide more project focus but there appears to be little evidence of this and company is now highly vulnerable. There was a 100% speculative jump in July 2009 associated with fund raising. 2009 financials indicate reduced spend but little signs of developments. In 2010, there was a sharp fall in prices (down 58%) followed by suspension of activities in New Zealand due to lack of funding. There was an unexplained recovery in July 2010 (now down 62%). (28/7/10)

GTG - Genetic Technologies Ltd.
GTG has been an enigmatic company claiming a significant portfolio of patents in the DNA area which initially was discounted but which over time is being acknowledged by some companies as worthy of being licensed in return for fees. The success of GTG will depend on its ability to enforce its patent portfolio in the market. Shares increased four fold in the year to August 2003, but thereafter, prices fell over 50% until the September 2004 announcement of positive trial outcomes in the litigation with Applera which doubled the share price. Since that time, the prices have gradually declined then recovered before falling heavily on the announcement of a resolution of litigation with Applera which was not seen as totally positive for GTG. There has been a further substantial fall (63%) in 2007 related to an ASIC inquiry into activities of executives of the company but countered by the deal with Monsanto. There was a temporary recovery associated with the premature announcement that FY2007 would be profitable and the appointment of a new CEO. The company now has a market cap of $11 million (prices down 15% in 2006, down 57% in 2007, down 67% in 2008 and down 16% in 2009). Realisation of this value will only come with a further substantial increase in income and a shift to profitability with the first signs being the favourable FY2007 and FY2008 results although revenues are stable rather than increasing. Confusion caused by proposal by largest shareholder to dump other directors which was successful in November 2008 probably contributing to further drop in price - down 67%. Situation further clouded by charges against key director and major shareholder in company for market manipulation leading to his resignation. There was a moderate recovery in prices in 2009 following appointment of new CEO but by years end, prices had again fallen. There was a temporary recovery in early 2010 with licensing in of new genetic tests, acquisition of a breast cancer test and new fund raising and prices now down 38% in 2010 with establishment of US diagnostics operation and new licence to Monsanto. (3/9/10)

HCT - Holista CollTech Ltd.
Previously called CollTech Australia, this company listed in February 2004 as a producer of ovine collagen. Listing was premature and in first four years, income was meager. By early 2009, company value was vulnerable at $3 million and alternative business was sought with backdoor listing of Malaysian natural products healthcare company and associated name change. Prices rose 45% in 2009 and 38% in early 2010. However prices are oscillating wildly and prices are currently down 52% in 2010 with market cap of merged company at $9 million which is in line with fundamentals.(27/8/10)

HTX - HealthLinx Ltd.
Previously called Cryptome Pharmaceuticals, completed merger with HealthLinx in March 2006. Previous company listed in November 2003 and shares rapidly fell by 20% and then stabilised before recovering to listing level. However with the sudden resignation of the CEO, prices fell 25% then recovered, but in November 2004, prices fell about 40% with a further 58% in 2005. Merger talks culminated in the merger with HealthLinx in March 2006 and the associated name change. There was a drop which was temporarily recovered with announcement of ovarian cancer biomarker trial and a further significant recovery with announcement of collaboration with Bruker Datronics. Prices fell 71% in 2006 to a market cap of $3 million but there was an increase from a low base in 2007 to a market cap of $7 million following fund raising. Company needs to show real results to support viability. Shares rose 33% to market cap of $8 million in 2007 with 1 for 5 consolidation and spin off of technology to another company. There was a 37% drop in 2008 with questions from ASX about viability of the company and positive publicity on effectiveness of its ovarian cancer diagnostic (market cap $5 million, down 37% in 2008.) There was a further 60% decline then a major jump with announcement of launch of ovarian cancer diagnostic in European market: up 38% to $11 million in 2009 with further funds raised. There was a doubling of share prices in 2010 with speculation about launch of diagnostic product in UK and currently up 3% at $13 million with revenues still small, distribution through Healthscope suggesting revenue increases in the near future and some negative publicity that test may not save lives. (1/9/10)

HXL - Hexima Ltd.
Ten year old company developing technology for genetic modification of crops to enhance resistance to insects and fungal pathogens listed in August 2007 following IPO raising $37 million. Company value of $23 million is low considering the status of the technology, the time to commercialisation to justify the value, the funds raised and cash holding of $23 million. Nevertheless acceptance of genetically modified crops in some states offers some promise for the future as has the recent deal with DuPont subsidiary Pioneer Hi-Bred on fungal disease resistant crops. Prices down 72% since listing and down 61% in 2008 with recoveries associated with appointment of new CEO and deal with Pioneer Hi-Bred which now becomes a 5% shareholder. Up 13% in 2009 and down 42% in 2010 with appointment of Executive Chairman to reinvigorate the company. (27/8/10)

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