More Shine for Biosensors as Costar Fizzles Out
Biosensors International Group: More shine for Biosensors as CoStar fizzles out
Closest competitor stent platform fails. Conor Medsystems, recently
acquired by JnJ for US$1.4b, announced on 7 May 07 that its CoStar stent
failed to meet its end goal in the COSTAR II clinical trial against Boston
Scientific's (BSX) Taxus stent. JnJ has stated that Conor will stop all clinical
trials of the CoStar stent and will not submit the product for approval to the
U.S. FDA. Conor will also stop sales of the stent in Europe, Asia and Latin
America where it is already approved. BIG now remains the sole up-andcoming
player with a new integrated Drug Eluting Stent (DES) delivery
platform coupled with a proprietary drug and biodegradable polymer.
Implications of US$15m. BIG has also announced that it will be receiving
payment of US$15m for a legal action started in Jan 06 against Guidant
(acquired by BSX for US$27.2b in Jan 06). Besides this adding to the
bottomline for FY08, we are now more confident of BIG's licensing and
legal capabilities with regards to Intellectual Property licensing.
Possible stream of licensing from JnJ. With the COSTAR II failure, JnJ
has indicated that they may explore putting sirolimus drug on Conor's stent
system. As stated in our report on 19 Jan 07, we anticipate that companies
selling stents like JnJ, Abbott, Guidant and Medtronic may be at a significant
competitive disadvantage if they want to incorporate limus derived drugs
into biodegradable polymers (future direction of DES) because BIG has an
issued US patent (6939376) that covers the use of all limus derivatives for
use on biodegradable polymers in stents.
Clarifying COURAGE trial implications. We view that the recent
COURAGE trial results as conclusive rather than revolutionary. Conclusive
in the sense that current medical guidelines that medical therapy prior to
angioplasty and stenting are consistent with the COURAGE trials. Please
refer to further details of our thoughts on the COURAGE trials in Exhibit 1.
Maintain BUY. We continue to like BIG for its strong competitive edge in
its IP standing even prior to its CE mark approval. We have not factored in
possible licensing revenue streams. Our fair value stays at S$1.05 based
on a 25% discount to its first year of substantial net profit to present value.
Maintain BUY. (Kelly Chia)