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Biolidics - Unicorn medtech in the making?
03-10-2019, 08:49 AM.
Post: #1
Biolidics - Unicorn medtech in the making?
Medtech offers booster shot for Singapore's biomed
Major job-creating sector expected to continue growing; 50 regional HQs from leading medtech firms based here
 It's been a tough year for the manufacturing sector, but the medical technology sub-sector has had a standout performance so far and is expected to continue to do well on the back of growing demand for high-tech medical equipment in Asia and opportunities brought on by digitalisation. PHOTO: ST FILE
Singapore

IT'S been a tough year for the manufacturing sector, but the medical technology sub-sector has had a standout performance so far and is expected to continue to do well on the back of growing demand for high-tech medical equipment in Asia and opportunities brought on by digitalisation.

One-half of the biomedical manufacturing sector, it is also the more stable component and a larger jobs creator, with demand for talent still growing.

In an exclusive interview with The Business Times, Lim Kok Kiang, EDB's assistant managing director overseeing advanced manufacturing, said the long-term fundamentals continue to be strong for the medtech industry as a whole, despite the current uncertain economic climate that could lead to "unpredictable short-term fluctuations".

"There's no running away from the fact that the Asian economy is continuing to grow and that there's an emerging middle class in this part of the world that will increasingly need more sophisticated products and services," Mr Lim said, adding that the population is also ageing.

Official data shows that in 2018, the medtech sector contributed S$13.3 billion to Singapore's economy, from just S$3.1 billion in 2008. The number of people it employs has also grown by more than 80 per cent over the same period to reach 14,806 in 2018.

The medtech sector expanded 6.7 per cent year-to-date to August, compared with the same period last year. This helped the biomedical manufacturing output which rose 8.7 per cent during the same period. Pharmaceutical manufacturing, the other half of biomed industrial production, also boosted the sector with a 9.4 per cent gain, although the sub-sector tends to be more volatile with some months seeing double-digit growth that can quickly plunge to negative territory.

In the meantime, electronics has been going through a rough patch globally. In Singapore, the sector saw a year-on-year contraction of 7.8 per cent for the first eight months of 2019.

"Singapore's manufacturing sector has quite a diverse base of activities and that's actually very welcome because ultimately, different industries follow different cycles and having a good mix of industries actually allows us to have a more sustainable manufacturing sector," Mr Lim said.

"From that perspective, healthcare and particularly medtech will definitely contribute to that ability for us to continue to have more stable and sustainable growth in manufacturing," he said.

Singapore's vision to make the biomedical industry a key pillar of its economy took shape about two decades ago, when the government began building up its human and industrial capabilities in biomedical research and life sciences. It is one of the reasons the medtech industry has been able to recruit the talent it needs, even as it remains hungry for more.

Recruiter Randstad said it has seen a 50 per cent increase in talent demand within the medtech industry over the last two years, specifically for roles in research and development (R&D), IT and manufacturing.

At hearing-aid maker Sivanto's Singapore headquarters, over 70 per cent of its 1,183 employees are Singaporeans or permanent residents, and the company said 40 per cent of its workforce here are "highly skilled". The company recently merged with Denmark-based hearing aid company Widex to form WS Audiology.

"Among the many strategic reasons for our presence here in Singapore is the availability of talent in the fields that are critical to our market growth in the medtech industry," said Roberto Di Fiore, chief operations officer at WS Audiology.

Over 80 per cent of the 5 million units of hearing aids it manufactures annually come from Singapore, and 70 per cent of its product portfolio are made exclusively here. The products are shipped to 125 countries, with the US, Europe and Japan among its main markets.

Mr Di Fiore said the company's ambition is to continue growing and to "match our growth of the past five years", even though he did not reveal specific numbers.

Another major medtech player here, Boston-headquartered Thermo Fisher Scientific, said it has seen its output here double in the last three years to US$800 million. The company manufactures what it calls "high value add" products in Singapore, and the R&D team here is credited with developing Thermo Fisher's first cloud-enabled instrument to carry out genomic applications.

The company started its operations here in 1996 with just four product lines, including a DNA amplifier which is used in genetic research. Today, more than 10 product lines are made here only.

Ravi Shastri, vice-president and general manager for Thermo Fisher in Southeast Asia and Taiwan, said Singapore is an important base for Asia given its access to the Asean market, which has a population of about 650 million.

While Mr Shastri does not think medtech is immune to slowdowns, he believes prospects for the industry will be good as long as healthcare remains a priority.

"For example, we have a huge business on the environment side, and these (issues) affect everyday life. In Singapore, we've got the haze and whatever the macro situation might be, we'll still focus on breathing good air," Mr Shastri said, in the context of the company's line of air sampler products.

One of the industry's newest entrants, orthopaedic implant maker Syntellix Asia, has hopes of expanding its presence here by some 20 times within five years. This would mean overall investment of some S$200 million with a projected cumulative revenue of S$500 million.

The firm specialises in bioabsorbable bone implants made from a patented magnesium alloy. It launched its Singapore manufacturing plant early last month with plans to capture the Asian market through Singapore.

Speaking to The Business Times, Syntellix founder, CEO and executive chairman Utz Claassen had full praise for Singapore's healthcare infrastructure and its banking and finance system, noting that Singapore has everything one needs to be "entrepreneurially successful" in medtech.

Prof Claassen said: "We thought if Singapore is the top medical service hub in Asia, it should also be our hub for our sales and distribution and production effort in Asia."

EDB data shows that 50 regional headquarters from the world's leading medtech firms are based here, and industry players say as the sector grows, companies here will benefit.

"The more companies come in and invest in Singapore in these end segments, the better it is for us because these are all end markets," Mr Shastri said.

Mr Lim said: "It applies to a bigger horizon as well. Some of them may also choose to work with local partners to supply them parts or components. This whole ecosystem ... is also a part of the value proposition that I think Singapore can provide as well."

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03-10-2019, 08:51 AM.
Post: #2
RE: Biolidics - Unicorn medtech in the making?
Biolidics - CGS-CIMB
Our Add call and S$0.32 TP are intact for this under-covered company.
ADD - Lower 1H19 loss; stronger China foothold
Maintain Add. Our S$0.32 TP is based on 12.0x FY20F EV/sales (20% below global industry average). Faster uptake of LDTs and strategic M&As are key re-rating catalysts. Downside risks could stem from unexpected project delays and unfavourable policy changes.

■ Higher product sales and lower financing costs drove the S$1.0m reduction in 1H19 net loss, deemed within expectations as we expect stronger 2H19.
■ Successive new partnerships in China validate Biolidics’ unique positioning in upstream liquid biopsy, and boost sales for its FX1 system and FR1 biochips.

1H19 net loss narrows, within our expectations
● BLDreported1H19revenueofS$1.0m,up59.0%yoyonthebackofhigherequipment sales (ClearCell FX1 system to Sysmex Corporation) and biochips and other consumables. The group has a strong net cash position of S$9.1m at end-1H19.
● Theabsenceoffinancingcostsandfairvaluechangesforfinancialliabilities(convertible loans and redeemable convertible preference shares have been fully exercised in 2H18) also led to the narrowing of 1H19 net loss from 1Q18’s S$2.8m to S$1.8m. We deem this in line against our FY19F net loss of S$2.9m as we project stronger product sales in 2H19 from the recent partnerships.

Inked two partnerships in China in a span of two months
● On 25 Jun 2019, Biolidics announced its 4th partnership in China with Zhongshan TopGene to develop and commercialise lab developed tests (LDTs) in the field of circulating tumour cells (CTCs) using ClearCell FX1 system and FR1 biochips. This is a wholly-owned subsidiary of TopGene Tech (Guangzhou) Co. Ltd, which specialises in precise diagnosis and cancer treatment in China. Zhongshan TopGene is a new customer for the group.
● This follows its earlier partnership with Beijing-based Genecast Biotechnology, which owns a technology platform for companion diagnosis based on cfDNA, as well as has extensive hospital cooperation and strong talent force (>60% of R&D team are master/ doctorate holders). Recall that North Asia has consistently been an important market for Biolidics (more than 50% of its FY15-18 sales contribution).
● We understand that BLDhas identified seven other lab partners in the pipeline; coupled with volume ramp-up of LDTs post achieving the respective lab and clinical validation, these should underpin our FY18-21F topline CAGR of 77.7%.

■ Higher product sales and lower financing costs drove the S$1.0m reduction in 1H19 net loss, deemed within expectations as we expect stronger 2H19.
■ Successive new partnerships in China validate Biolidics’ unique positioning in upstream liquid biopsy, and boost sales for its FX1 system and FR1 biochips.

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08-10-2019, 09:38 AM.
Post: #3
RE: Biolidics - Unicorn medtech in the making?
Biolidics' peer in the US, Guardant Health..interesting insights about this niche healthcare sector...

Better Buy: Illumina vs. Guardant Health

Which stock wins in a matchup between a gene sequencing pioneer and a fast-rising liquid biopsy leader?


Keith Speights
Sep 15, 2019 at 7:30AM


DNA's structure wasn't discovered until 1953. The human genome -- the complete set of DNA sequences in the human body -- wasn't fully sequenced until 50 years later. Fast-forward to today, and we're still only in the early stages of genetic research.

Several companies are already generating significant revenue by focusing on genetic research. Two that especially stand out are Illumina (NASDAQ:ILMN) and Guardant Health (NASDAQ:GH). Illumina dominates the gene-sequencing market, while Guardant Health is a fast-rising star in developing blood tests that detect DNA fragments of cancer cells. Which of these two stocks is the better choice for investors to profit over the long run from the continued advances in unlocking the power of DNA?

[Image: ?url=https%3A%2F%2Fg.foolcdn.com%2Fedito...&op=resize]IMAGE SOURCE: GETTY IMAGES.

The case for Illumina

The key to unleashing the opportunities from DNA is to first map the sequence of the chemical base pairs in DNA. No company has had a bigger role in this sequencing than Illumina. The company's systems were instrumental in reducing the cost for sequencing a human genome from over $10 million just 13 years ago to around $1,000 today.

What's even more exciting, though, is what Illumina could do in the future. The company believes that its NovaSeq platform should eventually enable human genomes to be mapped for around $100. This would open up the world of gene sequencing to organizations that can't afford to use the technology now.

Perhaps the biggest opportunity for Illumina's systems is in cancer research and treatment. Illumina CEO Francis deSouza recently stated that "it is increasingly clear that genomic information will transform the standard of care for oncology patients." Illumina is already at the forefront in enabling researchers to identify the genetic links to cancer and to help determine the most appropriate therapies for cancer patients.

The company also stands to grow as more countries initiate population genomics efforts to sequence the genomes of hundreds of thousands of people. Illumina's technology is being used in several of the early population genomics projects across the world. Other growth drivers for Illumina include research into rare and undiagnosed diseases, consumer genomics such as products offered by Ancestry and 23andMe, and non-invasive prenatal testing (NIPT).

Illumina is in a great financial position to sustain its leadership in gene sequencing innovation. The company generated over $3.3 billion in revenue last year with a profit of $826 million. Wall Street analysts expect Illumina to deliver average annual earnings growth of nearly 16% over the next five years.

The company is also hoping to close on its acquisition of Pacific Biosciences of California by the end of this year. This deal would give Illumina a top spot in the long read gene sequencing market, which is more costly than Illumina's specialty of short read gene sequencing but can map some parts of the genome that short reads can't. 

The case for Guardant Health

Liquid biopsy is something of a holy grail in cancer detection. Biopsies involving tissue samples frequently require invasive procedures and are usually done only when cancer is already suspected in a patient. Liquid biopsies, though, are simple blood tests that hold the potential to detect cancer at early stages.

Guardant Health ranks as a leader in the development of liquid biopsy products. The company's Guardant360 liquid biopsy is used to determine the appropriate therapy for patients with advanced-stage cancer. GuardantOmni is another liquid biopsy that biopharmaceutical companies use to screen patients for clinical studies evaluating cancer drugs.

These two products, especially Guardant360, have fueled Guardant Health's meteoric revenue growth. The company reported 178% year-over-year revenue growth in its latest quarter. Guardant360 has now been used for over 100,000 patients by more than 6,000 oncologists.

Earlier this year, Guardant Health announced the availability of its Lunar DNA assays for research use only. These tests are focused on early stage cancer detection and identifying the recurrence of cancer.

The addressable U.S. market for Guardant360 and GuardantOmni is around $6 billion per year. This alone represents a tremendous opportunity for Guardant Health. But the potential market for the company's Lunar assays is much larger -- over $45 billion.

Other companies are racing to compete in the liquid biopsy market as well, though. Some of these rivals have deeper pockets than Guardant Health, which isn't yet profitable. However, Guardant Health's early lead puts it in a good position for long-term success.



Better buy

Successful investing in healthcare stocks requires a careful examination of companies' growth prospects, financial positions, and competitive landscapes. I think that both Illumina and Guardant Health are in reasonably good shape on all three fronts.

As an up-and-coming company, Guardant Health's growth prospects appear to be greater than Illumina's. On the other hand, Illumina's financial position is significantly better than Guardant Health's. Both companies face competition, but Illumina's current market dominance gives it a stronger moat.

I think that which stock is the better choice boils down to your investing style. More aggressive investors will probably prefer Guardant Health, while less aggressive investors would be better off with Illumina. I like (and own) Guardant Health and Illumina. My view is to pick both of them.

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