To EG,
Hi EG. Trust all is well. Just a comment about CST.
I recall in the past you suggested TB is a 3rd world problem and the worry is the 3rd world don't have the money to make it strong business. Its easy to understand Australians may think its a 3rd world problem because TB has almost disappeared from our vocabulary and its easy to think the same thing applies all over the 1st world. But the reality is it is far from that. Just look at Japan as an example. Its a big problem there.
As you know I am in the process of escaping from my (unsuccessful) high risk investment strategy into a more logical portfolio and I thank you for all your good advice in that direction.
But CST is not one I will let go. Just like VCR I am sure of its potential and to return your good advice I would like to suggest its worth taking a closer look at.
good luck
Ian

PS. Does anyone know where the 2nd world is?.

Ian mate The second world has gone with the collapse of the Soviet Union and its Eastern Block "allies" .
Good luck with CST . However the current price , on a back of envelope calculation is as follows :
Market cap $140m
Assume PER 30 ( because it is a "you know what I mean" ) .
That is NPAT $4.5m
Assume Net Profit Margin 30% ( because I'm generous ).
That is $15m in Revenue .

If they can achieve a Revenue of $15m pa at 30% net profit margin and market is happy to flag it at PER 30 , current price is fair .

As I said IAN , I have no idea what is the selling price of their GOLD new test and I really hope they are successful .
In biotech , since Sirtex commercialization , we did not produce a new significant entrant to this commercialized club .Time is up ..cheers eG

Hi eG.

The previous generation was widely acknowledged to be US$10,but this may have been less for quantity and more for smaller orders.It was stated at the AGM that QFT-Gold will sell at a premium.I have heard several mentions of US$15 and was I told by a health care worker in the US involved in TB testing that she had heard US$20.

Using very conservative figures of US$10 at a exchange rate of say .75cents it would only take sales of only just over a million units to achieve AUS$15mil.When you consider the potential market that I alluded to in my previous posts and much greater accuracy and reliablity of QFT-Gold one million unit sales starts to look very conservative.

Japan has already, prior to approval,started planning for the implimentation of QFT-Gold they cannot even use TST in the adult population because of widespread BCG vaccination.I'll put up some information regarding japan in my next post.

Martin

Regarding QFT- Gold in Japan this was an announcement from CST last week that you may find interesting.

JATA News and an Update 19 March 2004

Extensive use of QuantiFERON-TB Gold (QFT-Gold), known as QuantiFERON-2G in Japan, is a
major goal for Cellestis, and there have been many inquiries on progress in Japan.
The Japan Anti-TB Association (JATA) is responsible for the research and control of TB in Japan
(http://www.jata.or.jp/eindex.htm), and its major research body is the Research Institute of
Tuberculosis (RIT), in Tokyo. RIT has been performing extensive studies on QFT-Gold. Two
senior RIT scientists recently visited Cellestis and presented their work. They had run over 40
separate QFT-Gold clinical investigations, and the data from these studies consistently showed
the value of QFT-Gold.
Over 4000 people have been tested in Japan in clinical studies using QuantiFERON-TB Gold.
Results obtained not only indicate that QFT-Gold is far more sensitive than the traditional Mantoux
test (also called the tuberculin skin test, or TST) in culture confirmed TB patients, but that in
suspected TB outbreaks there is a correlation between the incidence of a positive QFT-Gold
response and the incidence of true TB transmission. It also provides a near perfect specificity
(negative in TB-free individuals), even amongst the repeatedly BCG-vaccinated Japanese people,
a high proportion of whom tested (falsely) positive in the Mantoux test.
This has been emphasised in the most recent edition of JATA’s official journal, Fukujuji,[great name!] (No.296,
3. 2004). In a speech presented by at a recent meeting of the Directors of all JATA branches, Dr
Toru Mori (Director of the RIT) identified QFT-Gold as a test for TB infection that he believes will
be widely used within Japan upon its regulatory approval in that country. The English summary of
the relevant sections of the article is;
New Method for Diagnosis of TB Infection: In case of new TB infection among BCG immunized
subjects, correct diagnosis of the infected with conventional TST was fairly difficult. This problem
can be overcome with the use of whole blood interferon-gamma test (QuantiFERON-2G). This
test, though not approved yet in Japan, will be used widely in near future. This test, together with
TST and CXR, is expected to be a powerful weapon at contact surveys in particular. It is desirable
that any facility, involved in the survey , can conduct this test in house.
This test can be conducted at any facility with ELISA skill. RIT is planning training sessions on this
test for such facilities.
Dr Mori has previously reported on the high specificity and sensitivity of QFT-Gold in Fukujuji. The
current edition of Fukujuji containing Dr Mori’s speech is not yet available on the JATA’s website,
and while it should be available soon it will of course be in Japanese.
Cellestis’ application for approval for QFT-Gold, lodged in May 2003, is before the Japanese
Ministry of Health, Labor and Welfare. A meeting was held with the Ministry in September in
Tokyo to answer the first round of questions, and we are now responding to some clarification
questions received in late February. We have also been advised the Ministry is restructuring as of
this April, merging departments, and we believe this may lead to a short delay in processing of our
application. Consequently we do not expect approval before June (previously May), but timing
and outcome of any regulatory application can never be guaranteed.
Other news is that Nippon BCG is to also act as a distributor of QFT-Gold within Japan,
collaborating with Nichirei. Nippon BCG is a company that makes both BCG vaccine and skin test
reagents, and has a large sales force operating in the TB field throughout Japan. Changes to TB
regulations have greatly reduced the use of tuberculin in Japan, and we are pleased that Nippon
BCG has seen the opportunity QFT-Gold provides for their TB-educated sales and marketing
team.


Martin

One of the problems with developing new products particularly in the medical world is that they can take what seems like an age to gain not only approval but acceptance. QFT-TB is no different. It has approval and now seems to be gaining acceptance.The link below that I came across this morning on another site shows QFT-TB not as an option to TST but as a requirement of the US army when re-deploying.This is clear evidence that institutions are beginning to switch to QFT-TB.

Some of the problems with the old test,TST,make it difficult for organisations like the military to have an effective TB control programme.In a TST, bacteria(PPD) is actually injected into the skin(usually the forearm) then 2 or 3 days later the resultant swelling is measured and judged either positive or negative.The patients risk factors have also to be taken into account when making a judgement on the swelling.This test can only be used once a year as the PPD that is injected into the skin nulifies results from subsequent tests.

If personnel are given a TST and have to be drafted elsewhere within 48 hours it is unlikely that the reaction to the PPD will be read within the required time frame.When personnel are given leave to return home, after say six months from somewhere with high TB incidence like Iraq a TST cannot be given.

QFT-TB has none of these problems;a small blood sample is taken and laboratory tested.There are none of the complications and difficulties that TST is known for.

It should be noted that QFT-TB is the first generation product(still used in the US) and is affected by PPD from a TST for the the same one year period.The second generation product QFT-TB Gold is completely unaffected(for reasons that I won't go into here but will explain further for anyone interested) by PPD.
QFT-TB Gold is already approved and on sale in Europe and the supplementary(180 day) application to the FDA in the US should be approved anytime within the next two or three months.It was lodged in December.

Any questions?

Here's the link I mentioned

http://216.239.53.104/search?q=cache:M4 ... n&ie=UTF-8

Martin

Hi Martin.

From the example you've given (the military), I can see how either test could have positives and negatives. The old test could be good (I imagine) because it doesn't need laboratory processing of the results, which may be hard to come by for an entire company out in the desert somewhere, with dodgy supply lines. 1 medic with a few jars of PPD can probably test the entire company without any extra equipment. But obviously the new test is good in cases where you actually want accurate results...

(Disclaimer - I know nothing about how the army works.)

Bergholt.

Hi bergholt,

Mass screening (CSTs target market) of personnel is not conducted on manoeuvres it's carried out before and/or after field trips.This also applies to other tests such as for HIV.The link in my last post illustrates this.

Its a fair point that TST does not require a laboratory but this is also one of its failings.The reading of the reaction to the injected PPD is subjective and dependant on the skill of the health worker; a QFT test conducted in a lab gives a scientific (and more accurate) result.


Thanks for the question
Martin

Interesting info.on Google if one puts in latent TB testing. A number of universities in US eg U of Texas are requiring students to be tested for latent TB before next semester. Cost of Mantoux test is $10 US.

A company Elispot is developing a blood test for latent TB at Oxford University using cell culture. A year old report indicates that they hope to get US approval on about three years.

Hi Geoff,

As you say a number of universities are testing for TB and I was only reading yesterday that students are being given a choice which test they are given.If I can re-find the link I'll post it.

The company you refer to have a test called Clinispot and in laymans terms it is testing for the same thing using ESAT-6 and CFP-10 the big difference however is that QFT uses whole blood. Clinispot have to overcome this if they they want to be a serious competitor and as you point out they are already a long way behind.

Martin

I should clarify that last post

Both QFT-TB Gold and Clinispot use ESAT-6 and CFP-10 but only QFT uses whole blood

Here's the link that I mentioned the other day regarding testing at university

http://www.emerson.edu/emplibrary/hs_Health_Form.Fall04.pdf


It may seem like a small thing but it is yet more evidence that institutions(like the US army in the previous link) are starting to use QFT-TB.

When QFT-TB Gold is approved it will completely replace both QFT-TB and TST as it has much greater accuracy(TST returns 30% false negatives,QFT-TB Gold less than2%) and reliability(BCG renders TST unreliable,QFT-TB Gold is completely unaffected by BCG)

QFT-TB Gold has no competition.Clinispot has not been approved and by their own admission is at least two years away from approval.The most important thing about Clinispot is that it unsuitable for mass screening. Clinispot (unautomative) can perform about 10 test in a day,QFT-TB Gold about 150 per day.Using an automated precedure Clinispot can give around 50 or 60 a day,QFT-TB Gold several hundred.

Martin

Hi rogerbush,yes it was quite a jump today with good volume.

There could be a number of reasons:

1)the US army using QFT-TB could be one of them.See my post and link a few posts previous.

2)A presentation this week to fund managers that CST attended

3)It could be speculation that QFT-TB Golds FDA approval is imminent.It will be within the next 2 or 3 months as it is a 180 supplementary application.This means a result is given within 180 days of lodgement,it was lodged in December.

4)Imminent approval in Japan.This may have a greater impact on the share price than US approval.I suspect though that US approval will come first but it is difficult to predict.

Martin