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Biotech could get a big investment boost: MicroCap.com

Danny Deadlock Danny Deadlock, TickerTrax
0 Comments| June 28, 2010

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BioMS (TSX: T.MS, Stock Forum; 33 cents)

www.biomsmedical.com

This is a follow-up to BioMS, which we introduced on Stockhouse in Q1. This is a non event for the shares of Spectral (TSX: T.SDI, Stock Forum) short term, but it is extremely important third-party validation. We have been closely following BioMS because the stock trades at a nice discount to its $33 million in cash (worth 36 cents/share) and because we could then get free exposure to its investment in Spectral.

BioMS owns 30 million shares of Spectral and 15 million warrants, which if exercised would give them control of 49% of the stock. The Spectral shares are worth another 13 cents/share to BioMs (over and above the cash value) while the $33 million in cash will eventually provide exposure to other health care investments.

On June 23, it was quietly announced that Spectral received the McMaster University Industry Partner of the Year Award for its contribution to the discovery and development of aptamer technology for the diagnosis and treatment of sepsis. The discovery research was performed in the laboratory of Dr. Yingfu Li, a leading authority in the research and development of aptamers, at McMaster University in Hamilton, Ontario.

From an outside investor's perspective, this will likely go unrecognized. However, McMaster is one of the leading research universities in the world and this is very important not only for the work they are doing on Sepsis, but could lead to future commercial partnerships. Nominations were received from university and hospital faculty and staff, with final selection by a committee of business executives, government officials, and senior university administration.

"This recognition reflects our broad expertise in the field of endotoxin and its role as a cause of sepsis," said Dr. Paul Walker, President and CEO of Spectral. "The combination of Dr. Li's extensive work with aptamers and Spectral's pioneering work with endotoxin has led to the development of aptamers that can potentially bind to endotoxin. While our current focus is clearly on managing the pivotal trial for Toraymyxin(TM) in the U.S., this technology could open up future opportunities in the area of sepsis, providing unique, new tools for its diagnosis and treatment. Our work with Dr. Li and McMaster University is ongoing and we look forward to the further development of this technology and the possibility of future discoveries that this partnership could facilitate."

Aptamers are a new class of pharmacologic molecules based on DNA fragments that mimic protein action, allowing them to bind specifically to a targeted molecule.

Spectral continues preparations for the initiation of a U.S. trial for Toraymyxin™, a therapeutic hemoperfusion device that removes endotoxin from the bloodstream. Toraymyxin™ has the potential to fulfill an unmet need for the approximately 250,000 patients that develop severe sepsis or septic shock in the U.S. each year. In combination with their EAA™ diagnostic, this would be the first theranostic treatment for sepsis.

Toraymyxin has been used on more than 70,000 patients, primarily in Europe and Japan, for the treatment of severe sepsis caused by endotoxemia.

Any FDA approval could have a significant impact on the share price of SDI (and BioMS) because the revenue growth could be quite dramatic. In typical biotech fashion, these require patience. However, they are extremely difficult to catch “after the fact” because approvals or positive trial developments tend to move the share prices rapidly.


Disclosure: Danny Deadlock owns 50,000 shares of BioMS (purchased in 2009).


Current and past reports are archived on our Stockhouse message board at: https://stockhouse.com/Groups/GroupInfo.aspx?g=50540


Danny Deadlock has specialized in micro cap and small cap companies for over 25 years and is a registered member of the Stockhouse community since 1997. You can find his website at www.MicroCap.com - a service that has specialized in TSX and TSX.V penny stocks since 1998. You can also email Danny at microcap@telus.net



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