Irgendwie taucht die Firma nirgendswo auf...
On Monday, shares of the Irish biotechnology outfit Trinity Biotech (TRIB) surged 57% to
$5.14, nearly a four-year high, after
U.S. regulators approved Trinity's
10-minute test for detecting HIV. The
stock of OraSure Technologies
(OSUR), which makes a rival HIV test,
fell 5% to $8.25.
"The HIV rapid test could jump
Trinity's growth curve very
dramatically," says Elemer Piros, an
analyst at Rodman & Renshaw, a
New York investment bank, "because
of the attractive margin that it could
experience in the U.S."
The Food and Drug Administration's
blessing makes Trinity's Uni-Gold
Recombigen HIV the first product
approved for testing blood serum,
plasma or whole blood to detect
antibodies to the virus that causes
AIDS. Trinity said the trial data it
submitted to the FDA showed that its
test detected 100% of the HIV
positive specimens and was 99.7%
accurate on the negative samples for
about 9,000 patients. OraSure's
OraQuick Rapid HIV-1 test, approved
in November 2002, takes 20 minutes
but can only be used on whole blood.
Both tests are a step up from
conventional laboratory tests, which
often take hours or days to give a
result.
Trinity, which plans to market the test
to government programs and
physicians, expects hospitals to be its
main market. The company says the
test could provide immediate help to
medical professionals who are stuck
with potentially contaminated needles
about 800,000 times a year and
require an immediate HIV test. In
addition, about 200,000 pregnant
women at risk for HIV are tested in
hospitals each year.
Currently, Trinity's test is sold in Africa
and Asia and approved for the World
Health Organization's HIV testing
program in Africa. The company sells
about four million tests in Africa and
expects to sell between 400,000 and
500,000 tests in the U.S. next year.
Trinity says the conversion of
lab-based HIV tests to rapid tests
represents an annual market
opportunity of $30 million.
For the third quarter, the company,
which makes more than 500
diagnostic products for detecting a
variety of diseases and disorders,
posted a profit of $1.8 million, or four
cents a share, on revenue of $16.9
million.
Rodman & Renshaw's Piros predicts
Trinity will earn 14 cents a share for
2003. Next year, he projects the HIV test will bring in sales of $5 million, rising to $8
million in 2005 and $11.5 million in 2006. While that $11.5 million would only be 13% of
total revenue, Piros predicts it will be 20% of gross margins, bringing annual profits to
23 cents a share.
Prior to Monday's announcement, the consensus estimate among analysts polled by
Thomson First Call was for Trinity to earn 17 cents a share for 2003 and 19 cents for
2004.
"Trinity's revenue growth rate has been about 25% per annum; we've been a very
acquisitive company," says Trinity President Brendan Farrell. "Earnings growth has not
matched as fast, since we have invested a lot in a direct sales force in Germany and the
U.S. But earnings should match revenue growth going forward."
Farrell says the HIV test currently accounts for 7% of the 12-year-old company's
revenue, which he estimates to be about $67 million this year. Gross margins are
currently 45%. He expects the test to sell for between $10 and $13, and bring in gross
margins "north of 80%." By the end of 2004, 15% of the company's sales will come from
the HIV test, with about half from the U.S.
According to Piros, the wildcard in the equation is the adoption by physicians outside of
hospitals, which he hasn't included in his calculations. That's because family doctors
may avoid the rapid HIV test since they'd need to offer immediate counseling to those
testing positive.
But problems over at OraSure may give Trinity an opportunity to corner more of the
market quickly. Even though OraSure's test has been available for a year, three months
ago the company terminated its marketing relationship with Abbott Laboratories
(ABT), its sole distributor. OraSure cited Abbott's failure to meet its obligation of
minimum monthly purchases.
"Orasure had a 12-month lead," says Piros, "but it was equalized by the fact Abbott
didn't carry the day. Now, it needs to do the same process as Trinity does with building
a sales force. Plus, the OraSure version test isn't as user friendly in the hospital
environment as the Trinity product."
Quote:
"The playing field is level right now," says Rodman & Renshaw's Piros, "the only
difference being Trinity has a better quality test. OraSure is currently valued at $340
million and Trinity is valued at half that much. The key difference is perception because
OraSure was the market leader. But according to our thesis, this difference could be cut
and the situation could completely reverse during the next six to 12 moths after Trinity
establishes that its test is more favorable and will be adopted." (Piros doesn't own
shares of Trinity Biotech; Rodman & Renshaw has an investment-banking relationship
with the company.)
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