By: brucebadeau 08 Apr 2005, 11:51 AM EDT Msg. 5536 of 7900 Jump to msg. # I want to clarify some important facts...
1. Diagnostics is a large market and Therapy is ten times the size.
2. Diagnostics is cheaper to enter, faster to generate revenue, hence BOCX's current strategy of licensing the major diagnostic companies… very necessary to employ their immense marketing muscle and their respective market shares... Ever since Technicon invented the first high speed automated blood analyzers, the world has been purchasing growing numbers of these machines that run dozens of different assays as rapidly as 8000 per hour… This is what ABBOT does and the Architect is their newest fastest machine…
3. RECAF is a molecule either produced by living cancer cells OR by dying ones, NOT by benign tumors… Tumors have a living surface with the inside essentially dead...The RECAF comes out of the cancer cell or tumor and surrounds the spaces around the cells.
4. The BOCX Patents have many claims about methods of diagnosis and therapy involving RECAF, which itself is not patented - you can't patent a naturally occurring molecule...
5. Certain anti-bodies produced by BOCX have an affinity for RECAF and will "find" the RECAF...hence "Mark" it.
6. When your PSA is elevated, it indicates something is wrong with your Prostate… likely a tumor… but is it cancerous or benign?
7. The next step required when using current, un-enhanced PSA technology is a needle biopsy (six (6) of them at $300 to $500 cost and several days of anxious waiting for results) and 3% of the patients become infected…
8. 2/3 rds of the time the screen indicates you may have cancer when (thank God) the biopsy indicates you don't...
9. Because of the very high specificity (95%) of the BOCX technology, when used with PSA screens, it could nearly eliminate the requirement for those 2/3 rds to have a needle biopsy… WHY, because benign tumors (a source of PSA) don't produce RECAF and would not be "MARKED"… by BOCX's anti-bodies.
10. Possibly, there are over 5 million PSA tests performed annually and about 230,000 confirmed cases of prostate Cancer each year in the USA. Reversing the math would indicate about 700,000 probable cases needing biopsies… (for every 100 elevations of PSA, only 33 are found to be cancerous). With BOCX technology enhancing PSA technology, at $400 per biopsy we could eliminate approximately 460,000 biopsies or, nearly $185 million or more of unnecessary tests.
11. How much more would you pay (PSA tests range between $87 to $127) to NOT have the anxiety, pain, risk of infection and the cost and achieve much better accuracy – (with PSA some cancers are missed)? Another $25 or $50…. I would…
12. My research shows a current PSA test kit costing the LABS just over $26.71 on a contract basis – high volume machines – and $48.80 on a non-contract basis – usually the low volume machine.
13. Now how much more could an ABBOTT charge for a patented technology that does a significantly better job?
14. Maybe $20 to $30 more (my guess) which could translate into $40 to $60 more at the retail price… ($87 + $40 or $127 + $60.
15. Another guesstimate… BOCX is likely to have a Royalty between 5% and 15% the industry average... using an average of 10% of $20 marginal revenue = $2.00 per test. Now I'm assuming BOCX gets royalty based on the marginal increase in revenue due to enhanced technology...
16. Maybe we can safely use $2.50 per enhanced test… allowing for price ranges and possible higher royalty rates…
17. OK, estimating 20% (Abbott's USA share) of 5,000,000 PSA test = 1,000,000 x $2.50 per test = $2,500,000 in BOCX Royalties from ABBOTT… just USA…
18. The World PSA market is double that of the USA so we can make the case that a full year of Royalties just from Abbott's suspected PSA enhancement market could top $7,000,000…
19. REMEMBER there is possibly another 40% points of the market or twice what we potentially have from ABBOTT… say the top three control 60% or 20% each. This roughly translates into another $14 million in royalties from two more licenses… or $21,000,000 in Royalty Revenue.
20. Keep in mind the operating costs of BOCX, while they are surely likely to rise, are less than $2,000,000 per year….
21. If you could own stock in a bio-tech company that showed an 80% Pre-tax margin, would you buy it…?
This royalty revenue is like having a $200,000,000 revenue company with after tax profits of $20,000,000, or $0.50 per share with 40,000,000 fully diluted shares outstanding… Maybe this company sports a 30 multiple because the total market hasn't been addressed… We get a $15 stock for just PSA alone….
I have some more analysis, and more to do, but this is enough for today…
I will say that these are best guesses – using independent inductive reasoning… I haven't addressed timing or cash flows or more importantly other huge diagnostic markets or what competitive technologies are on the horizon. Nor have I discussed the importance and prospects for collaborative research on using Box's technology to hunt cancer cells…
Remember now there are many ways to kill cancer. But they are broad spectrum… it is like killing rodents in the city dump with tactical nuclear weapons… you get all of the rats but you fry the entire city… I watched my best friend wife fade away after being diagnosed with bone cancer…Chemo just devastated her and probably killed her, just a little later than the Cancer would have… and at a huge reduction in quality of life… just awful for the family as well as the cancer patient….
BOCX technology has the potential to be a smart bomb that will target and when linked with a killer anti-body or toxin, selectively kill cancer cells… not the patient… We need more collaborative research to make this happen. How many of you shareholders have connections with major Cancer research hospitals? Have you considered inviting these connections to look at BOCX's technology and get them interested in some collaborative research?
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