I am pretty sure the TB antigen rights you mention only last until 2013, presumably because the patent expires then (I believe its a Danish co). The most valuable patent we have at present, I believe, is the In-Tube one which covers a blood collection tube containing antigens ( for TB and other conditions) and lasts beyond 2020. So after 2013 another company can produce a generic test in any country but not one that involves taking blood directly into a tube holding the antigens already. Thus such a test would involve and extra step (although only one rather than 3 collection tubes) It is hard to see such a test competing effectively in developing countries in particular because of the prominent Quantiferon brand,the advantages of the In-Tube arrangement and the fact CST is supplying machines specifically to process the 3 tubes which acts as a barrier to competitors. So I'm not saying lots of generic tests will necessarily appear in 2014, but just that is relevant in assessing the value of the co. Possibly some people think that CST has some 'trade secret' that no one else can replicate, but this is not the case. I made an effort to learn the basis of the test and it is remarkably simple and in the public domain. Looking more longterm its necessary to plan for when the In-Tube patent expires to maintain the dominance of Quantiferon (ie good profit margins). I had assumed that the current R and D would have something in the pipeline here, but who knows, maybe its not doing that well. Indeed, one of the most frustrating things is that they cannot tell us what they're working on which makes it hard to judge the value of the company For example, the fingerprick patent application might be really crucial for PON testing but we don't know because we don't know how this is progressing. In my experience, Qiagen products are used in research, rather than diagnostics, therefore even though there might be synergy created by the deal, it is not necessarily ideal for cornering the TB diagnostics market. Let's hope that a more diagnostic-type company now comes forward. I guess this should happen if the 3.55 is really miles too low. PS (on the Bioshares website there is a really good section on evaluating biotechs and it talks about how important IP in valuing co.s http://www.bioshares.com.au/investmentguide.htm.)
CST Price at posting:
$3.45 Sentiment: Hold Disclosure: Held
