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Biosignal (BOS) 16c

CRITERION'S starting point with biotechs is that the discovery in question needs to have an easily understood and commercially viable application, which is where Biosignal at least gets to the starting block.

Biosignal's reason for being is the commercialisation of patented molecules which prevent bacteria from forming hazardous biofilms.

From studying seaweed, Biosignal's founders discovered that hazardous films are created by bugs "talking" to each other via electronic signals and mobilising with malevolent intent.

It sounds like a scenario from early sci-fi horror movies such as Steve McQueen's 1958 debut effort The Blob, interpreted by film buffs as a Cold War allegory but really just harmless low-grade schlock.

But bugs really do like to chat. So interrupt these signals and the bacteria are prevented from multiplying.

Biosignal is "biomimicking" with manufactured molecules what nature has taken millions of years to perfect. Practical applications include preventing barnacles and slime from attaching to maritime structures and halting corrosion of oil and gas pipes.

Biosignal's immediate revenue hopes lie with coating both sides of contact lenses to remedy the widespread problem of contamination, especially with users moving from disposable lenses to the longer-wearing variety.

The global market for contacts consists of 100 million people and 200 million eyes (more or less) and is valued at $US5billion ($6.3 billion). About one in five users suffers adverse effects through bacterial contamination.

Biosignal has signed an agreement with an "international contact lens company" to develop the product, with an agreement expected in the first half of 2007.

Biosignal chief Michael Oredsson describes contact lens protection as the "first cab off the rank" for Biosignal, but there's also strong interest from resource companies, who globally suffer $US600 million of bacteria-induced pipeline corrosion.

Biosignal listed as a University of NSW spin-off and the pillar of learning still holds a 10 per cent stake. Biosignal is also backed by Japan's Restoration Group, which took up a 10 per cent stake through a shortfall in a recent $4.2 million rights issue.

Biosignal made a $1.64 million loss in 2005-06 and has cash reserves of $5 million.

The stock has trended nowhere to date, but progress on commercialising the contacts film could prove the requisite catalyst. SPECULATIVE BUY.

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