Thursday, 23 October 2008

Med BioGene adds Sales and Marketing Horsepower

MED BIOGENE INC. (TSX:V-MBI)
Basic shares: 40 million
Fully diluted: 58 million
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As you may remember, back in April of this year Med BioGene acquired the rights to commercialize a lung cancer prognostic test that was developed by the University Health Network and some of the leading lung cancer oncologists.
Fast forward to the present, the lung cancer tool and Med BioGene have drawn the attention of premier diagnostics companies and top industry experts. It has provided Med BioGene with significant exposure and the company is viewed as a serious up-and-coming player in the world of gene expression-based diagnostics.

While Med BioGene had initially considered partnering with an established diagnostic company as a vehicle for commercialization, after discussions with numerous possible partners, and in light of the successful commercialization strategies of industry notables such as Genomic Health (Nasdaq: GHDX), XDx, Agendia and Pathwork Diagnostics who offer their tests directly to oncologists from their own clinical laboratory (and not through a partner), Med BioGene decided to follow this established strategy and offer their products from their own clinical laboratory in the United States. As a result, Med BioGene expects to begin commercial sales of LungExpress Dx™ in the United States in mid 2009 while introducing their other tests upon completion of development.

This is a prudent strategy given the valuations of these industry notables. Genomic Health, for example, offers a breast cancer prognostic test that provides information to oncologists in respect of that disease which is similar to the information that LungExpress Dx™ provides to oncologists in respect of lung cancer. The market sizes for breast cancer and lung cancer are also comparable. Genomic Health had US$64 million in revenues in 2007 and currently has a market capitalization of US$520 million, and recently had a market capitalization as high as US$680 million.
The addition of Vineet Bansal and Debbie Corazzelli, both being premier sales and marketing professionals, is a strong move in the right direction. They recognize the potential in Med BioGene’s products and they have the experience to successfully launch LungExpress Dx™ by mid 2009. As mentioned in the release, both individuals were previously with XDx and were integral to the successful launch, marketing and adoption of AlloMap®, XDx’s first gene expression-based test to help doctors manage the care of stable heart transplant recipients. Within the first two years of the launch of AlloMap®, sales revenue increased 1200% and more than 50% of all U.S. heart transplant centres were using the test.