Universal Biosensors fails confidence test

Universal Biosensors (UBI) delivered its full-year result yesterday that was ahead of expectations. Pity no one was listening.

Universal Biosensors (UBI) delivered its full-year result yesterday that was ahead of expectations. Pity no one was listening.

The fact is, it’s not profit or sales figures the market cares about but the launch of its blood coagulation device it is jointing developing with Siemens. The bad boy of the life science sector again disappointed on this front as it pushed back the date for taking the product to market.

Management now expects the device to launch by end of the September quarter and the news sent the stock slumping to retest its five-year low of 43 cents this afternoon.

The medical testing device developer had originally set a launch date for end of 2013, but pushed that out to the June half of this year because it was unable to find enough patients to test the device on.

Universal Biosensors had even told Eureka Report late last year that a March quarter launch was achievable.

The second delay is making investors nervous even though delays are not uncommon when it comes to the commercialisation of new medical devices. Critics would say management either didn’t plan the trials well enough, or there is something more sinister in the test results that popped up.

I have been a supporter of the company since I highlighted it on September 4, and I continue to give management the benefit of the doubt. The stock will be re-rated if and when the coagulation testing device is finally released.

It’s almost a binomial outcome even though Universal Biosensors already sells a blood glucose testing kit through LifeScan. Stick with the stock if you believe management’s third quarter deadline, otherwise run for the hills.

Universal Biosensors posted a 49% drop in revenue to $15.1 million as losses widened 27% to $11.6 million for the year ended December 2013. It’s cold comfort, but consensus estimates was forecasting sales of $13 million and a loss of $16.3 million.  

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