Saturday, May 14, 2005

notes on the Sontra Medical (SONT) cc

On the Sonoprep, topical anesthesia:

  • about $100k in Sonoprep sales in Q
  • CE and ISO marks soon for sales into Europe and Asia in 2006.
  • 2nd generation Sonoprep currently being developed. Ready for 2006. Improved ergonomics, operational capability plus lower manufacturing cost.
  • 70% of US covered by distributors to sell Sonoprep. All of U.S. covered by this summer.
On Glucose Monitoring (Symphony):
  • 3 diabetes products for on-demand glucose monitoring being developed in parallel with Bayer. 1st is for hospital ICU's where tight glycemic control is important. Clinicals on this product in 2006. 2nd product for physician use and 3rd for home use.
On transdermal vaccine delivery:
  • Hep A study at UMASS and flu vaccine study at SLU to be presented in 3q. Co is in discussions with vaccine co's about partnerships
Milestones, funding:
  • Co. has about $8 million in cash. Enough to last until mid 2006. This assumes no Bayer pmt and no gross margin from Sonoprep sales.
  • SONT expects Bayer product development payment of $3 million in 3q.
  • Co. still says $1 million quarter by end of the year.
Some comments:

Very positive CC. Check it out yourself. Right now I have a position that is 1/2 the size of a typical position. I might bring that up soon. With a $30 million market cap, I just don't think the market is giving them any credit for glucose monitoring or vaccine delivery. This is a pretty rough estimate, but with more distributors, opinion leader acceptance, EU and Asian sales, some VNUS contribution and an improved device, I could see how the company could make $8 million in revs off of Sonoprep plus the disposables in 2006. And, for fast growing med. device co's, a P/S multiple of 4x is not unheard of. So, under these assumptions, you really aren't paying for the co's big opportunities. Of course, do your own dd and make up your own mind.

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