cellestis vs slt, page-5

G'day Shelley,

As Wod mentioned, the place to find a whole lot of opinions, background and discussion on CST is on the CST discussion board at www.ozestock.com.au.

I don't know anything at all about SLT (perhaps you might post back with some detail on them).

However, in brief, CST have exclusive worldwide rights to the patented Quantiferon Technolology which is a method for diagnosing disease by measuring interferon response in bodily fluids (usually whole blood). The technology has many potential uses including the diagnosis of certain types of cancer, lymes disease and leprosy.

Initially, the company have concentrated their efforts on developing a new test for TB. The only currently available test for both latent and active TB is the 100+ year old Mantoux (or "skin") test. With the Mantoux test, PPD is injected into the patient and the resultant lump is measured two or three days later in an attempt to determine whether the patient is infected with TB. Whilst this test is clumsy, inconvenient and innacurate it has been the only test, till now.

The Quantiferon TB test (QFTB) is not only vastly more accurate but also much more convenient as it is a laboratory test and therefore does not require a second patient visit (for the "reading").

The QFTB test has been approved by the USA FDA and
is supported by the USA CDC.

Living in Australia, we tend to believe that TB is a relatively rare disease but not so in other parts of the world. In fact over 2m people die of TB each year. The USA currently conducts 15m TB tests per year while Japan conducts between 25m and 40m tests per year. Both of these markets are being actively targeted by Cellestis.

There is much more information but hopefully the above is enough to point you in the right direction.

Now, as to why CST is at the price it currently is ($1.50). The obvious answer is that that is the price people are willing to pay for it at the moment. What perhaps is more interesting is to establish why. There are a number of factors that may be considered.

Whilst CST is still a "speculative" share it is far further along the track that many (probably most) biotechs. Those that look at risk/reward ratios have, over the last two years, seen the risk part of this equation progressively diminish as each hurdle has been passed. The company is now on the brink (6 - 12 months) of making substantial sales. If you look at the company financials you will note that the company overheads are exceptionally low. This is largely due to the fact that all of the trials required to achieve approvals have been paid for by other bodies (eg the US CDC). This not only demonstrates the interest in this test but also means that the company needs to make very few sales to achieve profitability.

The share is very tightly held. The directors hold around 40% of the shares and the top 20 hold more than 50%. Those that have done their research are holding this share very tightly, even more so as the "pot of gold at the end of the rainbow" gets closer.

Cellestis is now past that "highly speculative" stage that most biotechs are at. It is no longer driven by ASX announcements of a "possible" future development. The next serious development will be the announcement of sales. When that happens I believe that the CST price will move North, never to return to the current level.

Geez, this was going to be a little post but I have rabbited on a bit. If you are interested, take a look at it, do your own research and make up your mind. As a rusted on holder of CST, I don't really mind what conclusions you reach.