valuation for ems is 88c per share

STOCK TO WATCH
16 June 2008

Aequs Securities

Superior Anti-Malaria Sublingual Treatment Nearing Commercialisation

SPECULATIVE

KEY POINTS
Eastland Medical Systems (EMS) has completed Phase 1
clinical trials of an anti-malaria drug called ArTiMistTM, which
provides significant clinical benefits because it is delivered
sublingually (i.e. under the tongue) and is an easier and more
effective method of treating malaria patients.
Results from Phase 1 trials show that the sublingual method
provided a fourfold increase in bio-availability for ArTiMist. The
sublingual route importantly avoids the first pass effect through
the gut, which is one of the main reasons why tablets have a
much lower bio-availability due to the massive interference by
the gut enzymes.
EMS is progressing to Phase 3 trials and management expect
these to be completed by the first quarter of calendar 2009. EMS
does not have to conduct Phase 2 trials, as external trials have
already been undertaken on the tablet version of the drug
currently available. Management believe commercialisation of
ArTiMist is achievable by June 2009.
HC Berlin Pharma AG will be the exclusive manufacturer of
ArTiMist. Completion of the HC Berlin Pharma AG
pharmaceutical plant in Germany is expected in the first half of
calendar 2009.
At full production, the plant in Germany is expected to
manufacture 60 million units of ArTiMisf per annum. We expect
the plant to reach full production by 2013 and have factored this
into our valuation assumptions.

Our base-case valuation for EMS is $0.88 per share, taking into
account conservative assumptions on pricing and raw material
costs and factoring in full production by 2013.