http://www.theaustralian.com.au/business/opinion/investors-unmove...

http://www.theaustralian.com.au/business/opinion/investors-unmoved-by-drug-breakthrough/story-e6frg9if-1225796263312

Investors unmoved by drug breakthrough

Universal Biosensors (UBI) $1.98
STOP sniggering! Here's two biotechs in imminent danger of earning real revenues after announcing breakthrough regulatory approvals yesterday.

UBI, meanwhile, is skinning the biotech cat in a different way with its improved blood-glucose monitoring for diabetics. UBI and partner LifeScan (Johnson & Johnson's diabetes arm) has won US assent to sell its device, a quicker and more accurate version of what's been out there for years. The approval unlocks a $17.3 million milestone payment from LifeScan.

The beauty of UBI's revenue flows is that they're based on selling the single-use testing strips rather than the device itself (they'll be given away a lot of the time). A full-blown diabetic has to test six or more times a day. The bad news for local sufferers is that the device won't be available in the small local market. UBI's factory in Melbourne can produce 750 million strips a year. Under the deal with LifeScan, UBI gets 1c per strip sold (plus an unquantified manufacturing payment). Chickenfeed? Not when you realise that 200 million strips equals $20m of royalties. UBI shares surged 26c (15 per cent) yesterday. We had UBI as a spec buy at 50c in February so that's enough for now: the stock is a hold.