food for thought

I like ‘left field’ possibilities. This post is about one of them. Something I didn’t include in my long post yesterday.


HGR acquired SunBiomedical Laboratories on 30 June 2006.

From that time until early 2008, roadside testing has been a MAJOR FOCUS of HGR/SBN’s reported activities and priorities.

The December 2006 Half Year Report highlighted the company’s involvement in ESTHER (a program being driven by European Union Police Agencies to characterize the optimal requirement for a drug screening device suitable for cost-effective implementation of roadside drug testing).

Between that report (on 28 Feb 2007) and the October 2007 Investor Update, the strategic importance of the emerging roadside testing market to the company’s prospects was made very clear.

In a 13 June 2007 Corporate Presentation, for example, five whole pages were devoted to roadside drug testing, which was described as “The Emerging Global Opportunity”. The presentation also identified 6 “Key Growth Drivers” for HGR and one of these was “realisation of an effective roadside screening tool”.

An international strategic alliance was formed with a prominent Irish company (Biosensia Ltd) in June 2007 to pursue this opportunity more vigorously. This relationship ‘soured’ some time later but, in October 2007, the company announced that “the Company is subsequently pursuing alternative collaborations including a U.S. manufacturer who have approached the Company to develop and manufacture the membrane assays for a handheld reader developed specifically for this application [i.e. roadside testing].”

This is where it gets interesting.

How many countries were doing roadside testing at this time? Some were experimenting and trialling, but only in one, Australia, had a testing program been fully rolled out. This was initially just in Victoria, but WA, QLD, SA and NSW later joined in.

Many other countries had enabling legislation but because the ESTHER and ROSITA programs had identified shortcomings with all available devices, these
Have, in the main, decided to wait until a suitable device came on the market.

This, in other words, was a huge and largely unserviced market. The Australian States had adopted devices with inferior detection capacities presumably because they wanted to be seen to be doing something or at least to be providing some sort of deterrence.

This was clearly a massive market opportunity for saliva-based testing companies to be involved in. So it was not surprising to see HGR/SBN’s focus through 2007.

So what has happened since the Investor Update on 24 October 2007?

Apparently nothing.

Not one mention of it in all the investor updates since. Nothing in the 28th Feb 2008 Investor Update (the first since October 2007) and nothing since. (So what happened to that collaboration with the US company with the ‘hand held reader?).

What a shame that this initiative was dropped!

Look what is now happening. France, one of those European countries with enabling legislation, has got sick of waiting for the ‘perfect mouse trap’ and has contracted to purchase 900,000 OralSTAT devices over the next 3 years.

They must be kidding! Cannabis is still the major illicit drug problem and OralSTAT has a fairly poor detection capacity for THC (15ng/ml compared to Oraline’s 4ng/ml).

But then again, OralSTAT can detect 6 drugs in two different formats (8 drugs altogether) and it does have a reader that can download multiple testing results to a computer.

Oraline iv can’t compete with that. (Or can it?)

What about Latvia? Courtesy of Dkisane and gsw, we recently discovered that Latvia has joined France and begun testing – as presumably they are sick of waiting as well.

And, bloody hell, they are using Oraline iv, despite its limitations (no reader, no prescription drugs). They must love its THC measurement efficacy or its ease of use, or something.

But this has to be a lucky break. Surely Oraline iv, with its serious limitations, can’t win other roadside contracts!

Given that likelihood, it really is a shame that the company dropped, late last year, its focus on the roadside testing product development. If it had not, it may be in a much stronger position now to compete with OralSTAT (and other devices under development).

But did it drop its focus?

This is where it gets really interesting!

As always, appearances can be deceiving.

The two words ‘roadside testing’ disappeared from the company’s reports and announcements from October 2007.

But did the development program behind these words also disappear? After all, there had been no announcement that the new US based alliance had been shafted.

Interesting that Dr Sun was in Australia for a week in February. Interesting that the 28th Feb Investor Update had no mention of ‘roadside testing’. But it was also interesting that we had the first tentative appearance of ‘Oraline 8’. (Under item 5, ‘SBN Capital Requirements’, the list includes the item “the commercialization of the Oraline 8 product”.

(There is no description or indication as to what Oraline 8 is. But why?? This is the first reference to Oraline 8 in any company literature).

Increasingly more detail has been provided about Oraline 8 – but mainly with respect to the number and type of drugs included and the better saliva collection technology. There has not yet been any indication of just what uses are anticipated for Oraline 8.

Is it just a bigger and better version of Oraline iv – essentially for the same purposes – or is it much more?

Could it have a direct link to the company’s broader strategies, so clearly articulated throughout 2007?

Dr Sun is personally driving the Oraline 8 project. What is it, exactly, that has lead him to delay his retirement and to take 50% of his payment in shares and to also take up his full entitlement under the rights issue?

The Medica show launch in November could entail some interesting clarifications.

Food for thought and something to ponder in the meantime.