my (second) last ever post on the plt thread

TTH et al

As you all know, I post more on GBI - a company that I am invested in - than I do on PLT.

In recent days we have seen:

1) Decan try to lure zvini across to GBI in a fashion that has provoked direct comparison of the relative merits of the two companies both from Decan and to a lesser degree from others;

2) TTH respond to Decan's commentary by questioning whether GBI in fact has anything of value given that DNA based tests are apparently dime a dozen these days.

Now, I do not claim to be an expert on PLT and I also think that it only causes tempers to become a little frayed if there is too much head to head comparison on this site.

Therefore, I do not wish to be a long term contributor to any feelings of ill-will that might be developing between investors in companies focussed on women's health. However, I would also hate to fade away into the mist without making what I believe to be a few quite fundamental points. The way I see it today, these points would make me pretty nervous if I were a shareholder in PLT. As a shareholder in GBI, I know that my investment is not without risk, but it is a risk profile that I prefer and that at current prices I think continues to justify further investment.

Consider the following:

1) PLT's Truscreen product has not yet achieved commercial success. It is unclear what the COGS will be for the disposables once the product is successful, but PLT is targeting a price point for the product of circa $20.

2) The recent New England Journal of Medicine article featured a test from Digene / Qiagen that is an HPV test that is ideally suited to second / third world locations that do not have established pathology infrastructure. This test will compete directly with Truscreen as it is a point of care screening methodology. There is a real risk that the Qiagen product will achieve far superior commercial success than Truscreen due to a combination of: a) being sold for a much lower price than the truscreen disposables (US$5 or less), b) having the full sales and marketing machinery support of a global major - Qiagen, c) being focussed on an area (HPV testing) that is increasingly attracting mainstream recognition as the optimal first screen for cervical cancer rather than the relatively little-know scientific basis that supports the truscreen product. (If you doubt the above - ask yourself the question as to why the Gates foundation is throwing its weight behind Qiagen and not PLT)

3) PLT's cerviscreen product is not a fully integrated offering. As I have said before, all PLT has is a contract/licence arrangement in relation to a sample catchment device that has relatively little IP in it. We all know that you can take a vaginal sample using a catchment device as ubiquitous as a tampon - so no purchaser is going to pay a significant premium to the cost of a tampon to purchase the GeneSwab device. In first world markets - maybe US$2 tops for GeneSwab??

4) In third world markets, there is every chance that the Qiagen test will emerge as the leading product for cervical screening. IF the GeneSwab catchment device were to emerge as the preferred catchment device for the Qiagen test, the pricing would have to be proportionate to the US$5 pricing that is proposed for the test itself. Maybe US$1 tops??

5)Turning to GBI - it is true that there are a bunch of competing platform technologies emerging for performing molecular diagnostics tests. And they all have their specific areas of strength. However, the heat that has been in the M&A market for well-positioned HPV tests in the last couple of years suggests that HPV is an area of focus for a wide range of women's health businesses and broader-based diagnostics businesses also. Remember - Hologic paid US$580 million for Third Wave 9 months before it got FDA approval and before it was profitable. And there were something like 8 bidders. This would seem to indicate that either the biggest companies around have entirely misjudged the HPV market (ie. DNA based tests are dime a dozen and therefore you don't need to pay up to acquire any particular product / platform) OR it is sufficiently hard to develop a competitive HPV test that the well-positioned tests on the market are going to prove to be a licence to print money as the HPV testing market in the first world increases in size from US$250m today to US$1 - 4 billion in 5 years time.

6) GBI's test seems to stack up pretty well in terms of a) ease of use for pathology labs, and b) quality of clinical data. Therefore, common sense suggests that GBI "deserves" to attract strong interest from some or all of the under-bidders for Third Wave Technologies. Whether this ends up being a licensing deal or an outright acquisition of the company remains to be seen.

Therefore, my summary is:

1) Truscreen may achieve a brief hour of sunshine but it faces the risk of the Qiagen third world test blowing them away. Therefore, for PLT shareholders you should be hoping that the product spits out a whole lot of cash very quickly.

2) The best hope for Cerviscreen is that the catchment device gets real traction partnered with the Qiagen third world test - as this will be a huge volume market. However, the pricing would need to be super-competitive

3) There are no circumstances in which I can see PLT making huge margins from the GeneSwab catchment device. No matter which way I look at it, the Cerviscreen business does not appear to be anything more than selling the Geneswab catchment device to major customer groups - whether they be pathology labs, Qiagen, or governments who can then build it into an integrated test offering.

4)None of us will know whether GBI's PapType test is truly competitive with other HPV tests on the market until it either starts selling in big volumes or GBI stitches up a great commercial deal. Until then we are all guessing. However, the heat in the Third Wave auction is encouraging that molecular diagnostics is not yet regarded as a commodity industry and that there is a perception of real value in a top notch HPV test.

I will leave it to the rest of you to come back and engage in the usual justifications of why PLT's future is in fact brighter than I suggest.

As for me - I won't be posting on the PLT thread again until this race has been truly run and won. Maybe one year, maybe ten?

Cheers

Redmond