Australia | Oct 16 2006
By Chris Shaw
With a market capitalisation of around $50m Optiscan Imaging (OIL) is certainly under the radar of many investors, but the company’s technology gives it a decent chance of breaking through and establishing itself in the medical technology sector.
The company is focusing its development work on endo-microscopes, which are used in the diagnosis and monitoring of diseases such as colon cancer and ulcerative colitis. It is developing both flexible and rigid microscopes, which have respective markets estimated by ABN Amro Morgans at US$1.2bn and US$1.0bn respectively.
While not covering the stock officially the broker notes the company has an agreement with Pentax where that company is committed to buying 80 or more flexible microscope systems in the first year of the product being released, which is almost half of the total annual sales the company requires to break-even in the market.
The year to June was the first financial year in which sales of the product were recorded, the company generating sales revenue of $3.2m in the period, the broker suggesting further strong sales growth is likely in coming years.
Helping boost sales in the broker’s view will be the completion of clinical trials for the rigid version of the microscope, an outcome that will allow the company to attempt to establish additional commercial partnerships. In August the company reported positive early results from these trials.
The company’s cash position has also been boosted by a recent ruling it will receive more than $2m for patent infringements in the European and Japanese markets, while its financial position is supported by the generation of around $1m annually from a variety of licensing deals.
In the FN Arena database only one broker covers the company, rating it as a Speculative Buy up to 60c. The stock has traded in a range of 28.5c to 65c this year, closing on Friday at 49c.