Focus Company: Bioject Medical Technologies Inc (BJCT)
By: John Gay - The Quiet Investor - Date: June 19, 2004
Introduction
Bioject is a small company developing needle-free drug delivery systems to capitalize on the disadvantages of the current needle and syringe method. Their devices may be used for intradermal, subcutaneous and intramuscular injections.
At present, shots and vaccines are generally administered by poking a needle into the recipient and injecting a fluid by plunging a syringe attached to the needle. Though only moderately painful, needle injections frighten many people, causing them to forgo the procedure regardless of consequences. A second drawback is the possibility of passing the needle completely through the vein.
A third, and more dire, negative is the danger that HIV or some other transmissible disease could accidentally infect another person (often a nurse or other medical worker) through a used needle carelessly handled. To give you an idea, some 800,000 needle stick accidents occur every year.
Bioject has been working on needle-less systems for the past 19 years and has developed three different products for specific three human drug targets. In addition, it has developed two products for animal health use. The company currently has 78 pending and issued patents both American and foreign.
Products
The Bioject devices all work on the principle that fluids can penetrate the skin without puncturing it with a needle as long as the fluid is projected with enough force. Thus Bioject's system simply requires a pen-like device to be placed against the skin. The fluid is then injected with enough force to drive it through the skin and into the tissue beneath. Antibiotics and other drugs and vaccines can be delivered into a patient's system without needles and with little pain or fuss.
Biojector 2000 is a carbon dioxide gas powered reusable jet injector capable of delivering subcutaneous and intramuscular injections of medicine of up to 1.0 ml. It is designed for heavy use is professional healthcare settings and is currently being used in clinical trials for DNA vaccines and therapeutics.
Vitajet is a spring pwered portable injector designed for home use self injection. It delivers subcutaneous injections of up to 0.5 ml.
Cool-click is a private labeled version of Vitajet developed to deliver Serona's recombinant growth hormone for pediatrics.
Serojet is another private labeled version of Vitajet to deliver Serona's growth hormone for AIDS wasting.
Iject Platform (in final development) is a new generation of personal injectors. It's gas powered (CO2), small, light weight and disposable. They can be customized to deliver specific drugs and vaccines.
Vetjet is designed for heavy duty use in high work load environment of production animal vaccination.
Financials
Bioject management estimates having adequate capital resources to fund operations and capital expenditures trough 2005, assuming it is successful with its business development strategy.
Book value is a little over $1 per share, of which about half is cash. Bioject has a little less than 11 million shares outstanding. A block of 2 million shares has been hanging over the market from a former venture partner that is selling positions in all its earlier investments.
Agreements
In 1999, a license and distribution agreement was signed with Ares-Serone to deliver human growth hormone for the pediatric market, an agreement since modified to include treatment of AIDS wasting applications. The following year BJCT entered into a clinical development and supply agreement with Amgen (NASDAQ: AMGN) for a disposable jet injector.
More recently agreements have been signed for needle-free delivery of other medications and vaccines with Alkernes (NASDAQ: ALKS), Merial and SAIC-Frederick. Merial, the world's largest supplier of animal health products, recently expanded its agreement covering food production animals to include companion animals. The SAIC-Frederick contract covers HIV and ebola virus clinical trials.
Future
Currently, BJCT's devices are being used in some 22 clinical research projects both here and abroad. More than half are DNA based projects. As the devices are still more expensive than needle based syringes ($3 - $4 per unit vs. $2), they are not likely to replace the needle for routine, low-priced insulin shots. But the safety element, especially in conjunction with the use of very expensive sera, vaccines and biologicals, opens a considerable market for Bioject and its systems.
Bioject's success is dependent upon the development of new partnerships and relationships that will result in increased license and development fees over the short term, and recurring products and royalties upon commercialization over the long term.
Product sales are derived from existing partners as well as direct sales to public health facilities, major hospitals and the military. Development and license fees are recognized over the period of development.
Because of the time it takes for these partnerships to bear fruit (6 to 36 months for existing drugs and 24 to 60 months for new drugs), Bioject has been unable to capitalize fully on its current partnerships and is in the agonizingly slow process of commercializing a number of projects with other drug partners.
Conclusion
As with any small company with an industry altering product, Bioject must get significant commercial acceptance before money runs out. This always seems to take more time than expected (or hoped).
But in Bioject's favor is the knowledge that their products are safer and more user friendly than needles and fairly economical when needlestick costs are factored in. As design and manufacturing improvements are made and with greater volume to absorb capacity, we expect prices will drop and make more favorable cost comparisons against needle systems.
Bioject has 19 years experience, has FDA clearance for its products and has a market growing from $2.3 billion in 2001 to an expected $7 billion in 2008.
If BJCT succeeds, there shouldn't be any difficulty in having the stock triple from these prices over the next three years. It was $13.30 only two years ago.
General information
| Market | NASDAQ |
| Symbol: | BJCT |
| Price: | $1.84 |
| Contact: | Bioject Medical Technologies Inc - 211 Somerville Road, Route 202 North - Bedminster, NJ 07921 |
| Telephone: | (908) 470-2800 |
| Website: | www.bioject.com |
© John Gay - The Quiet Investor
Through hard work, patience, a bit of common sense and some good fortune fine returns can be achieved. But all readers are advised that they should not assume that current or future recommendations will be profitable or equal the performance of past recommendations. All stock investments carry some degree of risk. The portfolios of smallcaps.us and/or its employees may include securities mentioned on Smallcaps.us. Smallcaps.us has NOT been compensated in any way for writing, publishing and distributing this report. Information contained on Smallcaps.us was derived from sources believed to be reliable. However its accuracy and completeness is not guaranteed. Always do your own due diligence.