SINGAPORE (Mar 27): CGS-CIMB is starting coverage of biotech firm Biolidics at “add” given it has developed a game-changing liquid biopsy kit for cancer.

CGS-CIMB says liquid biopsy offers several advantages over tissue biopsy, including greater availability, higher quality and amount of tissue samples needed.

In addition, biotech firms like Biolidics could benefit from increasing insurance inclusion while more government initiatives and funding could spur medical advances and broaden the market adoption of its products.

“We initiate on liquid biopsy diagnostic firm Biolidics with Add and TP of S$0.32, based on 12x FY20F EV/Sales (below global peer average of 16.8x),” says analyst Ngoh Yi Sin in a Tuesday report.

Established in 2009, Biolidics is the newly-listed medical technology company spun off from the National University of Singapore and SMART research centre.

Having developed a fully-automated in vitro diagnostic (IVD) medical device ClearCell FX1 System and the CTChip FR1 biochip, Biolidics now sells this platform to hospitals, labs and academic/research institutions to perform liquid biopsies to test for the presence of circulating tumour cells (CTCs).

Biolidics’ technology enables the separation and enrichment of cancer cells from 7.5ml of blood in under 2 hours compared to 7-30 days turnaround time for Guardant Health’s programmes. 

To date, more than 80 systems have been installed globally and the system has conducted over 170 tests.

“We expect the group to post substantially lower net losses of $2.9 million in FY19F and $1.3 million in FY20F, led by robust sales growth and better cost efficiency,” says Ngoh.

According to industry reports, expansion in applications beyond therapy selection and treatment monitoring presents a bigger global liquid biopsy market of US$6.5 billion ($8.8 billion) by 2026F.

Biolidics’ collaboration with global hematology leader Sysmex Corporation, Hunan Agen Medicine Laboratory Technology and Hangzhou Normal University could also promote more laboratory-developed tests (LDTs), supporting FY18-21F revenue CAGR of 78%, says CGS-CIMB.    

“Amid the recent M&A flurry in this sector, we think Biolidics makes an attractive target, given its novel technology and track record,” says Ngoh.

As at end 2018, Biolidics has net cash of $11.5 million as at end Dec 2018.

Shares in Biolidics are trading flat at 27 cents at 11.07am.