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Why I’m sticking with Premaitha – cracking news today, BTW

By Tom Winnifrith | Monday 23 March 2015


Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Last week was a bit of a stomach churner for Premaitha (NIPT). The shares zoomed for about 30 minutes as it announced a stunning deal to commercialise its IONA test. They the tanked as a US giant launched a patent infringement case. Today they are zooming – up 37% at 24p – but I am not selling. In fact I am just kicking myself for not buying more at 16p a week ago!

Having advised readers to bank gains of c100% on this stock before the roller coaster (more luck than design I stress) this is now just a personal thing. RMPC owns a stack of the shares.

The patent case is one that Premaitha does not regard as based on sound fact but merely as an attempt by a rival which is losing face to face battles with Premaitha to use its financial muscle to bully a small but increasingly successful competitor with a far superior product. The case will be heard in the UK Courts but Premaitha has the backers to fight it and says that it is sure it will win.

Meanwhile it has again today showed the commercial potential of its technology with news of another contract win. The release reads: 

Premaitha Health and St George's University Hospitals NHS Foundation Trust announce today that Premaitha has been awarded the contract to provide its non-invasive prenatal test (NIPT), the IONA® test, to St George's following a competitive tender process. The Trust, based at St George's Hospital in South West London, will be the first NHS facility to offer an in-house NIPT screening for pregnant women in the UK. The project award is a three-year contract with options to extend annually. 

Non-invasive prenatal test (NIPT) is an advanced screening test for pregnant women, using a small blood sample rather than an invasive procedure such as an amniocentisis, the test estimates the risk of a fetus having Down's syndrome or other serious genetic diseases. Until now, pregnant women in the UK could only access NIPT privately, with blood samples being sent to the US or China. Not only was this costly but carried a waiting time of up to two weeks which is a long time when parents may need to make decisions about their pregnancies.

Hmmm. A competitive tender. We know who Premaitha beat in its last competitive tender (hint, it responded with a patent case), I wonder who it beat in this one?  The market potential here is clearly enormous and I am led to believe that there are a stack more pitches and thus – we hope – contract wins to be announced over the coming weeks and months.

Clearly the stock now faces a new risk but the potential reward is increasingly apparent and I believe the management in what it says on the patent issue. We are thus more than willing to hold as we await news of more contract wins and a further re-rating.

 


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Comments

5 comments

  1. I bet Oakley would be kicking you as well if not for the fact he would fall over first, as its hard to stand on only two legs if your a cat .
    Tremendous tip this has been tho Tom . I bought again at the RNS release today and made several quid during the day . Thats my third go at the trough on this particular share . I feel like a pig in mud with this one . What a great swing trader its turned out to be and when past the courtcase I will probably go long long with a “proper long”


  2. handybrownone

    Tom – I have profited from this tip so many thanks. I sold immediately on the news of the court case very swiftly because I had already read the patent and in my own mind new the significance for me and my holding. I don’t have enough information to judge exactly the true merits of the case. The freedom-to-operate report mentioned by Premaitha in their listing is not worth anything as it will have so many caveats in it. It doesn’t protect you from a damage claim if they lose.I wanted to ask two things

    1, Tender – there is no other CE marked product so how could Illumina have been competing – you infer they only sued because their product was inferior and they were somehow upset?

    2. “Far superior product” – sorry on what basis can you judge this – see 1.

    Then I wanted to make one observation. The patent is a method patent so Iona does not infringe directly when sold.The person using Iona, ie the lab/hospital is a primary infringer and can be sued and made a party to the proceedings. NHS hospitals are pretty conservative people so if they do go full steam ahead that is quiet a good vote of confidence. Premaitha are contributory infringers – supplying the means to infringe. Offered the same similar product without the hassle at favourable terms would you switch? I think that you would.

    Let’s deal with the unknown unknowns:

    1. When will Illumina get approval – we dont know. We don’t even know if they have submitted as CE medical device submissions are confidential
    2. How “bound” is any customers to Premaitha – technically/contractually – when the others get approval?

    So I am not buying back in despite the very attractive gains. Its still a mCAP of 50m with one product – which could be taken off the market. A bit on the risk side. Will it be a duster? Decision will take a year if not accelerated.

  3. Went long last week under 17p after the bad news but exited under 19p same day for a small profit, then watched it drop into the 14’s and thought I did ok , LOL, anyway just goes to show no one really knows which way these things will turn out , hindsight etc, etc.

  4. Having taken a company to the high court for copyright infringement, I know how complicated, time consuming and worst of all distracting this can be for management. Both sides will probably think they are right but even if one seems irrefutably correct this does not ensure success which will depend, as my barrister said, ‘on what the judge had for breakfast’. In commercial law the most influential factor is very often predicated on financial power and / or outright determination. The latter is indeterminate for outsiders but the former is obvious – a few billion against a few million.


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