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Part-time trader, completely obsessive-compulsive when it comes to due diligence and research.
  • Shedding A Little Light On Medical Technologies Innovation (Asia) Ltd. 0 comments
    Dec 12, 2013 9:43 AM | about stocks: ECTE

    Because I'm long ECTE and because of articles like this I decided to take the time to research Medical Technologies Innovation ( Asia ) Ltd. (MTIA), a company who has recently announced a partnership with Echo Therapeutics to develop and market the Symphony CGM system in China, Taiwan, and Hong Kong. While the details of the agreement are not filed as of 7:00 AM Eastern December 11th, it appears on the surface at least to be a relatively attractive deal and the godsend that Echo has desperately needed. The purchase of $5 million common stock is nothing to sneeze at. But who and what exactly is MTIA? Will this "fully integrated medical device company" be able to actually develop the Symphony line in Chinese markets successfully? Cursory searches on the internet turned up very little on the company (a huge red flag in my eyes) and for that reason I will attempt to shed some light on the company.

    AngioLight

    MTIA is not a complete unknown. February 20th of this year they partnered with another small bio device company, AngioLight, in developing their "light-based diagnostic catheter". Their device is designed to provide real-time blood vessel measurements during a procedure using optical fibers. This summer on June 6th they announced that MTIA had completed an initial animal study at Fu Wai Hospital, Beijing and they were continuing on to further tests pending CFDA (China Food and Drug Administration) approval.

    While it was comforting to find at least some tangible evidence that MTIA is actively conducting other ventures, the AngioLight / MTIA partnership alone is certainly not enough to satisfy a paranoid investor.

    Director Bai Ge

    Bai Ge, the Managing Director of MTIA, was one commonality between the latest Echo press release and the study completed for AngioLight. Two different LinkedIn entries reveal he is also the Managing Director of Sino Tau International Company, Ltd. as well as the owner of Sino Tau W&B MedTech (LinkedIn #1 LinkedIn #2). Sino Tau is based out of Beijing and appears to be the Mainland China branch of Bai Ge's ventures. Sino Tau (W&B MedTech) appears to be an equipment distributer also located in Beijing.

    NOTE: Bai Ge's name is frequently rearranged as Ge Bai, Mr. Ge Bai, etc. which is not uncommon with Chinese names. I will stick with Bai Ge for the time being.

    Sino Tau and SureTouch

    The most recent business operation I found in the news about Sino Tau was with Medical Tactile, Inc. (MTI) in March of 2006. The agreement was that Sino Tau would market, sell, and service MTI's new SureTouch system. The SureTouch system is, to summarize, a handheld electronic sensor that examines a patient for breast cancer and eliminates the need for "traditional" exams. As near as I can tell, since 2006 SureTouch has been doing well with both FDA 510 and CE approval granted and a 3Gwireless version of their product developed. They distribute in the United States, Canada, Africa, the Middle East, and all over Asia

    Specific to China, a June 2009 blog entry by MTI's CEO details a visit to Shanghai in which they attend a conference, showcase the product, and meet with Bai Ge. At that particular point, 28 systems had been purchased (with 15 operating in clinics) and Sino Tau purchased 75 further units. While 103 units seem impressive, the original agreement called for a minimum of 650 units over 3 years. I was unable to find any updated sales information since that blog post.

    Coincidentally, MTIA is listed as the current China distributor for SureTouch in China. You can get their Hong Kong address, email and Mainland China mobile phone number here.

    Conclusion

    Any partnerships in the biotechnology realm must be examined thoroughly by investors. The same goes double for Chinese firms, which for a variety of reasons are often not as transparent as many North American and European companies. The information I was able to collect and sift through on MTIA (and Sino Tau) has comforted me enough to retain my long position in Echo Therapeutics.

    However, I do not feel that there is enough definitive data to encourage me to take additional positions in ECTE based on the uncertainty that the Chinese market can be fully developed by MTIA. If Echo's management (or any other investors) are able and willing to shed more light on MTIA's track record then that would of course be a different matter. Until then I would encourage other investors to examine ECTE only in terms of American and European market potential.

    Disclosure: I am long ECTE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: ECTE
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