China Medical Technologies (NSDQ: CMED) received SFDA approval for its Leukemia BCR/ABL fusion gene detection FISH Probe. The probe uses DNA probes to detect Philadelphia translocation, a chromosomal abnormality associated with three forms of leukemia. Detecting Philadelphia translocation is a critical diagnosis and prognosis tool for selecting the different treatment protocols appropriate for chronic myelogenous leukemia, acute lymphoblastic leukemia and acute myelogenous leukemia.

At this point, China Medical Technology has received SFDA approvals for all the major FISH probes it acquired as part of the FISH business in March 2007 (HER-2 FISH Probe, Prenatal FISH Probe, Cervical Cancer FISH Probe, Bladder Cancer FISH Probe and Leukemia BCR/ABL FISH Probe).

The complete list of Chinese ADRs traded on U.S. organized exchanges is listed below:

China Medical Technologies, Inc. (NSDQ: CMED) reported it received SFDA approval for its Surface Plasmon Resonance (SPR) diagnostic technology, a molecular biology biosensor. China Medical Technologies has developed SPR as a diagnostic test for human papillomavirus (HPV), a common virus that causes warts and can ultimately cause cervical cancer. One year ago, China Medical paid a very substantial $345 million to acquire the technology.

SPR has been used as a research tool for 20 years to analyze proteins, nucleic acids and viruses. HPV can be diagnosed by adding pathological samples on the HPV-DNA biosensor chip, which is analyzed in the SPR System. The SPR System is label-free with high throughput, high speed and a high degree of automation. Results are displayed on a real-time and online basis. SPR also offers the possibility of being used in other clinical diagnostic applications, such as detecting infectious diseases, cancers, cardiovascular disorders and immune system disorders.

Last week, people from both sides of the Pacific, all of them with an interest in China life science, came together for ChinaBio Day, which was held in San Francisco in conjunction with BioPharma America. Experts with partnership experience brought their expertise to the Panel Discussions, which we covered in detail. The panel subjects were: A Big Pharma Perspective on Leveraging China’s Resources (see story), the Impact of the Financial Crisis on China Partnering (see story), Case Studies of Successful Partnerships (see story), and Factors for Success in China Partnerships (see story).

Genzyme Corp. (NSDQ: GENZ), the third largest biotech company by revenue, began construction of a $100 million R&D center in Beijing (see story). The center, which will eventually employ 350 people, will comprise 200,000 square feet (18,580 square meters) and is expected to be completed in 2011. It will seek to discover and develop novel biologics and other gene therapies. Genzyme says it is interested in China because of the talent and the market.

China Medical Technologies (NSDQ: CMED) announced a $30 million share buyback program. The program will begin on October 1 and run for one year. China Medical is not obligated to spend the entire $30 million amount, and the release said the company may amend the program at any time.

Don’t worry about whether China Medical can afford the $30 million. At the end of its June quarter, the company reported a cash balance of $227 million, and its current market capitalization is $512 million, so the buyback represents only about 6% of the outstanding shares.

Showing that it can organize itself to meet a potential health emergency, China expeditiously tested, approved, produced and began stockpiling H1N1 flu vaccine last week. The swine flu strain, which began appearing late in last winter’s flu season, seemed to carry a greater incidence of death than most variants of the disease. Accordingly, the health establishment moved quickly to combat an as-yet-to-appear major outbreak. No one wants to appear lax against a threat that afforded authorities a chance to prepare.

Sinovac Biotech (SVA) was one of the main beneficiaries of the threat. On Monday, the company reported a panel of experts recommended approval of the product (see story). The SFDA followed on Thursday by granting a production license and approval for Panflu.1 (see story). As expected, the agency SFDA approved the single-injection administration of the vaccine as sufficient to provide immunogenicity.

Over the past few years, China Medical Technologies (NSDQ: CMED) transformed itself from a company focused on a single medical device, the tumor-fighting High Intensity Focused Ultrasound machine, into a business with an attractive portfolio of in vitro diagnostic tests. The process looked seamless. China Medical first bought an ECLIA platform, then a FISH diagnostic system. After each purchase, it built a business around the new platform in a process that seemed both quick and steady. Like many successful initiatives, their growth seemed inevitable – after the fact.

Accusations of Accounting Fraud

F4Q08 and F1Q09 Earnings Call

September 1, 2009 8:00 am ET

Pfizer (NYSE: PFE) announced two new collaborations with China academic institutions last week. Neither one was targeted at developing a specific drug candidate. Instead, their goal appeared to be building long-term relationships with academic leaders in China’s scientific community. Even though it has built a large, self-contained R&D center in Shanghai, Pfizer seems intent upon forging ties with the greater world of China biopharma.

In the first collaboration, Pfizer teamed up with the Shanghai Institutes for Biological Sciences [SIBS] to do basic research (see story). The big pharma will underwrite $500,000 of health-related basic research projects at SIBS for each of the next three years. Pfizer and SIBS will select the research projects jointly. According to a press release, that initiative is only part of the overall agreement, although no other collaborative activities were disclosed.

Looking to address shortfalls in its current health care system, the Chinese government is implementing large-scale health care reforms. In April, the State Council announced an allocation of 850 billion RMB (US$123 billion) as part of its New Medical Reform Plan to improve health care through 2011. The plan promises to cover 90% of China’s population under a universal health care system by 2010 as well as to significantly improve care facilities and expand health related infrastructure.

Note: This post is a follow up the the New Year post: Four Stocks for the New Year as well as the first quarter review

We’re halfway through 2009 and the markets continue to be very dynamic. After a full fledged rout in the first quarter, equity markets have rebounded sharply in the second quarter, posting the best market return since the bullish days of the late 90’s. Despite the strong performance off the March lows, equity markets still appear to have a significant amount of risk. Unemployment numbers continue to be weak, consumer spending is contracting even with upticks in income levels, and governments around the world are piling on excessive debt.

As I look for new ideas, I keep coming back to old positions in the fund; Friday I saw China Medical (CMED) up strongly on a pre-announcement - a quite substantial one at that. Now in this case there was little clue of this in the chart, as the company had fallen below the 200 day moving average; not joining the party in "all things Chinese" of late.

• Medical-device maker China Medical Technologies Inc. said Friday its adjusted profit from continuing operations grew 43 percent in the fiscal fourth quarter.
• The Beijing-based company reported preliminary fourth quarter results, and will make a full report in late July. It said its adjusted profit increased to 116 million renminbi, or $17 million, which translates to 60 cents per American Depositary Share. Revenue from continuing operations grew 37 percent, to 248 million renminbi, or $36 million.
• The two analysts reporting to Thomson Reuters expected 43 cents per share and $35.3 million in revenue for the quarter, which ended March 31.
• For the full year, China Medical Technologies said its adjusted profit from continuing operations grew 79 percent, to 416 million renminbi, or $61 million. That is equal to $2.30 per American Depositary Share. Revenue from continuing operations rose 51 percent to 829 million renminbi, or $121 million.

Since revenue came mostly inline with analysts estimates, there must have been either an increase in margins somewhere on the P&L, or an expense reduction. We'll know in July.

Eli Lilly (NYSE: LLY) won the prize for last week’s most innovative business plan. The company is transforming itself from a fully integrated big pharma to a partnership model, which it calls a Fully Integrated Pharmaceutical Network (FIPNet). The goal is to foster open collaboration between Lilly and global laboratory researchers. To implement that collaboration, Lilly unveiled a new program last week: the Phenotypic Drug Discovery Initiative, or PD2 (pronounced PD-squared) (see story). Lilly is offering a free-of-charge use to outside researchers of its disease-state assays, complete with a secure web portal, which will evaluate the therapeutic potential of externally-developed synthesized compounds. In return, Lilly will have an exclusive right to make the first bid on a partnership deal for any promising discoveries.

Another big pharma, Pfizer (NYSE: PFE), announced it will use acquisitions and partnerships in an effort to become the number one drug seller in emerging markets such as China (see story). At present, Pfizer occupies the number three position. The emerging markets sector is worth $80 billion currently, and is expected to grow to $120 billion by 2012. Asked if acquisitions figured in the company’s future, Jean-Michel Halfon, President of Emerging Markets for Pfizer replied, "We see opportunities coming from the financial crisis ... opportunities to build partnerships in emerging markets."

China Medical Technologies (NSDQ: CMED), a company that is prospering by focusing on in vitro diagnostic devices, reported preliminary financial data from its fiscal 2008 year, which ended March 31, 2009. The company said revenue increased 51% to $121 million, while net income jumped 80% to $2.3 million on a non-GAAP basis. Because it was a preliminary report, specific details were not provided.

The company currently depends on two lines of diagnostic devices: Enhanced Chemiluminescence [ECLIA] technology and Fluorescent in situ Hybridization [FISH] technology. In October 2008, the company paid $345 million to acquire Surface Plasmon Resonance [SPR] analysis technology and a test for human papillomavirus [HPV], both of which remain in development.

China Medical Technologies (CMED) is a Beijing, China manufacturing medical device company, founded in 1999, that develops, manufactures, and commercializes chemiluminescence products, MAIA technology, and FISH technology for the monitoring and detection of diseases and disorders, including ultrasound-based cancer treatments. Just recently, on April 27 the company received approval in China for its Bladder Cancer FISH Probe.

Some of the diseases that this company can help fight include thyroid disorders, diabetes, hepatitis, SARS, Down syndrome, liver fibrosis, disorder related to reproduction and growth, bladder cancer, breast cancer, prediction and diagnoses of cervical and prostate cancer, diagnosis and prognosis of various leukemia and multiple myeloma, and various types of tumors. CMED can also detect Trisomy 21, Trisomy 18, Trisomy 13, Turner syndrome, and triploidy.

by Melanie McFarland

Asian countries such as India and Japan have gained notoriety for their talented scientists and innovative contributions to the life sciences. Now, a new contender is emerging as a potential industry leader. According to a report by Price Waterhouse Coopers, big pharmaceutical companies rated China as the best location for outsourcing in Asia. The country’s large population represents enormous market potential for Western firms whose domestic profits are coming to a standstill. Pharma companies are also drawn by China’s low production costs. The Wall Street Journal estimates that the total cost of a scientist in China is $30,000, compared to $250,000 in the U.S.

We’ve had quite a spring rally in the last two months. It’s hard to believe that the S&P 500 has rallied as much as 40% since the panic levels in March, and many individual issues have given investors chances to double or triple their money in just a few short weeks. We are now beginning to hear whispers of economic recovery and new bull markets. (Actually, by definition, this latest rally constitutes a bull market because it exceeds a 20% gain - but don’t try to explain that to investors who are still 41% below the October 2007 high).

At ZachStocks, we have had plenty of opportunities to participate in the gains along the way. Continental Resources, Inc. (CLR) has risen 117% since our post in early March. Intrepid Potash, Inc. (IPI) was also a recommended long position and has returned 93% since our discussion. And The Blackstone Group L.P. (BX) has risen 147% since we discussed the company just after the rally began. At the time, the opportunities for aggressive trades were very clear. However, today’s market is getting to the place where the risk begins to cloud the picture. In the ZachStocks Growth Model we are taking some of our investment capital off the table, and looking toward some more defensive positions to protect our gains.

In March, Jim Jubak of MSN Money released a list of stocks that he believed should be stocks that you should pay attention to in the upcoming months/quarters as potentially attractive investment opportunities. ValueExpectations.com set out to answer the question, which stocks on Jim’s watch list look attractive according to AFG’s valuation model and should be on your watch list?

Provided in the table below are Jubak’s watch list companies and how they fare from a valuation perspective using The Applied Finance Group’s Value Score variable which ranks the valuation attractiveness of each company based on the discrepancy between the company’s current trading price and AFG’s target price.

Last week, we concluded our series on the “State of China Life Science” with a look at 2008 activity in IPOs and M&A (see story). In 2008, the IPO market for China life science companies was virtually moribund, dropping 94% in dollar volume, though M&A remained surprisingly vibrant, rising almost 20%.

The M&A numbers are, however, misleading, because so much of the activity took place in 2008’s Q1 – before the full force of the economic crisis was felt. Q2 (also before the crisis) fell 77%, a kind of canary in the M&A mine. The second half was on track to post results almost 50% lower than the previous year.