# Oncimmune Holdings plc Distributors signed in Korea and Israel – Zeus Capital Comments

- Link: https://www.directorstalkinterviews.com/oncimmune-holdings-plc-distributors-signed-korea-israel-zeus-capital-comments/412727912
- Published: 2017-04-28T07:13:53+01:00
- Author: Giles Arbor

**Oncimmune Holdings plc** (LON:ONC) is a pioneering UK-based biotechnology company
which has developed a blood test for the early cancer detection of lung cancer (
using its EarlyCDT® platform which measures auto-antibodies against specific panels
of tumour-associated antigens). This morning the company announced that it has signed
two new exclusive distribution agreements in Korea and Israel with Dow Biomedica/
Biodiscovery (DBB) and Best Medical Opinion (BMO), respectively. These companies
are both leading independent distributors in their countries and have committed 
to long-term contracts of 4 (DBB) and 5 (BMO) years, both commencing on May 1st,
2017. As the first distributors of Oncimmune’s innovative new EarlyCDT®-Lung diagnostic
tests in these markets, we are encouraged that both companies have agreed to minimum
sales levels from year 2 which cumulatively total £5.2 million over the combined
4 and 5 year contracts. We expect these base case sales will generate gross margins
of over 80%.

South Korea with its population of just over 50 million people and Israel with almost
8.5 million, represent potentially good sized market opportunities for an early 
lung cancer detection test with roughly 20% of the adult population being smokers.
In Israel it is estimated that there are some 8,000 smoking-related deaths annually
with direct medical costs of approximately $1 billion.

DBB currently acts as the distributor for a number of well-known diagnostics companies
including Abbott and Illumina. It currently sells a variety of tests in oncology
such as Her2 (for Herceptin use in breast cancer patients) and ALK (for Xalkori,
Zykadia, or Alecensa use in non-small cell lung cancer patients).

Both DBB and BMO were chosen for their closeness to clinician prescribers, given
the high importance of educating these customers about the advantages of early lung
cancer detection and the excellent performance of EarlyCDT®-Lung. The long-term 
nature of the initial contracts underscores the commitments of these companies to
invest time and effort in education and marketing the tests.

In both countries we believe the test will be initially available for a short time
in its current form as a central laboratory test with blood samples being analysed
in Oncimmune’s Kansas lab. However, the EarlyCDT®-Lung Kits which are in the stages
of validation for CE Marking are expected to be ready in the near future. In Israel
we expect that once the CE Mark has been obtained, the Kit will be available commercially
with only minor importation/registration required. In Korea, the Ministry of Food
and Drug Safety has oversight of product registrations and it is thought that the
registration process will take approximately 8 months and be supported by DBB who
will be the importer and registration license holder for the test. Commercial sales
are expected to begin around the end of the year or start of next year.

**Comment:** Today’s news represents the first of what we expect will be many distribution
agreements for countries in regions from Asia to Europe and elsewhere. A condition
of entering many of these markets is the availability of a test Kit which simplifies
the running of the test for all users and makes it appropriate for the vast majority
of hospital and small decentralised laboratories where the only equipment required
is a standard, inexpensive 96-well ELISA plate reader (already present in most labs).
The final validation for the CE Mark for the EarlyCDT®-Lung Kit will be a significant
achievement for the company and we believe will trigger the signing of many new 
distributors, particularly in Asian markets where there is a strong preference for
Kit-based tests.

>  **Geoffrey Hamilton-Fairley, CEO of Oncimmune Holdings plc, commented:** “At 
> our IPO in May last year we committed to invest in our commercial exploitation,
> especially focussed outside of the US market where we are also building new distribution
> channels. These are the first of what we anticipate will be many distribution/
> partnership contracts in Asia, USA, Europe and other territories. The development
> of our test from a central lab test into a “kit” was key to entering certain markets
> and so we are pleased to be able to announce these two distribution agreements
> today that will focus on selling our kit version of the test. The kit has the 
> benefit of major commercialisation advantages as it requires only a 96-well ELISA
> reader machine which practically all hospital labs worldwide have. This eliminates
> the need for deployment (and cost) of specialised testing machines and any additional
> training of technicians. We are pleased to be working with Best Medical Opinion
> and Dow Biomedica/Biodiscovery in these two new markets and believe they are the
> best distributors for us in these territories.”

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