Over the counter, into the black

Singapore-based, ASX-listed Rockeby Biomed (ASX:RBY) has changed its focus and managing director Dr Sze Wee Tan has a positive outlook for this year. Helen Schuller reports.

Rockeby Biomed didn't have the most auspicious start to the second half of the 2005/06 financial year -- a 'please explain' from the ASX about the company's cash position. Rockeby had negative cash flows for the quarter of AUD$1,122,000, and about $1.4 million in the bank.

But Rockeby's managing director, Dr Sze Wee Tan, promises this financial year will be a year of two halves for the company. "2006 is going to turn out much better than 2005, both fundamentally and financially, for the company," he says.

"It's a historical perspective -- forward guidance in the mid-year report will show the company is in a stronger situation. In the second half, the cash will be higher, the revenues will be higher and we aim to reduce our loss."

Broad portfolio

Rockeby focuses on diagnostics, including infectious disease and rapid testing platforms. Tan said Rockeby would maintain its broad product portfolio, giving priority to a bird flu test which earned it headlines on its launch last year, then the European rollout of its CanDia5 product for vaginal yeast infestion, then the Singapore distribution of its HIV test.

"Our core product, CanDia5, has taken longer to move forward in the US and has been a drain on finances," Tan admitted. "We now want to focus on European market, and point-of-care negotiation for the consumer health care market, which we hope to close some time this year. We believe we will generate revenues with CanDia5 because we already have CE mark approval, and we believe in the next six months there will be strong interest for the product in Europe."

Tan said Rockeby had been selecting a partner to help with the marketing of its avian flu test. "Our key focus is Vietnam, China and Thailand, which is the fourth largest exporter of poultry in the world," he said. "In the year ahead, demand for the poultry test will rise and revenues will increase. Overall, the test for HIV is extremely good for the company and will continue with the test in the Singapore and Mexico markets.

"It is an innovative test -- a 20-minute test to be performed by a nurse taking in a swab of the gums."

Tan explained that the company's HIV test had been launched in Singapore because of its government's policy requiring that all pregnant women take an HIV test.

"We expect that when we roll out the test in March, we will capture 10 per cent of the market share," Tan said. "It is retailed at $38 Singapore (AUD$31), which is more than the traditional blood test but is less invasive and more rapid so people will switch. The US Centres for Disease Control also recommends that all patients to an oral HIV test to protect health care workers.

"This HIV test is very useful for us to generate revenue. Following Singapore, we plan to look for rights to markets in the whole of South-East Asia."

Burn rate

Tan said costs associated with FDA compliance and stockpiling the bird flu test had increased Rockeby's burn rate.

"In 2007 we plan a small loss, or the magical breaking even," he said. "We also think it will be a stronger year from revenue."

In November, Rockeby's share price jumped 300 per cent from $0.012 to $0.048 following news on a deal with Thailand-based Pacific Biotech for the exclusive marketing and distribution rights in Europe, the Asia-Pacific and South Africa on two tests for avian flu.

"At this point there has been significant renewed interest from Australia -- our number of shareholders has expanded from under 600 to 1400," Tan said. "The daily liquidity has also increased, and we believe we will be able to tap in to domestic funding and our base of shareholders in Singapore and the UK."

At its November AGM, Rockeby's shareholders backed a placement of up to 290 million shares to raise additional funds. "Once we have more cash and more funding, the shareholder value will be enhanced and the market will decide for itself," Tan said.

"Previously, the focus of the company was research-based. The last two years have shown that the funding environment has changed.

"I think that from Singapore we have strong government support and the management team to bring in the tests to the market. We will continue to grow -- we have our R&D focus, and the management strength to identify opportunities.

"I think any query [from the ASX] should be answered in a transparent manner. For our shareholders, the reprisal from the ASX is not something we are concerned about -- our decision to answer in a forward perspective is normal procedure and we are happy at the market reaction."