Paradigm-shifting platform technology may be worth keeping an eye on Print E-mail
By Ray Dirks   
Wednesday, 26 January 2011 08:36
best penny stock picksWaferGen BioSystem  (OTCBB: WGBS) is a leading developer of state-of-the-art genomic analysis systems. WaferGen’s SmartChip system, with its 5000+ nano-well format, is designed to provide faster, more cost-effective biomarker identification and validation for multiple samples and patients.

The SmartChip platform is an innovative tool allowing scientists to achieve greater sensitivity and accuracy in Gene Expression than current methods employed, thus identifying the full spectrum of expressed genes and providing throughput levels at a fraction of the time and cost of current systems used in the industry. The time factor is being reduced by a factor of 30 or more times, from a month or more to a day or less, while the cost factor is being cut by a factor of 10 to 25, from $1.00 to $2.00 per data point to less than 10 cents per acquired data point. The gene expression market is $5 billion in size and growing at 15% per year.

WagerGen Bio-Systems currently offers the breakthrough SmartChip Real-Time PCR system for discovery and validation of biomarkers, or gene expression patterns, on a single platform. The company believes that the SmartChip system is ideal for researchers seeking to confirm discoveries made with the growing use of next-generation sequencing. In addition, the game-changing, high-throughput nano-scale capabilities of the SmartChip systems applied to genomic instruments and consumables will enable scientists to extend their research across large panels of genes, and hundreds of samples, at a reasonable cost.

This will revolutionize disease research, improve drug development efficiency, enable personalized medicine and favorably impact health care economics. In addition, WaferGen Bio-Systems offers an innovative fee-based service for gene-expression profiling using the SmartChip system. WaferGen will generate revenue from the sale of instruments as well as from consumables, thus generating a "Razor and Razor Blade" business model, which will be a clear path to profitability and a huge long-term upside in WaferGen common stock via royalties through partnerships with major pharmaceutical; companies, both domestically and globally.

The following are 6 reasons why Ray Dirks Research recommends WaferGen BioSystems to institutional and individual investors alike, for short, medium, and long term appreciation:

1.    Acquisition Play.  We believe WaferGen Bio-Systems will eventually be acquired by a major pharmaceutical company for several billion dollars because its unique SmartChip technology platform can place the acquiring company in a vastly superior position in next generation gene expression and sequence analysis technology. The emergence of Personalized Medicine, establishes a way for leading pharmas and healthcare providers to retain or enhance their profit margins and their profitability in an increasingly competitive healthcare world. WaferGen’s tools enable personalized medicine.  

2.    Growing Revenues.  Revenues for 2010 were about $2 million with 9 Instrument customers and 22 current Fee-For-Service customers. Wafergen Bio-Systems has outperformed its peers (Affymetrix, BioTrove, Fluidigm, Illumina) in first-year revenues, and management believes that this outperformance will be even more significant in 2011. Because its peers grew their revenues from 2x to 4X over the first year, this would indicate that WaferGen’s revenues should be $10 to $15 million in 2011.

3.    Large and Growing Customer Base. WaferGen has currently has over 30 customers, which include DNA Chip Research in Korea, Integrated BioBank of Luxembourg,  Ghent research which is the fastest growing research facility in western Europe, in Kyoto University in Japan, University of Pittsburg Medical Center, Stanford University and University of Southern California (USC).

4.    Pricing Power.  WaferGen's SmartChip System costs an average of 1/20 th the price of competing systems and works approximately 30 times faster. The company offer faster and cheaper by huge margins, thus insuring pricing power in the long term.

5.    Large and Growing Market.  The SmartChip System market exceeds $10 billion with a compound annual growth rate of 10% to 15%.

6.    Experts Provide Validation. Leading experts in the field of genomics and biomarkers have used and validated WaferGen technology. The company continues to receive public validation from these opinion leaders. WaferGen just announced the addition of Dr. Arul M. Chinnaiyan, a world renowned cancer genomics researcher to its Scientific Advisory Board.


Disclosure: No positions



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