$QT Vascular(5I0.SI)
This was meant to be a comment to this post by @contraboy.

But it ended up so long winded as I consolidated my notes and thoughts. @HuatBrother

Let's take a look at the latest 3Q17 results announcement.

P/L ... revenue up, due to Medtronic's commitment of orders, but still losing money.

Cash flow ... basically surviving on issuing of shares to GEM and also some payments from Medtronic for the supply of Chocolate PTA Balloon Catheter.

Group B/S (USD) 30/9/2017
Non-Current Assets -- 12,543
Current Assets -- 6,473
Total Assets -- 19,016

Non-Current Liabilities -- 1,096
Current Liabilities -- 25,713
Total Liabilities -- 26,809

Total Equity -- (7,793)

Needless to say, it looks bad. Negative equity!!

However, financial statements provide a snapshot of the past and the current financial position. Investing is forward looking. So let's go to Item 10 to look at the hyping. I've rearranged the points according to my train of thought.

1) Sale of Chocolate PTA
"The Company  is  constantly  exploring  various  strategic  options  including,  mergers,  acquisitions, disposals,  joint  ventures  and  fund  raising  activities  to  optimise  and/or  unlock  value  for shareholders.  The  Company  had  recently  received  shareholders’  approval  for  the  potential disposal  of  the  Group’s  non‐drug  coated  peripheral  balloon,  Chocolate®  PTA  to  Medtronic  for a  sum  of  US$28  million  (“Potential  Transaction”)  and  on  2  November  2017,  the  Company announced  that  Medtronic  has  the  right  to  exercise  their  option  to  purchase  Chocolate®  PTA as  one  of  the  option  triggers  has  been  satisfied  by  the  Company."

Medtronic has 90 days to exercise the option. If this lapses, there'll be another 2 trigger conditions. If this transaction is completed, it'll give rise to an estimated gain of USD 25.2 mil. Equity should then turn positive.

Shareholders can't expect to see this money as it'll be retained for working capital.

Update : 2018-01-30

2) Potential Sale of Coronary Assets
"The  Company  has  received indications  of  interests  from  interested parties  in  relation  to the potential transaction(s)  for  the Group’s non‐drug coated coronary  assets  with  a  possibility of  an  option  to  also  purchase  the  drug‐coated  coronary  balloon,  Chocolate  Heart™  as announced  on  15  October  2017."

The next possible catalyst is the sale of the non-drug coated coronary assets. There is no indication of price yet. Make a guess? Tens of millions?

"Lastly,  the  Group’s  drug‐coated  coronary  balloon,  Chocolate  Heart™,  completed two year  angiographic  follow  up  for  its  first‐in‐man  (FIM)  study  in  the  Dominican  Republic.    The results  of  this  follow  up  exceeded  expectations,  showing  a negative  late  lumen  loss  at  24  month which  even  the  best  drug  eluting  stents  are  not  able  to  show.   The  Group  anticipates commencing  a safety  and  feasibility  study  in  early  2018,  and  following  which,  FDA  approval  will be  sought  for Chocolate  Heart™  to  be  the  first  drug‐coated  balloon  approved  for  broad coronary use  in the US."

The announcement back in June.

This note on Chocolate Heart sounds promising. Does this imply that a balloon can achieve better outcome than a stent? Interesting, but I have no expertise in understanding this.

Update : 2018-01-30
Dalian company invents new drug-coated balloon to replace heart stent
"According to the official website of the CFDA, it is the world's first drug-eluting balloon catheter approved for use in coronary bifurcation, offering a new therapeutic solution for the treatment of bifurcation lesions that are urgently needed."

3) The ultimate hype ...

"Peripheral  arterial  disease  continues  to  be  under‐treated.    While  stents  are  used  on  some patients,  there  is  a  growing  preference  for  therapies  such  as  drug‐coated  balloons  and atherectomy  that  do  not  involve  placing  a  permanent  implant.   The  rapid  adoption  of  drugcoated balloons continues in the peripheral  space.   Sales  of  drug‐coated  balloons  are  estimated to  have  surpassed  US$300  million  in  2016  in  the  US  market[1]  and  the  global  market  will  surpass $1  billion  in  sales  by  2020[2].   The  revenue  for  CR  Bard’s  Lutonix  drug‐coated  balloon  was US$120  million  in  2016  growing  to  an  expected  US$150  million  in  2017[3].   CR  Bard  and Medtronic,  the  market  leader,  are  not  only  seeing  a  rapid  increase  in  sales  for  use  of  drugcoated  balloons  in  the  currently  approved  “above‐the‐knee”  segment,  but  they  are  also pursuing  new  indications  for  drug‐coated  balloons  which  include  “below‐the‐knee”  use  and arteriovenous  fistula.   This  bodes  well  for  continued  sales  growth  for  these  devices  well  into the  future.   Spectranetics  just  announced  FDA  approval  for  their  drug‐coated  balloon,  Stellarex, which  is  the  third  drug‐coated  balloon  approved  in  the  US  market.    Securities  analysts  now attribute  a  significant  portion  of  Spectranetics  market  value  (approximately  US$1  billion)  to  the promise  of  Stellarex[2].

The  Group  is  well  positioned  to  benefit  from  the  increased  adoption  of  drug‐coated balloons.   The  Group’s  drug‐coated  peripheral  balloon,  Chocolate  Touch®,  had  its  first enrollment  in  the  FDA  approved  pivotal  trial.    Upon  completion  of  the  trial  and  subsequent approval,  this  would  make  Chocolate  Touch®  the  fourth  such  device  to  be  approved  in  the  US and  the  first  with  a  differentiated  platform  and  a  clinical  trial  versus  a  commercially  available drug‐coated  balloon.   The  final  results  of  Chocolate  Touch®’s  first‐in‐human  trials  were announced  in  2016  and  demonstrate  data  that  are  similar  to  the  best‐in‐class  devices."

Oh, I just realised something interesting. Spectranetics bought Stellarex from Covidien for USD 30mil in 2014. (Covidien was acquired by Medtronic before that.)

Spectranetics was acquired by Philips for an enterprise value of EUR 1.9 billion recently.

And it appears that the focus could be Stellarex.

4) Industry M&A Landscape
"Mergers  and  acquisitions  (“M&A”)  activity  in  the  medical  technology  sector  continues  to  ramp up  in  2017  with  major  deals  announced  by  Abbott,  Phillips,  Spectranetics,  Medtronic  and Cardinal.   The  key  drivers  behind  this  active  M&A  landscape  include  pressure  on  large  players in  mature  markets  to  increase  their  top  line  growth  and  increased  vendor  consolidation  in  US hospitals  which  forces  companies  to  broaden  their  product  offerings.   It  is  expected  that  this trend  will continue  and  2018 will  also be  active."

The industry for such devices are dominated by large players. Even if one can come up with the best device, it means nothing if it cannot enter the sales channel. So the game here is to try to get a large player to acquire the IP in the battle for market share. As mentioned, Chocolate Touch is expected to be the fourth such device to be approved in US. But this may still take a year or so.

For reference, the first 3 are
1. CR Bard - Lutonix

2. Medtronic - IN.PACT

3. Philips Spectranetics - Stellerax

A successful sale of Chocolate PTA to Medtronic, bringing in proceeds of over USD 20mil, will put it in a stronger position to continue R&D and to hold out for higher prices.

Further Notes
5) Settlement with Angioscore
This settlement with Angioscore came as a shocker as I thought it was already settled some time back. Finally, this closed the issue.

6) Capital Commitment Agreement and Market Cap
The company has increased the capital commitment from GEM by requiring GEM to subscribe for new shares.

"As at the date of this announcement, the issued and paid up capital of the Company is S$181,351,496 divided into 1,788,275,046 Shares (excluding treasury Shares). Assuming the achievement of the Revised Maximum Share Commitment and full exercise of the Warrants at S$0.10 per Share, this will increase the existing issued and paid-up share capital of the Company by S$10,972,016 to S$192,323,512, divided into 2,022,841,826 Shares (excludingtreasuryShares)."

Based on the latest issuance of shares, the number of shares has increased to 1,809,841,826.

For a company in such situation that need to issue new shares to raise funds, the per share figures and share price are not the good way to keep track. The overall numbers and market cap should be looked at instead. For ease of calculation, let's use 2 billion shares. At last closing price of 0.013, market cap would be SGD 26 million, or around USD 19 mil.

When share price dropped to the low of 0.007, 0.008, the market cap would have been SGD 14mil - 16mil. A party that benefited from such drop is GEM, since more shares had to be issued to raise the equivalent sum of money. It'll only make sense for GEM to exercise the warrants if share price is above $0.10, which implies a market cap of over SGD 200 mil.

I guess I'll have to make a disclaimer?? That this is not intended to induce buying or selling of shares? DYODD!

For short term trading, I'm not sure how to plan the trades as each price bid movement is about 8%. It makes more sense to count the bids. If buy 100,000 shares, one bid loss will be $100 plus 2 way commission. If buy a million shares, it'll be $1000 plus 2 way commission. Short term trading is more of a zero sum game. And watch out for events!

For investing, this is high risk, high reward idea, more like venture cap. Shareholders can only hope the company delivers the hype, hence delivering positive sum for those vested. But if nothing turns up, it can end up zero. How much can you lose? Or rather how much can you afford to lose? Can the management be trusted?

Final Thought
Investing in this kind of stuff is like investing in something that we hope we'd never ever need. But if we need it, we'd like to have the options available.

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26 likes 53 comments

Bro , he start pushing....
Pls note...


How do you think about him, during STI red red red , market sentiment so bad, he still well support at 0.018, I still believe him can go further if market stable and turn green...
Just my opinion....


Reply to @bgting : Now they work hard to look potential customer to sell the product, is good sign for company ...
Let's see what the outcome...
Good luck

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Some background reading on the industry ...
The DCB Revolution
Drug-coated balloons show significant promise, but face reimbursement and data challenges.


An industry update just for info.
Dalian company invents new drug-coated balloon to replace heart stent
"According to the official website of the CFDA, it is the world's first drug-eluting balloon catheter approved for use in coronary bifurcation, offering a new therapeutic solution for the treatment of bifurcation lesions that are urgently needed."



• Medtronic completes the purchase of the Company’s non-drug coated Chocolate®
PTA balloon catheter
• The completion of this purchase validates the value of this internally developed
specialty PTA to improve outcomes in patients with peripheral artery disease


Reply to @Spinning_Top : Yaya....
We must shout laugh laugh....
Huat ahhhh
CNY coming....
Must Huat Ahhhh

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QT is taking off
Now clearing 0.012 with a trading volume of 50,363 lots



@bgting also interest in penny counter...your image for me are blue chip investor....hahaaaa
Now I more confidence you also in play with QT....
Huat ahhhhh


Another batch of new shares issues to settle part of a bond. Number of shares increased to 1,852,027,010.

"The July 15 Tranche 3 Bondholders shall accept, in lieu of cash repayment, the allotment and issue of an aggregate 42,185,184 new ordinary shares in the capital of the Company ("July 15 Tranche 3 Due Shares") at an issue price of S$0.0108 per July 15 Tranche 3 Due Share(“July 15 Tranche 3 Issue Price”) as part settlement of the July 15 Tranche 3 Settlement Amount;



Reply to @LiRen : I would believe 0.013 is a buy!
0.012 are rare chance to pick up!
0.011 is a steal!!!

After going through all the trouble, BBs will not be satisfied earning just a few bid.

Solid push may carry it to 0.05 because currently QT is surrounded by a lot of good stories and some are factual!

No need to FA, pennies are driven by news and rumors. Just make sure don't carry the baby when Gameover!!!


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Great work on the summary and analysis. I have been mostly a silent observer and it is amusing to see most of the analysis / speculation on this company. The main catalyst for the company right now is its sale of Chocolate PTA for USD28m which will change improve its balance sheet to positive equity position. Another catalyst is that within the signing of additional shares of GEM, the company changed its use of proceeds from repayment of borrowings to general working capital, implying that the company is confident that it will sell its chocolate PTA.

In fact the sale of chocolate PTA is more of a desperate move and I am guessing they are selling it much cheaper than its fair value to get some cash in to ensure the operational needs of the company is met. I say this because the sequence of events that have happened. 1) they first signed the distribution agreement with medtronic 2) then they sell it to medtronic. implying they cant wait for the revenue earned over the next few years.

Past transactions have been done at about 6x TV/Revenue which implies a mkt cap of about 90m SGD if a major acquisition or buy out is done.



Bro Thanks for looking deep into QT!!!
As you have mentioned good news are there but yet to be confirm!

Currently QT is a speculative counter and all the news that you have look into is good enough to push for a rally for the counter

The effort put in by management to set up the stage plus potential new shares coming into the market to fuel the burning churn up in the recent run up make QT a very good counter to be a top pick for the pennies!


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