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NetScientific "building a tiny bridge into Silicon Valley"

Published: 09:58 23 Sep 2014 EDT

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NetScientific (LON:NSCI) said its two core subsidiaries performed ahead of their own projections in the first half of 2014.

The company, which invests in and guides companies that have transformational biomedical and healthcare technologies, said its two main portfolio companies, WandaHealth and Vortex Biosciences, made progress towards achieving value inflection points.

Asked by Proactive Investors what those inflection points might be, chief executive officer Farid Azima said a number of options are open to the company, including a trade sale, a strategic partner or even a stock market flotation.

WandaHealth is focused on at-home monitoring of patients with chronic disease, with the company’s proposition entailing a marked reduction in hospital readmissions.

“Around three-quarters of the cost of healthcare is chronic disease management, and that applies worldwide. Clearly society does not have the resources to cope,” Azima said, explaining the size of market opportunity for WandaHealth.

At present, WandaHealth is targeting patients with congestive heart failure, but the technology can be extended beyond that, for instance to diabetes sufferers.

Successful clinical trials of the Cloud-based technology were completed ahead of time and regulatory approvals are expected in the first quarter of 2015, the company revealed.

Discussions have commenced with a major US hospital group in preparation for commercial roll-out.

“The US is maybe a step ahead in the patient monitoring market,” Azima suggested.

Vortex, meanwhile, is developing a simplified, high-speed blood test for a wide range of metastatic cancers.

The business model is similar to the so-called razor blade model, in which the razor is sold at cost and the money is made on the blades or, in the case of Vortex’s diagnostic device, the cartridges.

Commercial product launch is expected in 2015, and while hospitals are obviously among the target customer base, Azima said the device is small enough and cheap enough for use in surgeries where doctors can share the costs.

The medical benefit is the ability to identify and monitor circulating tumour cells (CTCs) in a patient’s blood.

NetScientific came to the market in September 2013 and is largely in the pre-revenue stage. Encouragingly, strict expenditure controls and rigorous criteria for new investments resulted in a higher than expected closing cash balance of £22.5mln at the end of June.

Research & development in the first half of the year was ramped up to £1.39mln from £259,722 in the first half of last year, and this was largely responsible for the deeper loss before tax of £2.59mln, as against a loss the year before of £1.04mln.

Since the end of the reporting period, the company has made investments in two later-stage companies: G-Tech Medical and Longevity Biotech.

Azima indicated that the company is “moving up the food chain” and, having “built a tiny little bridge into Silicon Valley” is investing more in companies that are closer to commercialisation than the standard University intellectual property spin-off.

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