SCIE Lands Major Distributor
Brian Marckx, CFA
It appears SpectraScience (SCIE) nailed down the large distributor that they've been hoping to land. This morning SCIE announced that they've come to terms with Pentax Europe GmbH, a European subsidiary of Tokyo-based optical giant Pentax Ricoh Imaging Co., for a five year deal to be the exclusive distributor of WavSTAT for colon cancer in Europe as well as parts of the Middle East and Africa.
As we noted in our last update (5/17/12), management had been in discussions with at least one major distribution partner but had yet to get a deal done. The delay in getting a major distributor on board stunted the anticipated roll-out and resulted in us trimming our revenue forecasts (and lowering our price target on SCIE). This morning's news is obviously highly positive and we hope this translates into meaningful revenue generation commencing during the current year (we currently model ~$960k in revenue in fiscal 2012).
An initial focus for SCIE and Pentax Europe will be the Netherlands' new colon cancer screening program which management talked about on the March 27th investor call. SCIE is positioning to supply WavSTAT systems under this program, which is expected to significantly increase the demand for colonoscopies to such an extent that there may not be a sufficient number of physician specialists handle the patient flow. During 2012 hospitals in the Netherlands will train nurse endoscopists to perform colonoscopies - SCIE sees this as a potential opportunity to supply WavSTAT under this program as it provides a non-subjective diagnosis without the need for interpretation by a specialist.
We cover SCIE with an Outperform rating and $0.35 price target.
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