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Constituent Review
J. Andrew Braswell, Equity Analyst Newbridge Institutional Research Data as of 3-30-07	Quote/News
	Nano Biotechnolgy

Review
1/5/07- CBMX filed a registration statement with the SEC in preparation for its separation from parent Acacia, as we speculated when the company announced the termination of its standby equity distribution agreement on 12/21/06. The company will list on the AmEx and will keep the symbol “CBMX.” All outstanding shares will be redeemed for new shares on a one-for-one basis.

2/21/07- Reported Q4 earnings at the close. Total revenue for the quarter was $859K (-76% Y/Y), including $511K (-41% Y/Y) in government contract revenue and $348K (-32%) in CustomArray™ product and service revenue. The steep decline in total revenue was largely due to the receipt of a $2.3M one-time collaboration payment in Q4/05. The net loss was $4.50M, rising from $1.79M Y/Y. The company ended the period with $14.3 million in cash including $9.3M in net proceeds from a recent common stock offering, down from $20.2 million at 12/31/05. Based on projected cash usage in 2007, management cited substantial doubt as to CBMX’s ability to continue as a going concern.

3/13/07- Announced that, following a successful beta test, its CombiMatrix Molecular Diagnostic subsidiary had launched its Bacterial Comparative Genomic (BAC) array Comparative Genomic Hybridization (CGH) Technical Only Program (TOP) for reference labs and other clients. Two labs have thus far signed partnerships under the TOP. The TOP represents one component of the typical clinical diagnostic test, the other component being professional medical interpretation.

3/14/07- Announced that its CombiMatrix Molecular Diagnostic subsidiary had completed the clinical validation of the first of its HemeScan™ suite of Bacterial Comparative Genomic (BAC) array Comparative Genomic Hybridization (CGH) based tests. Designed to detect prognostic markers in chronic lymphocytic leukemia, the test is now available to the research community both through routine clinical sample processing and through the company’s Technical Only Program.

3/16/07- Said that it was awarded a contract worth $869K by the Air Force Research Laboratory to further develop the Influenza Genotyping System. Utilizing the company’s CustomArray™ microarray platform and ElectraSense™ detection technology, the system will allow users in the field to identify various strains of influenza, including H5N1 bird flu as well as other upper-respiratory pathogens.

Commentary
CBMX posted the second-biggest decline among NNIX constituents in Q1 at 24%, compounding the loss of 42% of its value in 2006. The current share price would suggest that the company is headed for delisting, but we suspect the spin-off from parent Acacia will be effected before that comes to pass, and the transaction will surely address the low share price through the redemption ratio. Still, we see nothing that suggests CBMX is a viable stand-alone entity. Even after backing out the one-time collaboration payment from Q4/05, revenue still declined by 38% Y/Y in Q4/06, with most of the deterioration due to lower CustomArray revenue. Coupled with rising investment in the diagnostics business, this is a recipe for financial disaster. Topping things off, even after selling $9.3M in stock late last year, management isn’t sure that the $14.3M on hand will support the company through 2007.