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

Review
1/18/07- IMMC announced that its CellSearch™ Circulating Tumor Cell Kit met its primary endpoint in a clinical trial in metastatic androgen-independent prostate cancer. The primary endpoint was that CTC levels three-to-five weeks after the initiation of chemotherapy would predict overall therapy. The study also showed that CTC levels predict overall survival at each of the tested time points, which occurred approximately monthly. The company plans to file data with the FDA later this year.

1/29/07- Announced that it had signed two separate agreements with Novartis Pharmaceuticals. The first is a Research Services Agreement, which establishes a collaboration to develop a family of biomarkers associated with circulating tumor cells (CTCs) that may be useful in determining the efficacy of cancer therapies being developed by Novartis. The second is a Laboratory Master Services Agreement, which covers services IMMC will perform in connection with various Novartis drug development programs. Among these programs are a study involving enumeration of CTCs and assessment of apoptosis, or cell death, as well as a study to assess the relationship between CTC counts and expression of HER-2/neu at both the prein and the gene levels. Financial terms of the agreements were not disclosed.

2/21/07- Reported Q4 results pre-open. Product and service revenue for the quarter was $2.84M (+118% Y/Y), including $2.0M in instrument sales (+148% Y/Y), $579K in reagents and consumables (+145% Y/Y), and $283K in service revenue (flat Y/Y). The net loss on a GAAP basis was $7.7M, or $0.28 per share. Backing out a charge of $1.4M for warrant liability and $504K in options expense, the non-GAAP net loss was $5.7M, or $0.21 per share, flat from Q4/05. IMMC ended the period with $51.5M in cash, having burned $18.1M in cash in 2006.

For 2007, the company expects to ship 35 - 45 systems for aggregate revenue of $5.75M – $7.0M. Combined reagent, consumable and service revenue is seen at $6.0M - $7.5M, and cash burn is projected at $16M - $18M.

3/27/07- Said that Leon W.M.M. Terstappen, MD, Ph.D., its SVP of R&D and Chief Scientific Officer, had been appointed Chair of Medical Cell Biophysics in the Faculty of Science and Technology at the University of Twente in the Netherlands. Dr. Terstappen will remain in his current position with IMMC while devoting about 20% of his time to the University.

Commentary
Shares of IMMC have been in steady decline since last August, and shed another 12% of their value in Q1. In early March, the stock bounced off its all-time low around $2.65 per share. Though the current CellTracks labeling is limited to metastatic breast cancer, the company plans to submit data from its successful clinical trials in colorectal and prostate cancers this year. The research agreement signing with Novartis adds their name to the list of pharma customers alongside Pfizer and Astra Zeneca. Revenue growth continues at a strong pace driven by new instrument sales and increased consumables volume as the installed base of machines expands. IMMC has shipped a total of 77 systems, up from 42 at 12/31/05, but has booked only 63 sales in accordance with its customer trial period. The problem is that the product sales are carrying a negative gross margin of about 29%, so they are not helping reduce the net loss. Cash burn was cut to $18.1M from $25.4M in 2005 mainly due to a $7.2M, or 24% Y/Y reduction in operating expenses. The $30M convertible debt financing executed in December has put IMMC in a stable position for perhaps the next two years, but the projected burn rate for 2007 falls short of the improvement we were expecting.