Product line sales, IP licences the way forward for QT Vascular

Singapore

REVENUE from selling product lines and licencing out product patents could soon become part of ordinary revenue for medtech firm QT Vascular, chief executive Eitan Konstantino said in an interview on Thursday.

In the first half of 2018 alone, the Catalist-listed firm, which develops minimally invasive devices to open blocked arteries, struck two such deals worth more than its market cap of S$26.8 million as at June 14. In January, Medtronic paid US$28 million for QT Vascular's non-drug coated peripheral product, the Chocolate PTA balloon catheter, and a licence for the product's intellectual property (IP) rights.

Teleflex bought the non-drug coated coronary product line and related licences for S$98.4 million in May, along with an option to purchase the Chocolate Heart product, a drug-coated coronary balloon catheter currently under development.

Dr Konstantino clarified that while earlier media reports stated that the two firms had bought the products' IP rights from QT Vascular, they are instead licencing it from his company. This allows Medtronic and Teleflex to use the patents for specific applications or fields of use, while QT Vascular retains overall ownership of the patents and can use them to develop new products for other fields of use.

"We still own and hold the IP, which is now extremely valuable because two big companies, Teleflex and Medtronic, are licencing it from us," said Dr Konstantino. "This validates how strong it is, because if it's not strong, they can just go and do the same themselves without paying us.

"The goal is that revenue from such activities will become our ordinary revenue."

QT Vascular will be holding an extraordinary general meeting on Saturday to obtain shareholders' approval for the Teleflex transaction.

Direct product sales to clients have traditionally made up much of the firm's revenue and will continue to contribute, albeit on a lower scale, via supply agreements with Medtronic and Teleflex for the next few years. However, QT Vascular will explore collaborations and work on new products and patents to increase revenue through future sales and licencing deals.

Dr Konstantino considers QT Vascular's drug-coated peripheral product Chocolate Touch to be the firm's most valuable asset, as the benefits of drug-device combinations prove themselves and as the market grows. Incorporating drugs into the products helps reduce the likelihood of a repeated blockage by encouraging proper healing, and large medical companies such as Bard make over US$150 million a year from similar products, he said.

The product is currently undergoing clinical studies in the United States, with roughly 50 to 100 patients enrolled. Clinical studies normally take two to 2½ years to complete, and the product will be submitted for approval in Europe and the US after that.

While QT Vascular has received several offers to collaborate and develop new products from several medical companies outside of Singapore following news of the Medtronic and Teleflex deals, shareholders have been less enthusiastic. The stock has not traded above S$0.02 since the first deal was announced on Jan 30.

"Those transactions attracted a lot of attention outside Singapore, but unfortunately in Singapore, the shareholder base did not capture it," Dr Konstantino said.

"It seems that there is a little bit of a missed opportunity here. Hopefully, it will be adjusted in the future."