| Small & micro cap project / Activism insight
Oxford Immunotec Global (OXFD): Significant percentage in Stonepine Capital, First Light Asset Management and Endurant Capital’s portfolio and signs of moat
Note: Even though the company is incorporated under the laws of England and Wales, the company’s ordinary shares are listed on the NASDAQ Global Market.
M. Cap: $420 million
Stonepine Capital Management
- The top five stocks account for 54% of the total portfolio.
- The company accounts for 10% of the total portfolio – Rank #1
First Light Asset Management
- The top five stocks account for 31% of the total portfolio.
- The company accounts for 9% of the total portfolio – Rank #1
Endurant Capital Management
- The top five holdings account for 35% of the total portfolio.
- The company accounts for 9% of the total portfolio – Rank #5
The company is a pure-play product company focused on tuberculosis (TB) screening. The company sells test kits, proprietary T-SPOT®1.TB, and associated accessories to laboratories that perform TB testing.
According to the World Health Organization (WHO), approximately 23% of the world’s population, or about 1.7 billion people, are infected with M. tuberculosis. Despite the availability of an effective treatment, TB is the leading cause of death due to infectious disease, and remains one of the top ten causes of death worldwide from any cause.
The current and competing procedure
The company’s T-SPOT.TB test competes primarily with Tuberculin Skin Test (TST), which is an inexpensive method that has been in clinical use for more than 100 years. According to the WHO, TST is problematic due to the frequency of false-positive and false-negative skin reactions.
The company’s test is sometimes referred to generically as an IGRA, since the test detects individual T cells via their release of interferon-gamma.
Suggested further reading: https://www.cdc.gov/tb/publications/factsheets/testing/IGRA.pdf
Market share: TST accounts for 75%-80% of total TB tests and IGRAs account for the remaining 20%-25%.
Competition: The company’s SPOT.TB test is one of the two recommended alternatives to TST. The company primarily competes with Qiagen’s QFN Plus test, which, like the T-SPOT.TB test, employs an IGRA method for detecting tuberculosis infection.
SIGNS OF MOAT
(a) Patients with weakened immune systems: The US package insert for the QFN Plus test notes that the performance of the US version of the QFN Plus test has not been extensively evaluated with specimens from the following groups of patients: those with impaired or altered immune functions, those younger than age 17 years, and pregnant women. It also notes that the minimum number of lymphocytes required for a reliable test result has not been established and may also be variable. The company believes this is an important differentiating factor in patient populations with weakened immune systems, such as those on biologic therapies, corticosteroid or other immunosuppressive treatments, those with HIV and patients undergoing dialysis or organ transplantation.
(b) Sensitivity advantage: In FDA pivotal studies in the United States, T-SPOT.TB was shown to have sensitivity advantages over QFN Plus.
(c) Differential reimbursement: In 2018, the CMS reimbursement for T-SPOT.TB was approximately $100 per test, while it was $77 per test for QFN Plus. Under PAMA, reimbursement for the company’s test will remain unchanged from 2018 rates. In contrast, the reimbursement for QFN Plus will decrease to approximately $62 by 2020.
(d) Patent: The intellectual property relating to T-SPOT.TB includes 12 issued US patents, 13 issued patents and one pending patent application.
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