Test strip earnings boost UBI revenue

Universal Biosensors (ASX:UBI) slashed its cash outflow by more than two thirds for the September quarter, thanks to increased sales of its diagnostic test products.

The company reported a net cash outflow of $1.2 million for the quarter, compared to a $4.5 million outflow from the same period a year earlier.

The main contributor to the reduced burn was a 50% increase in revenue to $8.3 million, as partner LifeScan increased sales of UBI's OneTouch Verio blood glucose test strips.

Service fees derived from LifeScan's sales of the product grew 291% during the quarter to $555,000. For the first nine months of the year, sales grew 321% to $1.6 million.

Also contributing to the quarterly gain was a $1.5 million milestone payment from its collaboration from Siemens Healthcare to develop handheld analysers for the point-of-care coagulation testing market.

UBI entered a deal with Siemens in 2011 to develop three test strips for the market. Last month, the companies signed a long-term manufacturing and supply agreement that will see UBI become the exclusive manufacturer of these three strips.

The first product under the collaboration, a PT-INR testing system to monitor the application of anti-coagulant Warfarin, is expected to launch in 2013.

But the collaboration with Siemens required a significant cash commitment for internal and external product development. Payments for operating activities more than doubled, to $8.8 million from $4.3 million.

Improvements in manufacturing efficiencies and an improved gross manufacturing margin of 15% helped to offset the increased development costs. As of the end of the quarter, UBI had a cash balance of $13.9 million.

Universal Biosensors (ASX:UBI) shares were trading 1.2% higher at 85c as of around 3:30pm on Monday.