Competition: The key players in the CBGM market include: the Abbot Freestyle Navigator, the Medtronic Guardian RT, the Dexcom SEVEN, and the MiniMed Paradigm.

Key Advantages:

1. It’s Needle-Free! - The device is the first of its kind and has mass appeal because its gives Diabetics a non-invasive “needle-free” option. Nobody likes sticking themselves all day long and demand for this breakthrough technology should be brisk from both patients and medical pros.
2. Addressable Market - Unlike all products currently dominating the market, Echo’s Symphony is effective in both clinical and home-based care. Since Diabetics that use insulin need to check their blood sugar 3 to 10 times daily, a great deal of monitoring is done outside of the hospital. By developing a product affordable and efficient enough to be used at home, Echo will expose itself to a exponentially bigger market opportunity than leading competitors.
3. Initialization Time: The Symphony only takes about an hour to initialize while the MiniMed and Medtronic take roughly 2 hours and the Abbot Labs devices requires approximately 10 hours to ramp up.
4. Accuracy: At between 97% to 100%, Echo’s device has a leg up on the rest of the pack, which ranges between 97% and 98.9% effective.
5. Error Rate: The Symphony system has an error rate that ranges between 7.5% to 16%, while Medtronic (19.7%), Dexcom (15.7%), and MiniMed (19.7%) are substantially higher (note: data is not available for the Abbot Labs device).
6. Read Frequency: The Echo Therapeutics  and Abbot Labs devices read every minutes, while the rest of the pack checks every 5.
7. Price: Echo has stated that its product will be inexpensive while those offered by competitors are expensive to the point of making them uneconomical for home, single-patient use.

So, there you have it. Faster, cheaper, and more efficient than the competition in many crucial areas. The only remaining barrier to success is FDA approval. This designation alone would likely transform ECTE into a $5 to $10 stock immediately. In closing, it is important to note that Rick Kuntz, M.D., SVP and Chief Scientific Officer at competitor Medtronic is a key advisor to the upcoming OneMed Finance Forum in  San Francisco next week where Echo will be presenting. Will this stir up the competitive juices for the two company’s or perhaps set the stage for collaboration in the future? I suppose we’ll just have to wait and see.

Echo’s CEO, Patrick T. Mooney will be presenting its revolutionary transdermal medical device offering at the annual OneMed Finance Conference, perhaps the premiere event of the year for connecting emerging healthcare companies with financiers and equity research firms. The event represents a MAJOR opportunity for ECTE to show off its first two products and lining up multi-million dollar licensing deals should be like shooting fish in a barrel for management with all of the influential executives set to be in attendance.

Echo has already inked licensing contracts worth more than $13 million. With FDA-approval expected or both in 2010, the time is now to establish additional sales & distribution agreements that will maximize global sales later this year and beyond. The event is conducted across the street from the annual JP Morgan Healthcare Conference, where the majority of U.S. healthcare and life-sciences executive and institutional investors will be in attendance.

Many of these same people will make a point to pop into the OneMed Event. Big names already pegged for attendance include:

1. Leading global healthcare product companies including Johnson & Johnson, and Medtronic.
2. Top medical industry-focused investment banking and analyst firms such as General Atlantic, FTN Equity Capital and Crystal Research Associates.
3. Leading national law firms that specialize in M&A and venture-financed medical tech companies, like Wilson Sonsini Goodrich & Rosatti

Let’s take a look at some of the key points discussed in today’s interview:

Near-Term Growth Catalysts: Echo Therapeutics will pursue FDA-approval for both its Symphony glucose monitoring and Prelude trans-dermal drug delivery systems in 2010. The company’s ability to win approval would likely transform it and its stock. Cumulatively, the market for both products is north of $15 billion and pegged for brisk growth over the next two decades. Six consecutive pilot tests of the Symphony system have produced increasingly positive results and Echo’s R&D team is confident that its product ready for commercial production during the first half of 2010. Echo is aggressively pursuing licensing partnerships in anticipation of regulatory approval, which is a very positive indicator of management’s firm belief  that commercial production is forthcoming in 2010.

ECTE is “Wildly Undervalued” Compared to its Peers: CEO Patrick T. Mooney pointed out quite poignantly that ECTE is undervalued in comparison to its key competitors, especially Dexcom, Inc. (Nasdaq: DXCM), maker of the SevenPlus CBGM system.  DXCM has a market cap of nearly $400 million and its trailing 12 month sales are approximately $19 million. ECTE, on the other hand, has a market cap of roughly $47 million and could easily reach or surpass DXCM’s TTM sales over the next 12-18 months if FDA approval is granted for at least one product offering.  Again, Echo’s CGCM offering is needle-free, while Dexcom’s and those of other competitors are not.

Value-Proposition #1: Firstly, ECTE’s trans-dermal system is the only needle-free continuous blood glucose monitoring (CBGM) system in the world. It’s a well-known fact that the public hates needles. While a flu-shot once a year is tolerable for most people, Diabetics have grown to despise having to to prick themselves multiple times per day to ensure that their blood glucose levels are in check. While all of the big dogs such as Johnson & Johnson, Abbot and Roche have multi-billion dollar CBGM offerings, none of them are needle-free. This creates a major opportunity for Echo to acquire market share or position itself for acquisition or revenue-share partnerships once it receives FDA-approval for its Symphony system.

Value Proposition #2: The company’s trans-dermal technology platform can be used for multiple purposes in addition to monitoring levels of compounds, proteins, sugars, etc. in the human body. Extensive testing has proven it effective in facilitating enhanced delivery of various medications. As many of you know - due to the aforementioned public fear of needles – many drugs are delivered topically. For example, Lidocaine is a common anesthetic that is generally applied topically to reduce itching, burning, and other skin irritation in clinical settings. Echo has proven through initial testing, that Lidocaine delivered through its Prelude system has a faster onset of activity and a higher efficacy than systems currently in use. Additional trials and FDA application are expected during 2010. Also, notice that the CEO stated today that ECTE could possibly have three FDA-approved products on the market but neglected to state what markets a 3rd offering would target. While this nugget of information should not be relied upon to estimate future valuation, it is a very positive indicator of the company’s broad future potential.

$15+ Licensing Deal w/Ferndale: Successful initial testing of the Prelude transderaml drug delivery system has attracted the attention of leading pharmaceutical firms and is already resulting in lucrative licensing contracts. Echo recently inked a deal with Ferndale Pharma, a company with a broad portfolio of products that it delivers topically and a leading position in the Lidocaine market. Ferndale is a perfect partner to help Echo bring its technology to market and has agreed to pay $750,000 up front for licensing rights, $750,000 upon FDA approval, and at least $12.6 million in milestone payments.

South Korean Rights Contract w/Handok: After a deep due diligence dive, Handok Pharma executives decided to acquire the South Korean distribution rights to Echo’s Prelude system. Handok is one of the biggest pharma companies in South Korea, a nation with nearly 50 million inhabitants, has been operating since the 1940’s, and remains a major shareholder of Sanofi Aventus. In addition, Handok possesses the resources required to expose Echo’s technology to a much wider target market and help establish the Prelude system in geographic markets that it would not be able to address efficiently on its own.

The CEO is Impressive!: In addition to being a surgeon at a top 20 medical facility in Boston, CEO Patrick T. Mooney M.D. was also a Wall Street analyst for a period of time. The gent is extremely well-spoken and understands things from both an operational and stock market perspective. He grasps the intricacies and nuances of his company’s core product offering and target markets and knows how to articulate the business model to colleagues, financial professionals, and even the average investor. Dr. Mooney also deeply comprehends what it will take to build a successful public company and get his stock listed on a senior exchange – a publicly stated goal of the company going forward. He continues to make all the right moves and expects a steady flow of positive news in 2010 to aid market activity. With plans to aggresivley pursue licensing agreements in emerging markets such as China, Japan, India, and South America, as well as in North America, things should be very exciting indeed.

Pie in the Sky: When asked where he thought the company would be 5 years from now, the CEO stated that if not acquired or merged into a larger  company – which are distinct possibilities – ECTE would possibly have 3 FDA-approved medical device products on the market. One would think that this would generate significant revenues for the company and help transform it into a major medical device supplier.

 Net-Net

Management expects big things  in 2010 for the company and so do we. If Echo Therapeutics, Inc. (OTCBB: ECTE) is able to fulfill even one-half of its strategic objectives for the New Year, the company should be in an entirely different position twelve months from now.   Echo’s MIT-licensed technology platform continues to evolve thanks to Moore’s Law and the future appears extremely bright if management can keep conducting “business as usual” or as the CEO described it in today’s interview “blocking and tackling.

In future editions, we’ll be analyzing the company’s potential for financial improvement pending upcoming regulatory approval for its first two products. Check back soon for frequent updates, but for now, we suggest taking a look at Echo’s recent press and SEC filings. We think you’ll like what you find.

Echo received $3 million in financing back in November to push forward with its pursuance of FDA approval for its “Symphony” system, which is showing promise to establish a position as a best-of-breed product in the medical diagnostic industry. The company’s licensing deal with Ferndale Pharma is worth $15 million before manufacturing and royalty revenues are factored into the equation. The agreement allows the company (Ferndale) to develop, market, and sell ECTE’s “Prelude” system for delivery of its lidocaine product LMX4 in North America and Europe.

LMX4 is a topical anaesthetic formulation with major market potential and even more importantly major potential to generate substantial royalty revenues for Echo. For those of you unfamiliar with this market segment, the topical anaesthetic market is growing rapidly and LMX4 is a leading product with mass-appeal.  The product is used to reduce the pain associated with medical needle procedures and exhibits major benefits over competing substances. LMX4 becomes effective in just 30 minutes after application verus 60 minutes with Emla and 30-45 minutes with Ametop. In addition, it produces minimal skin changes while Emla frequently results in Skin blanching and Ametop is found to produce Erythema/redness. The product also requires no abnormal storage conditions while Ametop must be refrigerated below 8C.

Here’s a link to a head-to-head comparison of the products: http://www.lmx4.co.uk/LMX4Comparison.aspx

Back in May, Michael Burns, Ph.D., President of Ferndale had this to say about the venture, ‘We are extremely excited about using Prelude to expand our presence in the important topical dermal anesthesia market in hospitals, clinics and with plastic surgeons and dermatologists. We expect Prelude to allow much more rapid onset of effectiveness for our topical anesthetic product, thereby significantly increasing the size of our market opportunity.’

In our opinion, this licensing agreement represents one of many near-term opportunities in front of Echo. It’s important to note as well that this is not even the company’s main focus at this point (that is the Symphony product). In the coming days and weeks, we’ll be articulating the comapny’s many avenues for potential growth, but this deal certainly exhibits the diverse nature of ECTE’s business model and its vast potential for future growth.

For more information, visit: http://www.echotx.com/