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Tuesday, March 15, 2005

Biophan: Less Talk, More Action Needed

Last week, Biophan, a nanotech start-up based in West Henrietta, New York, reached a 12-month high at 2.09 a share. The company’s stock is now up over 300 percent since August. The question is: will it continue to increase? I am doubtful unless the company soon announces a deal of real substance. (Full Disclosure: I do not own any Biophan stock. I sold all my shares in December at $1.50). The announcement in February that it had acquired Amris GmbH was of some importance because it strengthened the company’s position as a leading manufacturer of MRI-compatible medical devices. However, a cursory review of the company’s numerous other press releases over the past few months are more troubling and that is because they appear to have only one thing in common: they aren’t really news. The fact that Biophan has been mentioned in an article or that its CEO is speaking at a conference may give some investors the perception of action and movement but I would prefer if the company stuck to the old fashioned notion that press releases should be saved for real news.

This is not to say Biophan is not without some merit. The company is developing a proprietary thin-film nanomagnetic particle coating to make biomedical devices MRI (Magnetic Resonance Imaging) safe and image compatible. And, if successful, the technology would represent a significant market (by some estimates approximately $5 billion).

Today, many medical devices—particularly pacemakers and neurostimulators—cannot be used with MRI because the resulting magnetic fields cause the devices to heat up and thereby cause tissue damage. Biophan’s technology allegedly alleviates this problem.

Unfortunately, to date, no major medical manufacturer has agreed to employ its technology. Biophan does have a relationship with Boston Scientific (BSX); however, no news on this front has been forthcoming for months. The company also has a partnership with NASA to create a biothermal battery that converts the body’s natural heat into usable electrical energy (Such batteries could extend the life of cardiac pacemakers and require fewer surgical replacements) but, again, nothing of substance has yet been developed from this relationship.

Similarly, the recent news that Biophan was commencing animals of MRI-visible Vena Cava filter bears watching but should be treated with great caution by investors until the results of these trials are known.

The bottom-line is that Biophan does have promising intellectual property and its relationships with Boston Scientific and NASA are noteworthy, but until a major medical device manufacturer actually starts licensing—and employing—its technology, it is simply another promising nanotech company with an unproven technology.

For a company with no revenues in 2004 and little cash on hand, it is hard—in my mind—to justify a market capitalization of $140 million at this time.

As always, due your own due diligence … but that’s my two cents.

Jack Uldrich

For more information:

Company: Biophan Technologies, Inc.
Symbol: BIPH
Trading Market: OTCBB
Address: 150 Lucius Gordon Drive
Suite 215
West Henrietta, NY 14586
Phone: 585-214-2441
CEO: Michael Weiner
Web: www.biophan.com