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BioTime, Inc. Message Board

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  • a__1 a__1 May 5, 1998 1:46 PM Flag

    I am long

    Wow lots of posts over the weekend, so I'm sorry
    about replying to such an old message. MarkVoelker said
    the following:

    By the way, this points up
    another untruth claimed by shortseller Asensio. He
    states
    in his reports and news releases that BioTime
    "Has no assets." Eight patents and an
    Exclusive
    License Agreement with a major pharmaceutical company
    form a valuable
    franchise indeed and are quite a
    set of assets. This is in addition to the $6 Million
    in
    cash the company has in the bank. If he knows
    BioTime owns these patents, he's
    lying to his
    clients. If he doesn't, he's incredibly negligent in his
    research.
    ---Mark A. Voelker

    Unless a patent is
    lisenced in, whereupon a value can be placed on it, the
    patent is not counted on the balance sheet, ergo he is
    not lying, at least about the patents. This is to
    prevent companies from inflating their balance sheet by
    overvaluing their patents

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    • "a_1" in message 1247 took issue with my claim
      that BioTime's six patents covering Hextend and their
      other solutions are assets, and that Asensio was
      negligent or dishonest in claiming that BioTime "has no
      assets" and "no valuable technology."

      "a_1" said:
      "Unless a patent is lisenced (sic) in, whereupon a value
      can be placed upon it, the patent is not counted on
      the balance sheet, ergo he is not
      lying."

      BioTime's patents do in fact cover the solutions licensed
      to Abbott Labs for manufacture and distribution.
      True, patents and other intangible assets are not
      included on a company's balance sheet *when calculating
      that company's book value.* But book value is not a
      useful measure of reasonable market value for a company
      like BioTime, and Asensio's bringing up book value
      (even though he doesn't call it that) is misleading. Do
      you find, on the balance sheet of the Coca-Cola
      Company, a dollar value attached to the secret formula for
      Coca-Cola the beverage? Yet this formula is the foundation
      of most of that company's earnings potential, not
      Coke's material assets and cash working
      capital.

      Similarly for BioTime. Based on the results of the Phase 3
      clinical trials, and on studies like R. L. Bick's paper,
      Hextend is clearly superior to generic hetastarch in
      normal saline solution, demonstrating a rate of
      complications due to bleeding 4 times lower than the generic
      solution. This is the real asset at BioTime, not the
      company's lab equipment and cash on hand.

      • 1 Reply to MarkVoelker
      • I was trying to get across that Asensio is not

        lying--he is certainly putting his spin on things,
        but
        lying he is not. so let�s go back to the
        beginning.


        In message 1100, you say:

        >By the way,
        this points up another untruth claimed
        >by
        shortseller Asensio. He states in his reports
        >and
        news releases that BioTime "Has no assets."

        >Eight patents and an Exclusive License Agreement

        >(sic) with a major pharmaceutical company form a

        >valuable franchise indeed and are quite a set of

        >assets. This is in addition to the $6 Million in

        >cash the company has in the bank. If he knows

        >BioTime owns these patents he's lying to his

        >clients. If he doesn't, he's incredibly negligent

        >in his research.
        > ---Mark A.
        Voelker

        Your argument seems to be as follows:

        Asensio
        said that BioTime has no assets.
        Eight patents and
        an exclusive license agreement
        are assets.

        ergo, Asensio is lying or incredibly negligent in

        his research.

        I couldn�t find where he stated
        that BioTime �Has
        no assets�. Maybe you were
        paraphrasing or taking
        something out of context, but I
        think Asensio�s
        argument is that not only does
        their lead product
        have little potential, but there
        are few underlying
        assets of the company,
        tangible or otherwise.

        In
        http://www.asensio.com/biotime2.html, Asensio
        *does* say:

        >Even assuming
        the most optimistic outcomes, we
        >found no
        legitimate reason for BioTime's current
        >$135 million
        market capitalization. As of December
        >31, 1997
        BioTime had $6.3 million in cash and
        >total assets
        of $6.7 million. Among its few non-
        >cash
        assets are a total of $127,000 in equipment.
        >In
        its over seven-year history, BioTime no product

        >sales and cumulative losses of $12.8 million. Even

        >based upon an unrealistically favorable assessment

        >of BioTime�s Hextend profit potential, we value

        >the stock at well below $2 per share.

        But I�ll
        give you the benefit of the doubt, and
        assume that
        somewhere he did say-and was not just
        quoted as
        saying-that BioTime has no assets.

        To me, Asensio was
        pretty obviously describing
        BioTime�s balance sheet
        and/or its book value. Now
        if you believe Hextend
        has great potential, I admit
        BioTime�s current
        book value really doesn�t matter.
        However, his
        argument--which I don�t *completely*
        agree with--is that
        Hextend is a non-improvement
        over any existing
        product in a crowded marketplace
        of decreasing size.
        If you believe that the stock
        is overvalued
        based on optimistic forecasts of
        Hextend sales like
        he does, then you need another
        way to value the
        stock. Most people would look to
        the book value of
        the company.

        In message 1247, I
        said:

        >Unless a patent is lisenced in, whereupon a value

        >can be placed on it, the patent is not counted on

        >the balance sheet, ergo he is not lying, at least

        >about the patents. This is to prevent companies

        >from inflating their balance sheet by overvaluing

        >their patents

        Now, my point in that posting was
        this: BioTime
        cannot value its patents on its
        balance sheet
        unless it bought them from someone
        else, in which
        case it can value them and
        depreciate them.
        Moreover, they are only valuable *IF*
        Hextend makes
        money.

 
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