I figure they'll have only between $15 and $18 million left by year-end 2015. They'll probably lose another $5 in 2016, which means they'll have maybe 75 cents a share by the time they supposedly turn profitable. With that in mind, how is it possible that the stock is trading at $3? That's at least $1.50 too much.
No, Alere hasn't yet gotten it's Determine Combo CLIA waiver. However, that seems a good bet in the next few months. Determine Combo has been on int'l markets for a few years now, and CEMI should have anticipated that ALR would bring it to the US. Yet, LS' response was to question the efficacy of this product (while attacking the FDA).
So, while CEMI was working on Elephant TB and other "niche" tests, ALR was changing the world. Now, Sperzel has got to refocus CEMI R&D. This should have been done a few years ago.
He's not running the company. We know who is. The fact is, by the end of 2015, this company will have only around $1 of cash per share left. Given the pace at which the company has run down its cash reserves in the past, I have little faith that the bleeding will stop before this company is completely bankrupt.
I had said earlier that the two conditions under which I might buy the stock would be $2.75 and Ms. Lurker gone. I must revise that. I wouldn't buy this stock at any price.
Sperzel's previous employer was Warburg Pincus. I don't know under what circumstances he left. He was slated to continue to work for them, but jumped ship for CEMI. Depending on what they think of Sperzel, it's entirely possible that they'd take a look at CEMI. If they're looking, no doubt other investment companies are as well.
No, LS and the CFO had both said on numerous occasions that Fio would buy $6 million total for 2014. Well, I seriously doubt that they bought $4.5 million in Q2, especially since we're told that it's sustainable. That implies that, either Fio is buying way more than expected (unlikely), or that there are hidden sales elsewhere. Clearly, Spurzel doesn't want to say exactly who might be buying DPP products, or how much, since this would provide information to competitors, most espeically SD Bioline.
They won't be able to stop the bleed. They can't do it in the business they're already in, and they definitely won't be able to do with the new business, which they know nothing about.
Well, this is going down to around $20 million in the next few months, which means they will have lost $95 million bucks in 8 years!
I know they are desperate to get out of the detailing business, but I said many years ago that, as the weakest competitor in low margin (or no margin) business, they should just shutter the business and give the cash back to shareholders. That would have likely been around $10 per share back in 2006 or 2007.
Now, they are trying to transform themselves into a diagnostic company. Well, let me say this about that. I am very familiar with the diagnostics business, and it's not at all easy. You have to deal with the FDA, with doctors, with insurers, and so on an so forth. It takes an extremely skilled and seasoned CEO to make it work. I seriously doubt PDI will succeed. I think that the $20 million won't last more than a couple of years, and then it will be sold for scrap.
We were told that Fiocruz was going to buy $6 million of product the whole year. Well, either they bought a substantial portion of that last quarter or there is something else going on in Latin America. I rather suspect that they've either sold much more to Mexico than we realize or, perhaps, they've opened new accounts in other countries.
Spurzel is not going to tell Alere or anyone else exactly where CEMI is doing business, but I'm guessing it's more than Mexico and Brazil. It would seem that DPP HIV-Syphilis is a hit. We had speculated that this might be the case. Spurzel and Larkin were not going to give details, but the fact that sales weren't "lumpy" indicates that sales of DPP HIV-Syphilis, in particular, are sustainable and growing. I think we're going to see further strong revenue quarters.
We've all witnessed the brutal process that is getting a test from lab to market, and by market I mean a CLIA waiver. DPP HIV trials began in early 2011. So, we're looking at 3.5 years or so. If CEMI has a DPP HIV-Syph product ready for trials by mid-2015, we're looking at 2019 before it gets a CLIA waiver. That's completely crazy. Ditto for DPP HCV.
Now, perhaps Spurzel and Co. can do something to make this process faster and more efficient than laggin' Larry Siebert. Even so, it will still be years. By that time, there will probably be technologies and test which render DPP obsolete. Doing business in the US is very rough, indeed.
That's why we should really look to partnering and international for growth. In the past, DPP for environmental testing has come up. It was said that CEMI under LS wasn't the slightest bit interested. I'm going to say that Spurzel's CEMI will be much more receptive. Ditto for veterinary and human medicine, and perhaps new areas not previously mentioned.
It's a $33 to $35 million market in the US. It's entirely possible that, even though it's not an OF test, Determine Combo could dent that by some percentage. However, I believe that Spurzel and his team will have the chops to take significant market share from OSUR, not least because DPP is a better product but also because Spurzel has proven to be very good a moving product in the US.
Now, all we need is the waiver.
Other comments: Spurzel seemed to imply that CEMI R&D hasn't been very focused. He's really going to make sure there is progress on the four key projects.
Sounds as if CEMI will bring in cash as further partnerships materialize. That's going to be a key source of growth funding over time.
Stock should get a pop if DPP HIV gets a CLIA waiver. They sound pretty confident about that. Spurzel's sweet talk approach to the FDA probably has much greater chance of success than the way LS used to hammer the FDA on conference calls.
There is lots of potential for this to transition from turnaround to growth play pretty quick. Stock is way too cheap right now.
It's mostly about the CLIA waiver. Like to know how confident they are. My second questions is, even if they get this, will Determine Combo render ALL Ab-only products, including oral fluid ones, obsolete?
As predicted, HIV-Syphilis is dead for at least 4 years. Also, I don't sense they're anywhere near done on an Ag-Ab product. I'd like to know why it's taking so long. Ditto for HCV. Will and oral fluid product be possible for either of these?
I'm very interested in Tb. LS said it's not realistic. Is that still the case?
I'd like to know what other opportunities exist for DPP. LS talked about it for years, but nothing ever came of it, not in human medicine, not in vet, not in enviro testing, NOTHING.
Lastly, I'd like to know if they are able to sell Stat-Pak on their. Is Determine Combo going to kill that market?
Lastly, about the case drain. Obviously, that's not sustainable. Is that going to stabilize?
I'm not terribly optimistic, based on the OSUR, TRIB and ALR calls. The fact is, if and when Determine Combo gets a CLIA waiver, that's going to be a major problem given the new guidelines. We'll have to see how Spurzel handles these enormous challenges.