Message from Udo W. Perkuhn on Nov 18 1996 5:35PM EST
I agree, once it starts it will jump quickly. Now all we need are some positive press
releases to get the ball rolling!
/////////////////////////////////////////////////////
I don't see why you guys are saying that it's going to pop. Management seems to be serious about doing business, not about trying to get the share price to pop. If you want to get the price to explode, find some indication that there is an ongoing clinical trial, addressing a decent market and using CIST technology, with either IL-1beta or PAI-2. Then you'll see an explosion. Otherwise, it'll take time for investors to realize that the cash flow for the next four years will be (1) substantial, and (2) addressing, unless CIST has a big surprise hidden somewhere, a rapidly growing reagents market where their penetration is minimal.
I am very comfortable with the investment, but I consider it an investment rather than speculation on a penny stock. I, for one, would like management to worry about press releases at their own pace.
As recently as third quarter fiscal '96, this sucker traded at a nickel. A little over a week ago, as I was buying, these folks had 10 baggers. It seems sort of natural that the issue will be facing all sorts of sell pressures over the next few months. Why should it suddenly pop? I see stepwise appreciation with the release of each quarterly report.
There's one thing that I don't like about this company. I don't like companies that have 800 numbers for their PR support. :-)
Also, in an earlier post, I implied that there might be cash flow from a kit to detect PAI-2. There may be, but the 10-K says that the company intends to develop the product, not that it's in-hand.
I stick by my earlier 12 month target....... $2/share. Rationale: lots of cash coming for the next four years, and a proprietary anchor in a rapidly growing market sector where access to technolgy for in-license is EASY.
Two questions we need to include next time we talk to Hal Smith, whoever calls next...... (1) what is the current relationship like between CIST and the inventors on the "institutions" patents (e.g., Dr. Auron), and (2) can CIST reacquire rights to the use of IL-1 in cancer vaccines if GTI/Sandoz has no on-going interest (the 10-K says that the license is exclusive and worldwide, and that it is coterminous with Cistron's license from the Institutions. That doesn't mean that there aren't performance standards which must be met by GTI/Sandoz. I can think of some other companies that might be interested in a means to produce a localized, limited inflammatory response.)?
So, worst case...... what would a "divide up the pieces and liquidate" price be? I'd guess that they're going to get about $15 million of the 21. They have the outstanding judgement against PeproTech; let's say that's worth 2 million, and that I'm correct that market penetration will allow for $3 million in sales from IL-1beta within 24 months. So, that's 15 plus 2 plus 4.5 (just guessing that a company would pay about 1.5X annual revenues for the IL-1 business). Throw in the 0.4 due from Techne (R&D Systems), and it comes to about 22 million. That's about $0.80/share, valuing the IL-1beta and PAI-2 patents at $0. Anyone want to guess at what the patents are worth?
Rick |
